UPDATE: This rare utility fund is fueled by growth in the natural gas industry
By Philip van Doorn, MarketWatch
The Hennessy Gas Utility Fund forgoes big dividend income in search of companies that are expanding
Investors may consider natural gas distributors, through pipeline operators or utilities, to be suitable mainly for dividend income but not necessarily for growth, as falling energy prices are a big risk.
But you can see in the following charts that there's quite a bit of growth among natural gas utilities, even with low energy commodity prices.
The $1.4 billion Hennessy Gas Utility Fund has exclusive license to track the American Gas Association (AGA) Stock Index. The index is made up of companies that are members of the AGA, weighted by market capitalization and the share of assets related to natural gas distribution.
According to the Ryan Kelley and Skip Aylesworth, two of the fund's portfolio mangers (the third is Brian Peery), about 25% of the fund's holdings are stocks of local natural gas distributors, 25% general partners that manage pipeline limited partnerships and the remaining 50% multi-utilities that distribute electricity and natural gas.
Hennessy Funds is headquartered in Novato, Calif., and has about $6.5 billion in assets under management, in 14 mutual funds.
You might be familiar with the gas pipeline partnership space, which is known for its attractive dividend yields, and most easily tracked with the Alerian MLP Index . But the AGA Stock Index, and, in turn, the Hennessy Gas Utility Fund, steers clear of the limited partnerships.