Oil mutual funds present an attractive opportunity in the current scenario. With global energy demand steadily rebounding, oil prices remain well-supported despite market volatility. Geopolitical tensions, supply constraints from OPEC+ cuts, and underinvestment in new oil projects have created a favorable supply-demand imbalance. At the same time, inflationary pressures make commodities, including oil, a strong hedge against eroding purchasing power.
In an inflationary environment, oil serves as a good hedge. While the long-term trend is toward clean energy, the transition will take decades, ensuring oil remains vital for the global economy. Oil mutual funds offer a way to invest in this critical sector and benefit from strong company earnings, dividends and share buybacks without the risk of picking individual stocks. For investors seeking growth, diversification and inflation protection, oil mutual funds offer a timely and strategic investment choice in today’s uncertain economic environment.
Below, we share with you three top-ranked energy mutual funds, viz., Franklin Natural Resources Fund FRNRX, Fidelity Select Energy Portfolio FSENX and T. Rowe Price New Era PRNEX. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of energy mutual funds.
Franklin Natural Resources Fund invests most of its net assets in equity and debt securities of smaller-capitalization companies with market capitalization of less than $2 billion in the natural resources sector. FRNRX advisors may also invest a small portion of its net assets in equity or debt securities of any type of issue.
Franklin Natural Resources Fund has three-year annualized returns of 16.7%. As of the end of January 2026, FRNRX had 91 issues and invested 4.2% of its net assets in Newmont Corporation.
Fidelity Select Energy Portfolio fund invests most of its net assets in common stocks of domestic and foreign companies that are principally engaged in the energy field, including the conventional areas of oil, gas, electricity and coal, and newer sources of energy such as nuclear, geothermal, oil shale and solar power. FSENX advisors choose to invest in companies based on fundamental analysis factors such as financial condition, industry position and market and economic conditions.
Fidelity Select Energy Portfolio fund has three-year annualized returns of 15.4%. FSENX has an expense ratio of 0.64%.
T. Rowe Price New Era fund invests the majority of its net assets in common stocks of natural resource companies that have earnings and tangible assets of natural resources companies, which may benefit from periods of increasing inflation. PRNEX advisors also invest in other growth companies that have strong potential for earnings growth.