Fill Up on These Diversified Funds to Gain Energy Exposure
Nonsector funds can help boost a beaten-down asset class' share of your portfolio.
As anyone who's been to the gas pump lately can attest, it's getting mighty pricey to fill up your vehicle these days. Nationally, average gas prices are approaching $4 a gallon, and the summer driving season isn't even here yet.
But while the price of oil and gasoline continues to rise, bargains remain in energy stocks, say Morningstar analysts. Overall, they believe the sector remains undervalued (after clicking link, click on the Sector tab on the left-hand navigation bar, then select Energy) following a 2011 in which the average energy-equity fund lost 7.5%, more than nine points worse than the S&P 500's performance for the year. Ongoing concerns about the global economic recovery, upheaval in the Mideast, and the natural disasters in Japan weighed heavily on the sector. So far in 2012, energy-stock funds have rebounded but continue to lag the S&P 500 considerably. Their 4.28% return for the first quarter would be appealing in most years, but it placed energy 20th among 21 domestic-stock fund categories, ahead of only utilities.
Adam Zoll does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.