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4 Funds to Buy as Cloud Computing Keeps Growing in 2021
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The year 2020 has been a blockbuster one for technology companies. With the pandemic forcing employees to work from home, companies had to go virtual to stay in operation. This pandemic-led remote working trend sped up digitization more than anticipated and cloud computing played a key role in this technological revolution.
Walking into 2021, we expect a further boom in the cloud computing space as more companies continue digitalization and expand their virtual work arena. According to International Data Corporation, by the end of this year, nearly 80% of the companies would put a strategy in place to shift to cloud-centric infrastructure and applications, which is twice that of the pre-pandemic levels. In fact, Gartner forecasts cloud spending growth of 18% this year. Cloud system infrastructure services spending is expected to grow from $44 billion in 2019 to $63 billion in 2020. Gartner forecasts that the segment could see solid exceptional growth by reaching $81 billion by 2022.
Several analysts initially feared that the spike in cloud investment was due to the sudden adoption of remote working led by the pandemic and it might dwindle eventually. However, these pandemic-induced new normal trends are here to stay. Hence, the cloud computing space will continue to flourish as the work-from-home, remote learning and other digital trends keep growing.
The current work-from-home environment is a prime catalyst for more businesses to adopt cloud technologies. So far, only 33% of workload uses cloud technology, according to Dan Ives, senior technology analyst of Wedbush. Ives forecasts that by 2022, it may hit 55%, though vaccine rollout may reverse the work-from-home trend.
This transition of manual to virtual will keep cloud players busy this year too. Type a message According to Synergy, more than 80% of revenues generated by the 20 leading hyperscale data center operators came from cloud, digital services and online activity sales in 2020. This has led the world’s largest data center operators like Amazon, Google, Facebook and Microsoft to increase spending on data centers. These giants spent a record $37 billion in the third quarter of 2020.
4 Top Fund Picks
Given the strong prospects of cloud computing companies, we have selected four mutual funds that have significant investment in cloud players and 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 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 Technology Portfolio (FSPTX - Free Report) 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. FSPTX has returned 27.8% and 28.3% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPTX is a non-diversified fund and has an annual expense ratio of 0.71%, which is below the category average of 1.24%. Some of the fund’s top cloud computing stock holdings are Nvidia, Microsoft and Salesforce.
Franklin DynaTech Fund Advisor Class (FDYZX - Free Report) aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that the fund manager believes are leaders in innovation and takes advantage of new technologies. FDYZX has returned 28.1% and 24.2% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FDYZX has an annual expense ratio of 0.61%, which is below the category average of 1.04%. Some of the fund’s top cloud computing stock holdings are Microsoft, Amazon and ServiceNow.
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 majority of revenues from the development, advancement and use of technology. PRGTX has returned nearly 26% and 25.7% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRGTX is a non-diversified fund and has an annual expense ratio of 0.88%, which is below the category average of 1.24%. Some of the fund’s top clouds computing stock holdings are Alibaba, Workday and Salesforce.
Janus Henderson Global Technology and Innovation Fund Class T (JAGTX - Free Report) aims for long-term growth of capital. The fund invests majority of assets in securities of companies that the fund managers believe will significantly benefit from advances in technology. JAGTX has returned 28.3% and 27.2% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JAGTX has an annual expense ratio of 0.93%, which is below the category average of 1.24%. Some of the fund’s top cloud computing stock holdings are Microsoft, Adobe Systems and salesforce.com.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week.
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4 Funds to Buy as Cloud Computing Keeps Growing in 2021
The year 2020 has been a blockbuster one for technology companies. With the pandemic forcing employees to work from home, companies had to go virtual to stay in operation. This pandemic-led remote working trend sped up digitization more than anticipated and cloud computing played a key role in this technological revolution.
Walking into 2021, we expect a further boom in the cloud computing space as more companies continue digitalization and expand their virtual work arena. According to International Data Corporation, by the end of this year, nearly 80% of the companies would put a strategy in place to shift to cloud-centric infrastructure and applications, which is twice that of the pre-pandemic levels. In fact, Gartner forecasts cloud spending growth of 18% this year. Cloud system infrastructure services spending is expected to grow from $44 billion in 2019 to $63 billion in 2020. Gartner forecasts that the segment could see solid exceptional growth by reaching $81 billion by 2022.
Several analysts initially feared that the spike in cloud investment was due to the sudden adoption of remote working led by the pandemic and it might dwindle eventually. However, these pandemic-induced new normal trends are here to stay. Hence, the cloud computing space will continue to flourish as the work-from-home, remote learning and other digital trends keep growing.
The current work-from-home environment is a prime catalyst for more businesses to adopt cloud technologies. So far, only 33% of workload uses cloud technology, according to Dan Ives, senior technology analyst of Wedbush. Ives forecasts that by 2022, it may hit 55%, though vaccine rollout may reverse the work-from-home trend.
This transition of manual to virtual will keep cloud players busy this year too. Type a message According to Synergy, more than 80% of revenues generated by the 20 leading hyperscale data center operators came from cloud, digital services and online activity sales in 2020. This has led the world’s largest data center operators like Amazon, Google, Facebook and Microsoft to increase spending on data centers. These giants spent a record $37 billion in the third quarter of 2020.
4 Top Fund Picks
Given the strong prospects of cloud computing companies, we have selected four mutual funds that have significant investment in cloud players and 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 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 Technology Portfolio (FSPTX - Free Report) 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. FSPTX has returned 27.8% and 28.3% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPTX is a non-diversified fund and has an annual expense ratio of 0.71%, which is below the category average of 1.24%. Some of the fund’s top cloud computing stock holdings are Nvidia, Microsoft and Salesforce.
Franklin DynaTech Fund Advisor Class (FDYZX - Free Report) aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that the fund manager believes are leaders in innovation and takes advantage of new technologies. FDYZX has returned 28.1% and 24.2% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FDYZX has an annual expense ratio of 0.61%, which is below the category average of 1.04%. Some of the fund’s top cloud computing stock holdings are Microsoft, Amazon and ServiceNow.
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 majority of revenues from the development, advancement and use of technology. PRGTX has returned nearly 26% and 25.7% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRGTX is a non-diversified fund and has an annual expense ratio of 0.88%, which is below the category average of 1.24%. Some of the fund’s top clouds computing stock holdings are Alibaba, Workday and Salesforce.
Janus Henderson Global Technology and Innovation Fund Class T (JAGTX - Free Report) aims for long-term growth of capital. The fund invests majority of assets in securities of companies that the fund managers believe will significantly benefit from advances in technology. JAGTX has returned 28.3% and 27.2% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JAGTX has an annual expense ratio of 0.93%, which is below the category average of 1.24%. Some of the fund’s top cloud computing stock holdings are Microsoft, Adobe Systems and salesforce.com.
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.
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