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Investors looking for a solid return with minimal risk in the booming energy sector should consider energy mutual funds.
That's because there's safety to be found in mutual funds' diversity, along with a more stable return on investment (ROI) that usually results from the aggregation of these funds.
And while the stock market's story in 2014 has been the subject of much debate as to whether the bears or the bulls are running the show, the energy sector, at least, has left little doubts that it's a bull.
For instance, a recent report by the International Energy Agency (IEA) projected that the U.S. will surpass Russia and Saudi Arabia to become the world's biggest oil producer by 2015. Just last week, a number of energy companies surpassed their 52-week share-price highs on the Standard & Poor's 500, including EQT Corp. (NYSE: EQT), Hess Corp. (NYSE: HES), and Baker Hughes Inc. (NYSE: BHI).
Here we will examine some energy mutual funds that allow investors to tap into the surging energy sector.
The Juice On Five Energy Mutual Funds
Direxion Daily Natural Gas Related Bull 3X Shares (GASL)
Incorporated in the U.S. in July 2010, this exchange-traded fund closed April 24 with a value of $51.05 per share. The fund tracks the ISE Revere Natural Gas Index.
At the end of the first quarter of 2014, total assets in the fund were reported to be $15.6461 million, with 0.35 million shares outstanding and a market capitalization of $17.87 million.
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ETFS Natural Gas (ECYGF)
This energy mutual fund is a strong performer for investors looking to trade in commodities with an equities base. ECYGF is an Exchange-Traded Commodity that tracks the DJ-UBS Natural Gas Total Return Index, and provides minimal risk due to the fact that the funds are 100% collateralized with eligible securities. At market close on April 24, the fund had total assets of $127.904 million and shares were trading at a very small $0.15 per share.
ProShares Ultra DJ-UBS Natural Gas (BOIL)
Incorporated in the U.S. in October of 2011, this exchange-traded fund strives for a 200% performance rate over and above the Dow Jones-UBS Natural Gas Sub-Index.
As of market close on April 24, this fund's total assets were valued at $19.2211 million with 0.37 million shares outstanding. The fund closed slightly down on the day at $51.67, resulting in a market cap of $19.11 million. This fund has performed with a growth rate of 33.76% over the past five years.
Vanguard Energy Fund (VGENX)
Since its inception in May of 1984, VGENX is one of the top growing energy mutual funds. It has done so by investing as much as 80% of its assets in common stocks of some of the largest companies in the U.S. engaged in activities directly associated with the research, production and development of fuels and other components of the energy sector.
With total assets of $12.5 billion, shares were trading at $72.08 at market close on April 24, the highest recorded year-to-date.
Guinness Atkinson Global Energy Fund (GAGEX)
This is an open-end energy mutual fund that was incorporated in the U.S. in 2004 with a goal of capital appreciation for the long-term. Eighty percent of the fund's net assets are invested in companies, both in the U.S. and abroad, that have principal business engagements in the energy sector.
With total assets of $84.47 million at the close of business April 24, the fund was at the peak of its 52-week share value, closing at $35.73. GAGEX is one of the few energy mutual funds that pays an annual year-end dividend, which was $0.15 per share in 2013.
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