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Play Oracle's Q1 Earnings Beat With These 3 Tech Funds

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Oracle Corporation (ORCL - Free Report) posted favorable earnings results in its fiscal first quarter. Although the software company posted a marginal revenue miss, on the earnings side, it's been two years since Oracle missed estimates.

Oracle’s encouraging earnings results had a positive impact on the tech sector and boosted investors’ sentiment. Following the promising development, investing in technology mutual funds with a significant holding in the Redwood City-based company will be prudent.

Q1 Earnings in Focus

Oracle came up with fiscal first-quarter earnings of 71 cents per share, beating the Zacks Consensus Estimate of 68 cents. This compares to earnings of 62 cents per share a year ago. This quarterly report represents an earnings surprise of 4.41%. In the last four quarters, the company surpassed consensus EPS estimate four times.

Oracle, posted revenues of $9.20 billion for the quarter ended August 2018, missing the Zacks Consensus Estimate by 0.9%. The top line also declined from $9.21 billion generated a year ago. The company has topped consensus revenue estimate two times over the last four quarters.

The other takeaway from the release is that the company plans a massive 12 billion share buyback program.

Oracle’s Rally: Boon for the Tech Sector

Total earnings for the Tech sector in the second quarter are up 31.6% on 12.2% higher revenues, with 3.2% increase in margins. Moreover, third-quarter earnings growth is expected to be in the double-digit territory for 10 of the 16 Zacks sectors, Technology being one.

Additionally, the tech sector has jumped 15.7% year to date (YTD), becoming the second best-performing sector on the S&P 500. In fact, the tech sector’s performance is better than the S&P 500’s increase of 8.1%. Additionally, mutual funds related to this sector registered strong returns. According to Morningstar, technology mutual funds have returned 15.5% YTD.

Buy 3 Tech Mutual Funds

Here we have selected three technology mutual funds that have significant exposure to Oracle. Moreover, these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are 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).

These funds also have encouraging one-year returns and minimum initial investment within $5000. Also, each of these funds has a low expense ratio.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

Columbia Global Technology Growth A (CTCAX - Free Report) invests a majority of its assets in common stocks, preferred stocks and securities that are convertible into common or preferred stocks. These equity securities are issued by technology companies that will benefit from technological advancements or improvement.

CTCAX carries an expense ratio of 1.31% compared with the category average of 1.37%. Moreover, CTCAX requires a minimal initial investment of $2,000. The fund has one-year annualized returns of 31.3%.

CTCAX has a Zacks Mutual Fund Rank #1. Further, as of the last filing, CTCAX held 0.75% of its assets invested in Oracle.

Fidelity Select Software & IT Services Portfolio (FSCSX - Free Report) invests a big part of its assets in companies whose primary operations are related to software or information-based services. FSCSX primarily focuses on acquiring common stocks of both domestic and foreign IT companies. The fund seeks appreciation of capital.

FSCSX carries an expense ratio of 0.73%, compared with the category average of 1.37%. Moreover, it requires a minimal initial investment of $2,500. The fund has one-year annualized returns of 34%.

FSCSX has a Zacks Mutual Fund Rank #2. Further, as of the last filing, FSCSX held 1.85% of its assets invested in Oracle.

Deutsche Science and Technology A (KTCAX - Free Report) invests a huge portion of its assets in securities of companies of any size and involved in the science and technology sector. The fund may also invest in initial public offerings. Although the funds invest heavily in domestic tech companies, it also invests around 35% of its assets in foreign companies.

KTCAX carries an expense ratio of 0.96% compared with the category average of 1.37%. Moreover, KTCAX requires a minimal initial investment of $1,000. The fund has one-year annualized returns of 31.2%.

KTCAX has a Zacks Mutual Fund Rank #2. Further, as of the last filing, KTCAX held 2.57% of its assets invested in Oracle.

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