We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Communication Services Funds to Buy as the Sector Marches on
Read MoreHide Full Article
Communication Services made rapid strides in 2023, ending the year just behind the broader tech sector that it is part of. As of February 2024, the sector grew 49.9% over the prior 12 months, again trailing the tech sector.
Communication Services, as a bucket, was created in 2018 by taking some of the erstwhile FANG stocks and joining them with the telecom sector. The sector comprises telecommunications and media companies of various kinds. These include cable television, wireless communications and communications-equipment firms, as well as traditional phone companies. Broadcasters, film studios, publishers and online service providers are also part of this sector.
Being characterized by high-growth, cyclical stocks of companies that see massive decline in demand when an economy enters a downturn, the sector is, by nature, economically sensitive. Over the past year, it has done very well primarily because of its close link to the tech sector and the AI optimism that has led to its resurgence.
Communications services has had a great first-quarter 2024 earnings alongside the broader tech sector. The S&P 500 has climbed more than 9.2% in the quarter on the back of strong earnings performance by its “Magnificent Seven” stocks, which comprise mainly tech and communication services.
Also, with general investor consensus being that a recession has been averted and a soft landing of the economy seems attainable with rate cuts on the not-so-distant horizon, the prospects for the sector look upbeat.
Funds focused on stocks from this diverse group, thus, provide a great opportunity to investors looking to add solidity and fast growth to their portfolio.
Hence, astute investors should invest in communication services funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected two such communication services mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive 5-year and 10-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
DWS Science and Technology (KTCAX - Free Report) primarily invests in common stocks of science and technology companies, including communication services. For investment purposes, KTCAX advisors may concentrate on one or more industries in the technology sector.
Sebastian P. Werner has been the lead manager of KTCAX since November 2017. Three top holdings for the fund are Meta (8.2%), Alphabet (5.4%) and Broadcom (4.9%).
KTCAX’s 5-year and 10-year annualized returns are 20.9% and 15.2%, respectively. Its net expense ratio is 0.90%. KTCAX has a Zacks Mutual Fund Rank #2. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
T. Rowe Price Comm & Tech Investor (PRMTX - Free Report) primarily invests in securities of communications and technology companies. PRMTX advisors may use both growth and value approaches to arrive at their investment decisions. The portfolio may consist of a relatively small number of holdings.
James Stillwagon has been the lead manager of PRMTX since November 2019. Three top holdings for the fund are Meta (7.3%), Alphabet (7%) and T-Mobile (5.7%).
PRMTX’s 5-year and 10-year annualized returns are 13% and 12.8%, respectively. Its net expense ratio is 0.77%. PRMTX has a Zacks Mutual Fund Rank #2.
Fidelity Select Semiconductors (FSELX - Free Report) primarily invests in securities of semiconductors and related companies. The markets for semiconductors are widely influenced by the communication services sector. FSELX advisors use fundamental analysis of factors like each issuer's financial condition and industry position to arrive at their investment decision.
Adam Benjamin has been the lead manager of FSELX since March 2020. Three top holdings for the fund are Nvidia (24.5%), NXP Semiconductors (9.1%) and Broadcom (4.7%).
FSELX’s 5-year and 10-year annualized returns are 35% and 27.2%, respectively. Its net expense ratio is 0.68%, compared to the category average of 1.23%. FSELX has a Zacks Mutual Fund Rank #1.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Communication Services Funds to Buy as the Sector Marches on
Communication Services made rapid strides in 2023, ending the year just behind the broader tech sector that it is part of. As of February 2024, the sector grew 49.9% over the prior 12 months, again trailing the tech sector.
Communication Services, as a bucket, was created in 2018 by taking some of the erstwhile FANG stocks and joining them with the telecom sector. The sector comprises telecommunications and media companies of various kinds. These include cable television, wireless communications and communications-equipment firms, as well as traditional phone companies. Broadcasters, film studios, publishers and online service providers are also part of this sector.
Being characterized by high-growth, cyclical stocks of companies that see massive decline in demand when an economy enters a downturn, the sector is, by nature, economically sensitive. Over the past year, it has done very well primarily because of its close link to the tech sector and the AI optimism that has led to its resurgence.
Communications services has had a great first-quarter 2024 earnings alongside the broader tech sector. The S&P 500 has climbed more than 9.2% in the quarter on the back of strong earnings performance by its “Magnificent Seven” stocks, which comprise mainly tech and communication services.
Also, with general investor consensus being that a recession has been averted and a soft landing of the economy seems attainable with rate cuts on the not-so-distant horizon, the prospects for the sector look upbeat.
Funds focused on stocks from this diverse group, thus, provide a great opportunity to investors looking to add solidity and fast growth to their portfolio.
Hence, astute investors should invest in communication services funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected two such communication services mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive 5-year and 10-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
DWS Science and Technology (KTCAX - Free Report) primarily invests in common stocks of science and technology companies, including communication services. For investment purposes, KTCAX advisors may concentrate on one or more industries in the technology sector.
Sebastian P. Werner has been the lead manager of KTCAX since November 2017. Three top holdings for the fund are Meta (8.2%), Alphabet (5.4%) and Broadcom (4.9%).
KTCAX’s 5-year and 10-year annualized returns are 20.9% and 15.2%, respectively. Its net expense ratio is 0.90%. KTCAX has a Zacks Mutual Fund Rank #2. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
T. Rowe Price Comm & Tech Investor (PRMTX - Free Report) primarily invests in securities of communications and technology companies. PRMTX advisors may use both growth and value approaches to arrive at their investment decisions. The portfolio may consist of a relatively small number of holdings.
James Stillwagon has been the lead manager of PRMTX since November 2019. Three top holdings for the fund are Meta (7.3%), Alphabet (7%) and T-Mobile (5.7%).
PRMTX’s 5-year and 10-year annualized returns are 13% and 12.8%, respectively. Its net expense ratio is 0.77%. PRMTX has a Zacks Mutual Fund Rank #2.
Fidelity Select Semiconductors (FSELX - Free Report) primarily invests in securities of semiconductors and related companies. The markets for semiconductors are widely influenced by the communication services sector. FSELX advisors use fundamental analysis of factors like each issuer's financial condition and industry position to arrive at their investment decision.
Adam Benjamin has been the lead manager of FSELX since March 2020. Three top holdings for the fund are Nvidia (24.5%), NXP Semiconductors (9.1%) and Broadcom (4.7%).
FSELX’s 5-year and 10-year annualized returns are 35% and 27.2%, respectively. Its net expense ratio is 0.68%, compared to the category average of 1.23%. FSELX has a Zacks Mutual Fund Rank #1.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>