Utilities funds are an excellent choice for investors seeking a steady income flow. They are also used as defensive instruments, which protect investments during a market downturn. This is because the demand for essential services such as those provided by utilities remains unchanged even during difficult times. In recent years, many funds in this category have increased their exposure to emerging markets and unregulated companies. This has increased the risk involved but has also generated higher returns. Below we will share with you 5 top rated utilities funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all utilities funds, then click here. Fidelity Telecom and Utilities (FIUIX) seeks high total return through a mix of current income and capital growth. It invests at least 80% of its assets in companies that provide telecom services as well as other utility companies. It focuses on purchasing common stocks of both domestic and foreign companies. It is a no-load fund. This utilities fund returned 22.19% over the last one year period. Franklin Utilities A ( FKUTX) invests the majority of its assets in securities of public utility companies. These include companies which produce or distribute electricity, natural gas and water. The fund also purchases securities of communications services companies and service providers for public utilities. The fund returned 23.27% in the last one year period and has a ten year annualized return of 8.36%. The utilities fund has a minimum initial investment of $1,000 and an expense ratio of 0.80% compared to a category average of 1.40%. Van Kampen Utility A ( VKUAX) seeks current income and capital appreciation. It invests in a combination of common stocks and income generating securities issued by companies from the utilities sector. The fund may purchase preferred stock and debt securities, as well as convertible securities. The fund returned 16.64% in the last one year period. As of December 2009, this utilities fund held 47 issues, with 7.82% of its total assets invested in Exelon Corporation. Evergreen Utility and Telecom A ( EVUAX) invests the majority of its assets telecom and utility companies with a wide range of market capitalizations. It focuses on purchasing common, preferred and convertible preferred stocks as well as bonds rated investment grade. Up to 25% of its assets may be invested in companies outside the utilities sector. This utilities fund returned 24.69% over the last one year period and has a five year annualized return of 6.53%. This utilities fund has an expense ratio of 1.13% compared to a category average of 1.40%. Aim Utilities ( FSTUX) invests a large share of its assets in stocks of companies in the utilities sector or related industries. Firms producing and distributing gas and electricity as well as those providing telecom services constitute its major investments. The fund has a five year annualized return of 4.34%. The fund manager is Davis Paddock and he has managed this utilities fund since 2009. To view the Zacks Rank and past performance of all utilities funds, then click here. About Zacks Mutual Fund Rank By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/ Zacks Investment Research