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JAGTX Vs. FSCSX: Which Fund Should You Bet On?

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Risk lovers, seeking healthy returns over a fairly long investment horizon may opt for technology mutual funds. It is believed that technology is poised for a brighter earnings performance than the other sectors due to greater demand. Improving industry fundamentals and emerging technologies such as AI, machine learning, robotics and data science are the key catalysts to the sector’s growth.

Meanwhile, most of the mutual funds investing in securities from these sectors take a growth-oriented approach focusing on companies with strong fundamentals and a relatively higher investment prospect. Moreover, technology has come to have a broader meaning than just hardware and software companies. Social media and Internet companies are now part of the technology landscape.

The U.S. technology sector has performed remarkably well so far this year, especially after social distancing to curb the spread of COVID-19. The Technology Select Sector SPDR Fund (XLK) has gained 16.9% year to date.

Under such circumstances, investing in technology mutual funds seems prudent. However, choosing the right mutual funds for your portfolio can be cumbersome. To that end, let us find out which of the two funds discussed below is better.

Janus Henderson Global Technology and Innovation Fund Class T (JAGTX - Free Report)

This fund invests a huge portion of its assets in equity securities of companies that are expected to gain from improvements or advancements in technology. JAGTX seeks capital appreciation for the long run and invests in both domestic and foreign companies with stable growth potential. It generally invests in companies from different nations including the United States.

This Sector-Tech product has a history of positive total returns for over 10 years.  Specifically, the fund’s returns are 26.2% over the 3-year and 23.4% of the 5-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.

The Janus Henderson Global Technology and Innovation Fund Class T, as of the last filing, allocates its assets in the top two major groups; Large Growth and Emerging Market. Further, as of the last filing, Microsoft Corp., Apple Inc. and Adobe Systems Inc. were the top holdings for JAGTX.

Sporting a Zacks Mutual Fund Rank #1 (Strong Buy), JAGTX was incepted in December 1998 and is managed by Janus Fund. The fund carries an expense ratio of 0.93% and requires a minimal initial investment of $2,500.

Fidelity Select Software & IT Services Portfolio (FSCSX - Free Report)

This fund invests the majority of its assets in companies whose primary operations are related to software or information-based services. It primarily focuses on acquiring common stocks of both domestic and foreign companies.

This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the 3 and 5-year benchmarks are 26% and 23.6%, respectively. To see how this fund performed compared in its category, and other #1 and 2 Ranked Mutual Funds, please click here.

The Fidelity Select Software & IT Services Portfolio, as of the last filing, allocates its assets in Large Growth stocks. Further, as of the last filing, Microsoft Inc., Visa Inc. and Adobe Systems Inc. were the top holdings for FSCSX.

This Zacks Rank #1 fund was incepted in July 1985 and carries an expense ratio of 0.71%. It requires a minimal initial investment of $0 and is managed by Fidelity.

To Conclude

While both JAGTX and FSCSX carry a Zacks Mutual Fund Rank #1, upon having a closer look, we find that the latter is a clear winner. The administrative and other operating expenses of JAGTX are higher than FSCSX’s.

Also, JAGTX has returned 17.7% year to date compared with 18.5% returned by FSCSX. Meanwhile, FSCSX offers lower risk compared to JAGTX. While FSCSX has a 3-year beta of 0.99, JAGTX’s is 1.03. Under such circumstances, FSCSX is worth buying, given its lower costs as well as inherent risk and consistency in providing high returns on investment.

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