Energy mutual funds are a collection of investments, managed by a professional investment company, with stocks, bonds and derivatives of companies that are involved in the energy field.
The world's consumption of energy is growing at a rate that exceeds the rate of growth for energy production. This is creating a situation where the demand exceeds supply. This should lead to increased profits for energy companies. Since the earnings of energy mutual funds is based mainly on the profits of companies involved in the energy field this means that energy mutual funds should begin to show high rates of return. Since the companies involved in the energy field are providing a product that will remain in demand for a long period of time the risks associated with long-term investment in energy mutual funds should be minimal compared to investment in other business sectors.
A growing subsection of energy mutual funds, the alternative energy mutual funds, provide the same benefits as regular energy mutual funds but invest in more environmentally friendly energy sources such as wind power and solar power. By investing in alternative energy mutual funds you are able to receive the earnings expactations of energy mutual funds while helping promote a cleaner, green environment.
