3 Energy Funds to Gain Big From Soaring Crude Oil Price

Geopolitical tensions have been worrying investors for quite some time now. The ongoing war between Russia and Ukraine has seen a number of countries, including the United States, imposing sanctions on Moscow. This has resulted in crude oil prices soaring, sending energy stocks on a rally.

The energy sector has been performing well with crude oil prices hitting record highs. Funds like Fidelity Advisor Energy Fund Class I FANIX, Fidelity Natural Resources Fund FNARX and Fidelity Select Energy Portfolio FSENX are likely to benefit in the near term.

Oil Price Soaring

The ongoing war between Russia and Ukraine has prompted several countries, including the Biden administration, to impose sanctions on Russian oil and energy.

Crude prices, which were already surging, hit multi-year highs of $130 per barrel this month on concerns over supply form Russia, which is one of the world’s biggest producers of the commodity. Prices rose further after the Biden administration imposed a ban on the import of oil and other energy products.     

On Mar 23, oil prices once again rose, with WTI Crude hitting $114.03 per barrel, while Brent Crude traded at $120.76. Crude prices have somewhat declined from those highs, but with no signs of the war ending, the sanctions are likely to be in place and will keep pushing up prices. Moreover, oil prices could escalate if the European Union imposes sanctions on Russian energy products.

Geopolitical tensions are likely to keep markets volatile for some time, with the energy sector making the most of the opportunity. So, investing in funds with exposure to the energy equities are likely to benefit in the near term.

Top 3 Funds to Buy Now

We have selected three funds that have most of their assets invested in energy stocks. These have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.

The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Advisor Energy Fund Class Iaims for capital appreciation. FANIX typically invests in common stocks. Fidelity Advisor Energy Fund Class I invests the majority of its assets in companies primarily engaged in energy production, including the conventional areas of oil, gas, electricity and coal, and newer sources of energy.

Fidelity Advisor Energy Fund Class I has 3-year and 5-year annualized returns of 9.2% and 2.7%, respectively. The annual expense ratio of 0.79% is lower than the category average of 1.07%. FANIX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Fidelity Natural ResourcesFund aims for capital growth. FNARX invests the majority of its assets in securities of companies that own or develop natural resources, or provide goods and services to these companies. Fidelity Natural Resources Fund usually invests in common stocks. Chevron and The Williams Companies are among the fund’s top 10 investments.

Fidelity Natural Resources Fund has 3-year and 5-year annualized returns of 12% and 4.8%, respectively. The annual expense ratio of 0.89% is lower than the category average of 1.07%. FNARX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Fidelity Select Energy Portfolio fund invests the majority of its assets in securities of firms primarily active in the energy sector, which includes both traditional energy sources such as oil, gas, electricity, and coal, as well as newer energy sources such as nuclear, geothermal, oil shale, and solar power. FSENX invests in both domestic and international companies. Fidelity Select Energy Portfoliofund mostly invests in ordinary stocks.

Fidelity Select Energy Portfolio has 3-year and 5-year annualized returns of 9.2% and 2.7%, respectively. The annual expense ratio of 0.85% is lower than the category average of 1.07%. FNARX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

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