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Technology mutual funds are ideal for investors seeking long-term growth and impressive returns. Improving industry fundamentals and emerging technologies such as AI, ML, robotics and data science are the key catalysts to the sector’s growth.
In addition, the majority of funds investing in securities from the technology sector take a growth-oriented approach that includes focusing on companies with strong fundamentals and a relatively better investment prospect. Moreover, technology has come to have a broader meaning than just hardware and software. Social media and Internet companies are now part of the technology landscape.
The U.S. technology sector has been the best performer so far this year, backed especially by the work-from-home trend due to social distancing to curb the spread of COVID-19. The Technology Select Sector SPDR Fund (XLK) has gained 37.5% over the past year.
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.
This fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of large and midsize companies worldwide. The fund primarily invests in securities of companies in the technology industries.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 28% over the 3-year and 62% over the 1-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
Putnam Global Technology Fund Class A, as of the last filing, allocates its assets in the top two major groups; Large Growth and Intermediate Bond. Further, as of the last filing, Microsoft Corp., Visa Inc. and Adobe Systems Inc were the top holdings for PGTAX.
Sporting a Zacks Mutual Fund Rank #1 (Strong Buy), PGTAX was incepted in January 2009 and is managed by Putnam Funds. The fund carries an expense ratio of 1.10% and requires a minimal initial investment of $500.
The 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.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the 3 and 1-year benchmarks are 27.8% and 59.7%, respectively. To see how this fund performed compared in its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Technology Portfolio, as of the last filing, allocates its assets primarily in Large Growth stocks. Further, as of the last filing, Microsoft Inc. and Apple Inc. were the top holdings for FSPTX.
This Zacks Rank #1 fund was incepted in July 1981 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 PGTAX and FSPTX carry a Zacks Mutual Fund Rank #1, upon having a closer look, we find that the former is a clear winner. Although PGTAX’s administrative and other operating expenses are higher than FSPTX’s, the former has a history of providing higher and consistent returns. Meanwhile, PGTAX also offers slightly lower risk compared to FSPTX. While PGTAX has a 3-year beta of 1.04, FSPTX’s is 1.13.
Furthermore, PGTAX has a 3-year alpha of 13.39 compared to FSPTX’s 12.13. It should be noted that a higher alpha indicates that managers of the fund, through careful stock selection, have been able to extract higher returns than the market. So it is only fair to conclude that PGTAX is worth buying.
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PGTAX Versus FSPTX: Which Fund Should You Bet On?
Technology mutual funds are ideal for investors seeking long-term growth and impressive returns. Improving industry fundamentals and emerging technologies such as AI, ML, robotics and data science are the key catalysts to the sector’s growth.
In addition, the majority of funds investing in securities from the technology sector take a growth-oriented approach that includes focusing on companies with strong fundamentals and a relatively better investment prospect. Moreover, technology has come to have a broader meaning than just hardware and software. Social media and Internet companies are now part of the technology landscape.
The U.S. technology sector has been the best performer so far this year, backed especially by the work-from-home trend due to social distancing to curb the spread of COVID-19. The Technology Select Sector SPDR Fund (XLK) has gained 37.5% over the past year.
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.
Putnam Global Technology Fund Class A (PGTAX - Free Report)
This fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of large and midsize companies worldwide. The fund primarily invests in securities of companies in the technology industries.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 28% over the 3-year and 62% over the 1-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
Putnam Global Technology Fund Class A, as of the last filing, allocates its assets in the top two major groups; Large Growth and Intermediate Bond. Further, as of the last filing, Microsoft Corp., Visa Inc. and Adobe Systems Inc were the top holdings for PGTAX.
Sporting a Zacks Mutual Fund Rank #1 (Strong Buy), PGTAX was incepted in January 2009 and is managed by Putnam Funds. The fund carries an expense ratio of 1.10% and requires a minimal initial investment of $500.
Fidelity Select Technology Portfolio (FSPTX - Free Report)
The 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.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the 3 and 1-year benchmarks are 27.8% and 59.7%, respectively. To see how this fund performed compared in its category, and other #1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Technology Portfolio, as of the last filing, allocates its assets primarily in Large Growth stocks. Further, as of the last filing, Microsoft Inc. and Apple Inc. were the top holdings for FSPTX.
This Zacks Rank #1 fund was incepted in July 1981 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 PGTAX and FSPTX carry a Zacks Mutual Fund Rank #1, upon having a closer look, we find that the former is a clear winner. Although PGTAX’s administrative and other operating expenses are higher than FSPTX’s, the former has a history of providing higher and consistent returns. Meanwhile, PGTAX also offers slightly lower risk compared to FSPTX. While PGTAX has a 3-year beta of 1.04, FSPTX’s is 1.13.
Furthermore, PGTAX has a 3-year alpha of 13.39 compared to FSPTX’s 12.13. It should be noted that a higher alpha indicates that managers of the fund, through careful stock selection, have been able to extract higher returns than the market. So it is only fair to conclude that PGTAX is worth buying.
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 >>