3 Utility Funds to Boost Your Portfolio as Dow Hits New Record High

Markets have remained choppy over the past few months as investors continue to shun technology and AI-related chip stocks amid growing concerns about the sector's long-term prospects. Despite that uncertainty, the Dow has delivered a standout performance this year.

The blue-chip index kicked off August on a strong note, closing at a fresh record high on Monday after an impressive first-half rally.

Amid this positive sentiment, investors may consider investing in utility funds like American Century Utilities Inv BULIX, Franklin Utilities Fund FKUTX and Fidelity Select Utilities FSUTX.

Dow Reaches Another Record High

The Dow rallied 693.38 points, or 1.3%, on Monday to finish at 53,178.41, marking its 22nd record close of 2026 and its second all-time high during the year's second half.

While the Nasdaq has faced pressure from a sharp selloff in technology stocks, the Dow has continued to advance as investors move away from artificial intelligence (AI)-focused companies toward more defensive assets. Concerns over whether AI-driven stocks can sustain their lofty valuations have also weighed on market sentiment.

Even with intermittent pullbacks, the Dow has enjoyed a remarkable year. The index first crossed the historic 50,000 mark on Feb. 2 before retreating as swings in oil prices and fears of escalating tensions in the Middle East fueled market volatility. It later regained momentum, surpassing the 52,000 level for the first time in late June.

Strong quarterly earnings from several industry bellwethers provided another boost to the Dow during the first half of the year, and that momentum has continued into the second half. Better-than-expected results from major cyclical companies and leading technology firms have continued to support the broader market's march to new highs.

The Dow rose 8.9% during the first six months of 2026, its strongest first-half performance since 2021. After gaining nearly 13% in 2025, the index is now up about 9.2% year to date.

3 Best Choices

We've identified three utility mutual funds that have demonstrated impressive annualized returns over 3-year and 5-year periods. These funds also hold a Zacks Mutual Fund Rank of #1 (Strong Buy) or 2 (Buy), require an initial investment of no more than $5,000 and have a low expense ratio.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

American Century Utilities Inv fund seeks current income and long-term capital growth. BULIX mainly invests 80% of its assets in stocks of companies engaged in the utilities industry. Within this 80% category, the managers will not buy shares of a company unless 50% or more of its revenues or net profits come from the ownership or operation of facilities used to provide electricity, natural gas, telecommunications services, cable television, water or sanitary services.

BULIX’s 3-year and 5-year annualized returns are 16% and 9.4%, respectively. American Century Utilities Invfund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.66%, which is lower than the category average of 0.99%.

To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Franklin Utilities Fund seeks capital appreciation and current income. FKUTX invests at least 80% of its net assets in securities of public utilities. Franklin Utilities Fund invests more than 25% of its total assets in companies operating in the utilities industry. The manager expects more than 50% of the fund's assets to be invested in electric utilities securities.

FKUTX’s 3-year and 5-year annualized returns are 16.9% and 12.2%, respectively. Franklin Utilities Fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.71%, which is lower than its category average of 0.94%.

To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Fidelity Select Utilities fund seeks capital appreciation. FSUTX normally invests at least 80% of its assets in common stocks of companies principally engaged in utilities and companies deriving the majority of their revenues from utility operations.

FSUTX’s 3-year and 5-year annualized returns are 17.3% and 13.6%, respectively. Fidelity Select Utilities fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.65%, which is lower than its category average.

To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

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This article originally published on Zacks Investment Research (zacks.com).

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