http://blog.mutualdecision.com/articles/2007/05/16/how-to-hedge-your-suv en-us 40 Insight from the minds behind MUTUALdecision <div>Think gas prices will remain high or go higher?&nbsp;I do. &nbsp;Demand is growing.&nbsp;Gasoline consumption is up 2% in the U.S. this year.&nbsp;China, India and the other new economies crave energy.&nbsp;&nbsp;Ask yourself this:&nbsp;Are you plugging more stuff into the wall each year?&nbsp;Political instability in Nigeria, Iran, and Venezuela could limit supply.&nbsp;And, there&rsquo;s only so much oil (natural gas and coal) in the ground.&nbsp;I&rsquo;m not suggesting we&rsquo;ll run out but it will become more expensive to extract it.</div> <div>&nbsp;</div> <div>How can you benefit from higher energy prices?&nbsp;By investing in energy companies.&nbsp;There are two ways to do this.&nbsp;You can buy a Natural Resources sector fund or you can buy a Value fund which holds energy stocks.&nbsp;The sector mutual fund is the &ldquo;pure play.&rdquo;&nbsp;It holds energy stocks and, probably, stocks of minerals i.e., iron ore and copper, mining companies.&nbsp;The risk with a sector fund is that there aren&rsquo;t a lot of them to choose from and they aren&rsquo;t diversified.&nbsp;Don&rsquo;t get me wrong.&nbsp;A sector fund is diversified within its focus area, i.e., owns a number of energy and mining companies, but any fund which investors in only one part of the economy is inherently riskier then a broadly diversified mutual fund.&nbsp;The other way to &ldquo;play energy&rdquo; is through a large cap or mid cap value fund.&nbsp;These funds typically have some energy exposure.&nbsp;The downside of this approach is that value mutual funds have only a portion of their assets invested in energy stocks.</div> <div>&nbsp;</div> <div>With either a Natural Resource fund or a Value fund (or any fund, for that matter), don&rsquo;t just go by the name.&nbsp;Check the fund&rsquo;s holdings to see if they match your expectations.&nbsp;Different fund managers view and approach their mandates differently.&nbsp;You can find a list of the top rated <a href="http://www.mutualdecision.com/mutual_fund/top_ten_funds/fund/40">Natural Resource</a> and <a href="http://www.mutualdecision.com/mutual_fund/top_ten_funds/fund/12">Value funds</a> and their top holdings at <strong><a href="http://www.mutualdecision.com">MUTUALdecision</a></strong>.&nbsp;You can drill down (no pun intended) further by going to the fund&rsquo;s website for a complete list of its holdings.</div> <div>&nbsp;</div> <div>Which investing approach is right for you?&nbsp;It depends upon how much risk you&rsquo;re willing to take and how your other assets are invested (think diversification of your entire portfolio).&nbsp;Having an energy investment might ease the pain the next time you fill up.</div> Wed, 16 May 2007 13:12:00 -0500 urn:uuid:dc1c0923-3f2e-4006-8c0e-1a427cf9800d Bill Byrnes http://blog.mutualdecision.com/articles/2007/05/16/how-to-hedge-your-suv Investing Mutual fund blog Mutual Funds Investing Natural Resource Funds Value Funds Energy Funds