Technology stocks have been soaring even while the pandemic ravaged the entire world. Thanks to remote working, education and entertainment needs, technology firms have constantly been in demand. The pandemic has forced people to stay indoors and with the new-variant of coronavirus recently spooking countries like Europe and America, lockdowns are being imposed and restrictions are being laid. Hence, the work from home trend will stretch longer than anticipated.
With the entire world now moving to the Web, cybersecurity has been a rising concern and this in turn boosts certain funds with significant investment in cybersecurity stocks.
Hackers Raise Cyber Threats
The pandemic has pushed many companies to instruct employees to work from home and that in turn has driven demand for computer security products that support remote working. Companies like CrowdStrike, Zscaler and Okta have reported a dramatic rise in demand for their computer security products for the quarter ending October and earnings have topped expectations since the coronavirus outbreak. The pandemic has accelerated cloud-based network security growth so that businesses can support and distribute work.
Though businesses and governments have been taking ample measures, recent cyberattacks on U.S. government computer networks raised concerns of cybersecurity. Russian hackers used a far wider variety of tools than previously known to penetrate U.S. government computer networks via network management software provided by SolarWinds. The U.S. Cybersecurity and Infrastructure Security Agency warned that the cyberattack marks "a grave risk to the Federal Government and state, local, tribal, and territorial governments” and it also puts private sector organizations’ infrastructure in a critical position.
A concern over a new variant of coronavirus has overshadowed the economic outlook for 2021. The lingering concerns, especially in the United Kingdom, have led many countries to close borders with Britain and implement travel restrictions on visitors. And with new cases rapidly rising in America, the work and stay-at-home orders are going to stay for longer.
3 Funds to Buy
Given the spur in demand for cybersecurity, we have shortlisted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.
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). Fidelity Select Software & IT Services Portfolio ( FSCSX Quick Quote FSCSX - Free Report) aims for capital appreciation. The non-diversified fund invests majority of its assets in common stocks of companies engaged in research, design, production or distribution of products or processes that relate to software or information-based services. Some of the cybersecurity companies in this fund’s holding are Palo Alto Networks and FireEye.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSCSX has three and five-year returns of 26% and 23.6%, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds,
please click here.
FSCSX has an annual expense ratio of 0.71% versus the category average of 1.24%.
Fidelity Select Technology Portfolio FSPTX fund aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements. Some of the fund’s top cybersecurity stock holdings are Cloudflare and Workday.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. FSPTX is a non-diversified fund that has returned 27.8% and 28.3% 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.
FSPTX has an annual expense ratio of 0.71% versus the category average of 1.24%.
Janus Henderson Global Technology and Innovation Fund Class A ( JATAX Quick Quote JATAX - Free Report) aims for long-term growth of capital. The fund invests majority of its net assets in securities of companies benefiting from advances or improvements in technology. Some of the fund’s top cybersecurity stock holdings are Okta and Workday.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 24.5% and 25.1% over the past three and five-year period, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds,
please click here.
JATAX has an annual expense ratio of 1.01% versus the category average of 1.24%.
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