None of Your Mutual Money Are Creating Money

U.S. stock mutual money that invest in a diverse array of companies turned in a shameful performance last quarter, as none -- that's right, none -- made funds.

Among funds that purchase mostly U.S. stocks as well as use no leverage or perhaps brief positions, only 3 sector-specific funds eked out gains from the beginning of July to the end of September, according to fund-research firm Morningstar: Icon Telecommunications & Utilities(ICTUX), up 1.9%; Franklin Utilities(FKUTX), up 1.7%; and Invesco Utilities Investor(FSTUX), up 0.3%.

The stock-market rout gathered steam last month on concern the U.S. economy is slipping into an additional recession as well as Europe's debt burden will sink more banks and cause a further decline in global corporate profits. In September, materials stocks fell the most, by 13%, followed by energy, with a 10% drop, as well as financial services, which tumbled 8.3%, according to Capital IQ. Utilities shares have been the sole sector to rise, by 1%.

The utility stocks that make up the winning money last quarter have historically been categorized as the turtles of equity investing, due to their slow, albeit steady, share-price returns.

But now they're seen as attractive investments for those seeking dividends and the preservation of funds in volatile markets.

Here's a snapshot of the five companies that have been the top gainers in the utility sector in the third quarter:
Progress Energy(PGN), 1 of the nation's biggest regulated utilities, is up 20% this year, including 8% in the 3rd quarter. It has a projected dividend yield of 4.75%.

Progress Energy is a holding company with a market value of $15 billion that offers electricity generation, transmission, as well as distribution throughout the Southeast, principally in North Carolina, South Carolina as well as Florida.

Progress as well as Duke Energy(DUK) have announced plans to merge in a $14 billion deal that will create the biggest electrical power utility in the U.S. They aim to close the deal by year-end.

The Duke merger, which faces several regulatory hurdles before it gets approved, would give Progress' shareholders an immediate premium to the pre-deal stock price as well as a 3% dividend increase. But the company has agreed to make $650 million in rate concessions to its customers through 2016.

Analysts are unanimous on their view of the stock, giving it 15 "hold" reviews, according to TheStreet Reviews.


View the original article here