Survivor: These Funds Resist the Recession

During boom years, such as 2006 and 2007, Franklin trailed competitors that held telecom and energy stocks. But the conservative fund outperformed when the going became difficult. In 2008, Franklin lost 25.6% -- more than 11 percentage points ahead of the S&P 500.

More aggressive investors may prefer MFS Utilities(MMUFX Quote), which returned 8.5% annually during the past five years, exceeding 92% of its peers. Portfolio manager Maura Shaughnessy favors companies that can grow a bit faster than their competitors. While she owns some regulated utilities, Shaughnessy also holds non-regulated producers that sell gas and electric in the open markets. Such companies can score big gains when demand rises and prices climb. A big holding is NRG Energy(NRG Quote), an unregulated power producer.

To find extra earnings growth, MFS has bought some overseas companies that enjoy increasing demand. A longtime holding is America Movil(AMX Quote), a Mexican provider of wireless and fixed-line telecommunications.

Another top performer is Evergreen Utility and Telecomm(EVUAX Quote), which returned 9.8% annually during the past five years -- more than 98% of competitors. Portfolio manager Timothy O'Brien holds a mix of cautious and aggressive choices. During the boom years, he emphasized growing companies that could benefit from rising energy prices. In the past year, he turned defensive, focusing on regulated electric companies that seemed likely to suffer less during the recession. A favorite stock is Pepco Holdings(POM Quote) (POM), a regulated power producer serving Washington, D.C.

Solid companies like Pepco should continue delivering steady dividends and help utilities funds weather difficult markets.