US utilities sector has shown a strong resurgence in the past year ending Feb. 10, 2026, with the State Street Utilities Select Sector SPDR ETF (XLU) gaining approximately 14.5%. This growth comes amidst shifting power demand, favorable macro conditions, and increasing geopolitical uncertainty.
One of the driving forces behind this resurgence is the rising electricity consumption associated with artificial intelligence (AI) and the expansion of data centers. Projections indicate a significant surge in electricity demand in the coming years, with utilities playing a crucial role in supporting the digital economy. Additionally, trends like manufacturing reshoring and the adoption of electric technologies are further bolstering long-term demand prospects.
Macroeconomic factors such as expectations of interest rate cuts have improved investor sentiment towards utilities. The sector’s steady dividends have attracted investors seeking stability in a volatile market. Moreover, investments in grid upgrades, renewables, and nuclear partnerships have enhanced growth potential.
Geopolitical tensions and concerns about energy security have underscored the importance of domestic infrastructure investment. This transformation has positioned utilities as a sector offering both defensive resilience and structural growth.
Given the current environment, utility mutual funds present an opportunity for stability and growth. Three utility mutual funds with Zacks Mutual Fund Rank #1 or 2, positive returns, and low expense ratios are worth considering.
Let’s take a closer look at these funds and their performance:
Stock Ticker: XLU (State Street Utilities Select Sector SPDR ETF)
American Century Utilities (BULIX) focuses on equity investments in the utilities sector. The fund’s portfolio is managed using a combination of quantitative and qualitative strategies, emphasizing risk management.
Fidelity Select Utilities (FSUTX) primarily invests in common stocks of companies in the utilities industry, using fundamental analysis to select holdings.
Franklin Utilities A1 (FKUTX) invests in public utilities and related service providers, concentrating on companies in electricity, natural gas, water, and communications.
Performance Overview:
BULIX has achieved 3-year and 5-year annualized returns of 10.3% and 7.8%, respectively, with a net expense ratio of 0.65%.
FSUTX has delivered 3-year and 5-year annualized returns of 13.3% and 12.5%, respectively, with a net expense ratio of 0.65%.
FKUTX has reported 3-year and 5-year annualized returns of 11.8% and 10.9%, respectively, with a net expense ratio of 0.70%.
For more in-depth analysis of these funds and their performance compared to their categories, investors can refer to the provided links.
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For further details on the utility mutual funds discussed in this article, refer to the original publication on Zacks Investment Research.
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