Equity Funds

In March 2015, oil prices hit a six-year low,1 but that doesn’t mean the energy sector is finished — far from it. What it does mean is that astute companies that can find ways to produce it more effectively or that come up with energy alternatives could become more profitable.

Finding such companies on your own is a tall order. Mutual funds, however, may bring them within your grasp.

Non-oil energy. Mutual funds that focus on the oil sector typically include companies involved in exploration, production, delivery, pipelines, or companies that support these industries. But many funds also include holdings in natural gas, hydro-electric, or nuclear energy.

Alternative energy. These funds hold companies involved in the production or delivery of geothermal, wind, and solar energy or bio-fuel.

When assessing potential funds, we will consider the following:

  • The energy funds investment objectives. Are you looking for pure “green” energy funds or one that holds more mainstream companies?
  • Performance history. While past performance is no guarantee of future returns, it does provide insight into how the energy funds responds to different market environments.
  • Management. Because this is a specialized area, it’s especially important to have a knowledgeable management team backed by qualified researchers and analysts.
  • How it fits with the rest of your portfolio. We’ll look for potential overlap and make sure that your asset allocation stays on target.

1 cnn.money.com, “Oil plunges to a 6-year low. Is $30 a barrel next?,” March 16, 2015.