Oil mutual funds present an attractive opportunity in the current scenario. With global energy demand steadily rebounding, oil prices remain well-supported despite market volatility. Geopolitical tensions, supply constraints from OPEC+ cuts, and underinvestment in new oil projects have created a favorable supply-demand imbalance. At the same time, inflationary pressures make commodities, including oil, a strong hedge against eroding purchasing power.
In an inflationary environment, oil serves as a good hedge. While the long-term trend is toward clean energy, the transition will take decades, ensuring oil remains vital for the global economy. Oil mutual funds offer a way to invest in this critical sector and benefit from strong company earnings, dividends, and share buybacks without the risk of picking individual stocks. For investors seeking growth, diversification, and inflation protection, oil mutual funds offer a timely and strategic investment choice in today’s uncertain economic environment.
Below, we share with you three top-ranked energy mutual funds, viz., Fidelity Natural Resources Fund FNARX, Vanguard Specialized Portfolios Energy Fund VGENX and T. Rowe Price New Era PRNEX. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of energy mutual funds.
Fidelity Natural Resources Fund invests most of its assets, along with borrowings, if any, in equity securities of domestic and foreign companies principally engaged in owning or developing natural resources, or supplying goods and services to such companies, and in precious metals. FNARX advisors choose to invest in issues based on fundamental analysis factors such as financial condition, industry position, as well as market and economic conditions.
Fidelity Natural Resources Fund has three-year annualized returns of 19.3%. As of May 2025, FNARX held 37 issues, with 18.8% of its assets invested in Exxon Mobil.
Vanguard Specialized Portfolios Energy Fund invests most of its net assets in common stocks of companies that are engaged in the energy industry. VGENX advisors prefer to invest in companies involved in exploration, production, transmission, energy research and conservation and pollution control.
Vanguard Specialized Portfolios Energy Fund has three-year annualized returns of 17%. VGENX has an expense ratio of 0.45%.
T. Rowe Price New Era fund invests the majority of its net assets in common stocks of natural resource companies that have earnings and tangible assets of natural resources companies, which may benefit from periods of increasing inflation. PRNEX advisors also invest in other growth companies that have strong potential for earnings growth.
T. Rowe Price New Era fund has three-year annualized returns of 12.1%. Shinwoo Kim has been the fund manager of PRNEX since June 2021.
To view the Zacks Rank and the past performance of all energy mutual funds, investors can click here to see the complete list of energy mutual funds.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
