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PRSCX Versus BGSAX: Which Fund Should You Bet On?

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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 56.7% 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.

T. Rowe Price Science and Technology Fund (PRSCX - Free Report)

This fund aims for long-term capital appreciation. The fund invests at least four-fifths of its net assets in the common stocks of companies expected to benefit from the development and use of science and technology.

This Sector-Tech product has a history of positive total returns for over 10 years.  Specifically, the fund’s returns are 26.4% over the 3-year and 86.9% 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.

T. Rowe Price Science and Technology Fund, 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, Alphabet Inc Class A, and Booking Holdings Inc were the top holdings for PRSCX.

Sporting a Zacks Mutual Fund Rank #1 (Strong Buy), PRSCX was incepted in September 1997 and is managed by T. Rowe Price. The fund carries an expense ratio of 0.77% and requires a minimal initial investment of $2,500.

BlackRock Technology Opportunities Fund Investor A Shares (BGSAX - Free Report)

The fund aims for long-term capital appreciation. The fund invests majority of its assets in equity securities of U.S. and foreign companies across all market capitalizations that have fast and sustainable growth potential from the development, advancement and implementation of science and technology.

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 34.9% and 99.1%, respectively. To see how this fund performed compared in its category, and other #1 and 2 Ranked Mutual Funds, please click here.

BlackRock Technology Opportunities Fund Investor A Shares, 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 Apple Inc. and Tesla, Inc. were the top holdings for BGSAX.

This Zacks Rank #1 fund was incepted in May 2000 and carries an expense ratio of 1.18%. It requires a minimal initial investment of $1,000 and is managed by BlackRock.

To Conclude

While both PRSCX and BGSAX carry a Zacks Mutual Fund Rank #1, upon having a closer look, we find that the latter is a clear winner. Not only are BGSAX’s administrative and other operating expenses slightly lower than PRSCX’s, the former has a history of providing higher and consistent returns.

Furthermore, BGSAX has a 3-year alpha of 15.68 compared to PRSCX’s 7.24. 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 BGSAX is worth buying.

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