On the lookout for a Sector – Utilities fund? Starting with Gabelli Utilities AAA (GABUX) should not be a possibility at this time. GABUX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes GABUX in Sector – Utilities, which is a segment packed with options. Known for its stability, the utility industry is perfect for investors seeking low risk. Sector – Utilities mutual funds focus on companies that provide essential services to millions of people on a daily basis: think electric power, gas distribution, and water supply.
History of Fund/Manager
Gabelli Funds is based in Rye, NY, and is the manager of GABUX. The Gabelli Utilities AAA made its debut in January of 2002 and GABUX has managed to accumulate roughly $229.07 million in assets, as of the most recently available information. A team of investment professionals is the fund’s current manager.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 1.96%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 0.38%, which places it in the bottom third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of GABUX over the past three years is 16.05% compared to the category average of 15.1%. The standard deviation of the fund over the past 5 years is 15.38% compared to the category average of 15.68%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.65, which means it is hypothetically less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a negative alpha of -7.58, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, GABUX is a no load fund. It has an expense ratio of 1.43% compared to the category average of 0.95%. From a cost perspective, GABUX is actually more expensive than its peers.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Gabelli Utilities AAA ( GABUX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and higher fees, Gabelli Utilities AAA ( GABUX ) looks like a somewhat weak choice for investors right now.
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