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Tap Into the Artificial Intelligence Space With These 4 Funds
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Is training an enormous number of systems with huge amount of data manually possible? Maybe, but this is where machine learning and artificial intelligence (AI) come into play. Once trained, the systems can check/verify/ make inferences about the new data that those never saw. In simple terms, systems are designed to detect objects in images, creating a photographic memory that can be used in robotics, self-driving cars, virtual assistants and more.
AI along with its offshoots deep learning and machine learning can do tasks that usually require human intelligence, including language processing, visual perception, reasoning, planning and most importantly, learning. Hence, from tech companies to manufacturing units, AI finds utility across a wide horizon. From simply filtering out spam mails (for instance in Gmail) to recommending products to customers (example: Amazon, Etsy) or suggesting preferred contents to view or music to listen (Youtube, Netflix, Spotify).
There are companies that directly engage in AI by selling hardware, software or just providing infrastructure or the services required. Investors may select the following mutual funds to cash in on AI growth. These include Fidelity Select Technology Portfolio (FSPTX - Free Report) , Fidelity Select Semiconductors Portfolio (FSELX - Free Report) , Fidelity Select Software & IT Services Portfolio (FSCSX - Free Report) and Fidelity Select Computers Portfolio (FDCPX - Free Report) .
This disruptive technology has a huge space to grow with a very few pure-play artificial intelligence stocks right now. Though there are several AI startups popping up globally, their exposure to the stock market is negligible. Software companies are also integrating AI tools for creating software code, drug development and more. Companies like IBM, Accenture and Infosys hold 28% of the $17-billion artificial intelligence IT services market, according to IDC data, enhancing the software-as-a-service portfolio by using AI tools.
Moreover, tech bigwigs often acquire these startups to expand their portfolio. Last year, Facebook, Apple, Microsoft, Google and Amazon (FAMGA) acquired 13 artificial intelligence startups to win the race for AI. And this is nothing new. FAMGA has been competing in the space and scooping up the top AI startups since 2010. Apple has been leading the way with 29 total AI acquisitions since 2010, followed by Google’s parent Alphabet with 15 buyouts.
On Apr 12, Microsoft acquired the speech recognition software company Nuance Communications, to widen and strengthen its AI hold. Nuance AI tools are widely used in the healthcare market and Microsoft plans to deliver the same to its healthcare customers via Azure cloud.
Chipmakers are also trying to catch up with the big tech firms making progress in AI. For these semiconductor giants, the race is to create AI chips that can be used in smartphones, data centers, robotics, self-driving cars, drones and more. This year, Applied Materials also rolled out its new optical inspection system ExtractAI. It can be used to detect chip defects by using AI software, allowing engineers to secure a manageable amount of dataset.
4 Funds to Buy
Competition in the AI space is fierce and according to a Grand View Research report, the global AI market size, valued at $62.35 billion in 2020, is expected to see a CAGR of 40.2% from 2021 to 2028. The continuous research and innovation in the AI field and across all industry verticals, such as automotive, healthcare, retail, finance and manufacturing will boost the associated mutual funds further.
Hence, we shortlisted four mutual funds that currently sport a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.
The question here is why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without several commission charges associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Technology Portfolio fund aims for capital appreciation. FSPTX invests primarily in equity securities, especially common stocks of companies engaged in offering, using or developing products, processes or services that will provide or benefit significantly from technological advances and improvements.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSPTX, a non-diversified fund, has returned 39.7% and 32.7% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Technology Portfolio has an annual expense ratio of 0.69% compared with the category average of 1.05%.
Fidelity Select Semiconductors Portfolio fund aims for capital appreciation. As a non-diversified fund, FSELX invests the majority of its assets in securities of companies, principally engaged in the design, manufacturing or sale of semiconductors and semiconductor equipment.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSELX has returned 50.5% and 35.3% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Semiconductors Portfolio has an annual expense ratio of 0.70%, below the category average of 1.05%.
Fidelity Select Software & IT Services Portfolio aims for capital appreciation. As a non-diversified fund, FSCSX invests most assets in the common stocks of companies engaged in research, design, production or distribution of products or processes related to software or information-based services.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSCSX has returned 29.4% and 27.7% over the past three and five-year periods, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Software & IT Services Portfolio has an annual expense ratio of 0.70% compared with the category average of 1.05%.
Fidelity Select Computers Portfolio fund aims for capital appreciation. FDCPX invests the majority of its assets in securities of companies, primarily engaged in research, design, development, manufacturing or distribution of products and services related to currently available or experimental hardware technology in the computer industry.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FDCPX has returned 29.5% and 24.7% over the past three and five-year periods, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Computers Portfolio has an annual expense ratio of 0.74% compared with the category average of 1.05%.
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Tap Into the Artificial Intelligence Space With These 4 Funds
Is training an enormous number of systems with huge amount of data manually possible? Maybe, but this is where machine learning and artificial intelligence (AI) come into play. Once trained, the systems can check/verify/ make inferences about the new data that those never saw. In simple terms, systems are designed to detect objects in images, creating a photographic memory that can be used in robotics, self-driving cars, virtual assistants and more.
AI along with its offshoots deep learning and machine learning can do tasks that usually require human intelligence, including language processing, visual perception, reasoning, planning and most importantly, learning. Hence, from tech companies to manufacturing units, AI finds utility across a wide horizon. From simply filtering out spam mails (for instance in Gmail) to recommending products to customers (example: Amazon, Etsy) or suggesting preferred contents to view or music to listen (Youtube, Netflix, Spotify).
There are companies that directly engage in AI by selling hardware, software or just providing infrastructure or the services required. Investors may select the following mutual funds to cash in on AI growth. These include Fidelity Select Technology Portfolio (FSPTX - Free Report) , Fidelity Select Semiconductors Portfolio (FSELX - Free Report) , Fidelity Select Software & IT Services Portfolio (FSCSX - Free Report) and Fidelity Select Computers Portfolio (FDCPX - Free Report) .
This disruptive technology has a huge space to grow with a very few pure-play artificial intelligence stocks right now. Though there are several AI startups popping up globally, their exposure to the stock market is negligible. Software companies are also integrating AI tools for creating software code, drug development and more. Companies like IBM, Accenture and Infosys hold 28% of the $17-billion artificial intelligence IT services market, according to IDC data, enhancing the software-as-a-service portfolio by using AI tools.
Moreover, tech bigwigs often acquire these startups to expand their portfolio. Last year, Facebook, Apple, Microsoft, Google and Amazon (FAMGA) acquired 13 artificial intelligence startups to win the race for AI. And this is nothing new. FAMGA has been competing in the space and scooping up the top AI startups since 2010. Apple has been leading the way with 29 total AI acquisitions since 2010, followed by Google’s parent Alphabet with 15 buyouts.
On Apr 12, Microsoft acquired the speech recognition software company Nuance Communications, to widen and strengthen its AI hold. Nuance AI tools are widely used in the healthcare market and Microsoft plans to deliver the same to its healthcare customers via Azure cloud.
Chipmakers are also trying to catch up with the big tech firms making progress in AI. For these semiconductor giants, the race is to create AI chips that can be used in smartphones, data centers, robotics, self-driving cars, drones and more. This year, Applied Materials also rolled out its new optical inspection system ExtractAI. It can be used to detect chip defects by using AI software, allowing engineers to secure a manageable amount of dataset.
4 Funds to Buy
Competition in the AI space is fierce and according to a Grand View Research report, the global AI market size, valued at $62.35 billion in 2020, is expected to see a CAGR of 40.2% from 2021 to 2028. The continuous research and innovation in the AI field and across all industry verticals, such as automotive, healthcare, retail, finance and manufacturing will boost the associated mutual funds further.
Hence, we shortlisted four mutual funds that currently sport a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.
The question here is why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without several commission charges associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Technology Portfolio fund aims for capital appreciation. FSPTX invests primarily in equity securities, especially common stocks of companies engaged in offering, using or developing products, processes or services that will provide or benefit significantly from technological advances and improvements.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSPTX, a non-diversified fund, has returned 39.7% and 32.7% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Technology Portfolio has an annual expense ratio of 0.69% compared with the category average of 1.05%.
Fidelity Select Semiconductors Portfolio fund aims for capital appreciation. As a non-diversified fund, FSELX invests the majority of its assets in securities of companies, principally engaged in the design, manufacturing or sale of semiconductors and semiconductor equipment.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSELX has returned 50.5% and 35.3% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Semiconductors Portfolio has an annual expense ratio of 0.70%, below the category average of 1.05%.
Fidelity Select Software & IT Services Portfolio aims for capital appreciation. As a non-diversified fund, FSCSX invests most assets in the common stocks of companies engaged in research, design, production or distribution of products or processes related to software or information-based services.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSCSX has returned 29.4% and 27.7% over the past three and five-year periods, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Software & IT Services Portfolio has an annual expense ratio of 0.70% compared with the category average of 1.05%.
Fidelity Select Computers Portfolio fund aims for capital appreciation. FDCPX invests the majority of its assets in securities of companies, primarily engaged in research, design, development, manufacturing or distribution of products and services related to currently available or experimental hardware technology in the computer industry.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FDCPX has returned 29.5% and 24.7% over the past three and five-year periods, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Computers Portfolio has an annual expense ratio of 0.74% compared with the category average of 1.05%.
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