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Mutual Fund Commentary

More often than not the technology sector is likely to report above par earnings compared to other sectors as the demand for technology and innovation remains high. However, technology stocks are considered to be more volatile than other sector specific stocks in the short run. In order to minimize this short term volatility almost all tech funds adopt a growth management style with a focus on strong fundamentals and a relatively higher investment horizon. Investors having an above par appetite for risk and fairly longer investment horizon should park their savings in these funds.

Below we will share with you 5 top rated technology mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all technology funds, investors can click here to see the complete list of funds.

Fidelity Select Software & Computer Portfolio (FSCSX - MF report) invests a major portion of its assets in securities of companies whose primary operations are related to software or information-based services. It invests in domestic as well as in foreign companies using both fundamental analysis as well as considering market and economic factors. The technology mutual fund has a three year annualized return of 21.23%.

This fund has an expense ratio of 0.78% as compared to category average of 1.50%.

Matthews Asia Science & Technology Investor (MATFX - MF report) seeks capital growth over the long term. The fund invests the majority of its assets in companies located in Asia which generate more than half of their revenues from product and services sales in technology related industries and services. The technology mutual fund has a three year annualized return of 11.22%.

J. Michael Oh is the fund manager and has managed the fund since 2006.

Fidelity Select Wireless Portfolio (FWRLX - MF report) invests a lion’s share of its assets in companies involved in operations related to wireless communications services or products. It focuses in acquiring common stocks of companies throughout the world depending on factors such as industry position, financial strength and economic condition. This non-diversified technology mutual fund has a three year annualized return of 13.86%.

As of June 2014, this fund held 62 issues with 16.69% invested in Verizon Communications Inc.

Vanguard Telecom Services Index Admiral (VTCAX - MF report) seeks to provide returns identical to that of the MSCI US Investable Market Index (IMI)/ Telecommunication Services 25/50. The index includes domestic companies from the telecommunication domain. The fund invests in almost all or all of the stocks which are included in the index. This non-diversified technology mutual fund has a three year annualized return of 14.58%.

This fund has an expense ratio of 0.14% as compared to category average of 1.38%.

ProFunds Semiconductor UltraSector Service (SMPSX - MF report) invests a large share of its assets in derivatives and securities which have the potential to give daily returns which are 150% of the daily returns of the Dow Jones U.S. Semiconductors index. This non-diversified technology mutual fund has a three year annualized return of 20.89%.

Charles Lowery is the fund manager and has managed the fund since 2013.

To view the Zacks Rank and past performance of all technology mutual funds, investors can click here to see the complete list of funds.

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.

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