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Thematic Investment to Keep Up Pace in 2021: 4 Funds to Buy
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After a roller-coaster ride in 2020, markets are gearing up for another rusty year as pandemic woes keep impacting businesses. However, with vaccines rolling out in a few months, a bound is greatly anticipated. While traders are looking at growth funds for scrumptious returns, some investments themes that made blockbuster returns last year will keep up the pace in 2021.
First, work and stay-at-home trends will continue even as the pandemic eases. The adoption of telemedicine, e-commerce, online education and gaming is evitable, as major industries have shifted to the virtual platform to continue business safely. In the education sector, more number of smart campuses and digital libraries will be implemented to cater to modern learners.
In fact, digitization of the education sector will have a long-term impact and democratize the education system worldwide. Additionally, the gaming sector was one of the winners, even during the pandemic slump.
With millions having to stay indoors, games like Animal Crossing took the world by storm. In fact, 2021 is expected to see new series/versions of Halo, Resident Evil and Ratchet & Clank -- among a variety of entirely new games and new hardware entry from Nintendo, Sony and more.
Next up we have ESG (environmental, social and governance) funds. 2020 has been a banner year for ESG funds, with tailwinds from the heavy inflows into ESG investment strategies. In fact, concerns regarding climate change, civil rights protests and the pandemic will help ESG to explode in 2021. This dominant investment theme of 2020 enjoyed record flows in 2019 and broke records in just the first half of 2020.
According to Bloomberg, ESG ETFs surged to $22 billion in the first half of 2020 which was more than thrice the 2019 total. Additional support is expected from President-elect Joe Biden as he promises to resolve some of the actions of his predecessor and encourage continued growth in ESG investing.
This pandemic has already made businesses aware of the perks of being environmentally friendly and socially responsible. This will not only help them maintain good relations with customers and stakeholders but also with shareholders.
Last among them is robotics or automation. The robotics revolution has been the hype in the past decade however; as lives went virtual in 2020, some technology inventions were adopted that will stick around for good. Robotics is one such trend that is poised to grow further in 2021 and beyond.
Given the health crisis, automation and robotics have been in focus. Robotic scrubbers, vacuum cleaning bots and other self-driving machines that can operate in high-traffic public locations and in running daily household errands become a part of our daily life.
4 Funds to Buy
Work and stay-at-home, ESG and robotics are three trends that are poised to grow in 2021.Given the positives, we have shortlisted four mutual funds that flaunt a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
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.
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).
Franklin DynaTech Fund Class A (FKDNX - Free Report) aims for capital appreciation. The fund invests primarily in common stocks and the fund manager focuses on companies that are leaders in innovation, take advantage of new technologies, have superior management, and benefit from new industry conditions.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund has three and five-year returns of 24% and 21.7%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
FKDNX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.86%, which is below the category average of 1.04%.
Fidelity Select Environment and Alternative Energy Portfolio (FSLEX - Free Report) fund aims for capital appreciation. The fund invests majority of assets in securities of companies that provide business services related to alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies or other environmental support.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. The fund has three and five-year returns of 3.4% and 9.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSLEX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.85% compared to the category average of 1.04%.
New Alternatives Fund Class A (NALFX - Free Report) seeks long-term capital growth, with income as its secondary objective. It primarily invests in common stocks of companies and even in other equity securities such as real estate investment trusts and American Depository Receipts etc.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. The fund has three and five-year returns of 17.9% and 17%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NALFX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.08% compared to the category average of 1.28%.
T. Rowe Price Global Technology Fund (PRGTX - Free Report) aims for long-term capital growth. The fund invests most assets in the common stocks of companies that its managers expect will generate the majority of their revenues from the development, advancement, and use of technology.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. PRGTX is a non-diversified fund and has returned nearly 26% and 25.7% 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.
PRGTX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.88%, which is below the category average of 1.24%.
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Thematic Investment to Keep Up Pace in 2021: 4 Funds to Buy
After a roller-coaster ride in 2020, markets are gearing up for another rusty year as pandemic woes keep impacting businesses. However, with vaccines rolling out in a few months, a bound is greatly anticipated. While traders are looking at growth funds for scrumptious returns, some investments themes that made blockbuster returns last year will keep up the pace in 2021.
First, work and stay-at-home trends will continue even as the pandemic eases. The adoption of telemedicine, e-commerce, online education and gaming is evitable, as major industries have shifted to the virtual platform to continue business safely. In the education sector, more number of smart campuses and digital libraries will be implemented to cater to modern learners.
In fact, digitization of the education sector will have a long-term impact and democratize the education system worldwide. Additionally, the gaming sector was one of the winners, even during the pandemic slump.
With millions having to stay indoors, games like Animal Crossing took the world by storm. In fact, 2021 is expected to see new series/versions of Halo, Resident Evil and Ratchet & Clank -- among a variety of entirely new games and new hardware entry from Nintendo, Sony and more.
Next up we have ESG (environmental, social and governance) funds. 2020 has been a banner year for ESG funds, with tailwinds from the heavy inflows into ESG investment strategies. In fact, concerns regarding climate change, civil rights protests and the pandemic will help ESG to explode in 2021. This dominant investment theme of 2020 enjoyed record flows in 2019 and broke records in just the first half of 2020.
According to Bloomberg, ESG ETFs surged to $22 billion in the first half of 2020 which was more than thrice the 2019 total. Additional support is expected from President-elect Joe Biden as he promises to resolve some of the actions of his predecessor and encourage continued growth in ESG investing.
This pandemic has already made businesses aware of the perks of being environmentally friendly and socially responsible. This will not only help them maintain good relations with customers and stakeholders but also with shareholders.
Last among them is robotics or automation. The robotics revolution has been the hype in the past decade however; as lives went virtual in 2020, some technology inventions were adopted that will stick around for good. Robotics is one such trend that is poised to grow further in 2021 and beyond.
Given the health crisis, automation and robotics have been in focus. Robotic scrubbers, vacuum cleaning bots and other self-driving machines that can operate in high-traffic public locations and in running daily household errands become a part of our daily life.
4 Funds to Buy
Work and stay-at-home, ESG and robotics are three trends that are poised to grow in 2021.Given the positives, we have shortlisted four mutual funds that flaunt a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
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.
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).
Franklin DynaTech Fund Class A (FKDNX - Free Report) aims for capital appreciation. The fund invests primarily in common stocks and the fund manager focuses on companies that are leaders in innovation, take advantage of new technologies, have superior management, and benefit from new industry conditions.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund has three and five-year returns of 24% and 21.7%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
FKDNX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.86%, which is below the category average of 1.04%.
Fidelity Select Environment and Alternative Energy Portfolio (FSLEX - Free Report) fund aims for capital appreciation. The fund invests majority of assets in securities of companies that provide business services related to alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies or other environmental support.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. The fund has three and five-year returns of 3.4% and 9.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSLEX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.85% compared to the category average of 1.04%.
New Alternatives Fund Class A (NALFX - Free Report) seeks long-term capital growth, with income as its secondary objective. It primarily invests in common stocks of companies and even in other equity securities such as real estate investment trusts and American Depository Receipts etc.
This Zacks sector – Other product has a history of positive total returns for more than 10 years. The fund has three and five-year returns of 17.9% and 17%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NALFX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.08% compared to the category average of 1.28%.
T. Rowe Price Global Technology Fund (PRGTX - Free Report) aims for long-term capital growth. The fund invests most assets in the common stocks of companies that its managers expect will generate the majority of their revenues from the development, advancement, and use of technology.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. PRGTX is a non-diversified fund and has returned nearly 26% and 25.7% 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.
PRGTX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.88%, which is below the category average of 1.24%.
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 >>