Cohen & Steers Utility Fund at Full Power

Increasing demand is fueling growth in the utility sector.

Utilities, traditionally a low-key source of dividends, have been churning out electrifying returns. Over the past year to May 1, the average utility fund rocketed 32%. Over the past three years, the average annualized gain was 23%.

Robert Becker, manager of the Cohen & Steers Utility fund, says the rally has plenty of more juice left. That's because the supply of pipelines and power plants hasn't kept pace with the growing demand for electricity. "There is a huge amount of catch-up investments being made, and that's leading to substantial earnings growth for utilities," says Becker, who has led the Cohen & Steers fund since its May 2004 inception. A jolt of merger activity has also given utilities a boost.

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Staff Writer, Kiplinger's Personal Finance