The coronavirus pandemic has brought about radical transformation in both societal and technological norms. The society is likely to continue remote trends like digital communications, work from home, online shopping and education, throughout 2021 and beyond. Technology will not only continue to assist this societal transformation but also become a cornerstone for this change. Hence, transformational technologies should provide ample growth opportunities for funds with stocks of companies providing these kinds of technologies.
Now, what is transformational technology? It is an amalgamation of hardware and software-based tools designed to enhance human psychological well-being along with cognitive function and physical capabilities. Hence, big data, artificial intelligence (AI), cloud computing, internet of things (IoT), robotics, blockchain and even 5G are the building blocks of this transformation.
Per a survey conducted by IBM, the COVID-19 pandemic has accelerated digital transformation at 59% of organizations. Hence, reducing costs is the top benefit that is attributed to the transformation initiatives across various verticals of business. Reliance on tech platforms has become more acute in recent days. Businesses which are digitalizing but cannot afford infrastructure are opting for various platforms-as-a-service. Companies have shifted to more cloud-based business activities, accelerated process automation, and made permanent changes to organization strategy.
In the last decade, AI has faced explosive growth. AI’s application in the field of testing and planned deployments is phenomenal. Companies are encashing AI’s capabilities in social engineering, designing media content, and data poisoning. Additionally, concepts like big data are constantly helping companies set a target for advertising based on age, gender, shopping habits and location. Meanwhile IoT is playing an integral part in our daily lives, both at home and office. At homes, people are using personalized smart home devices and robots for security and controlling the environment. Meanwhile in offices, industrial IoT systems are helping in business communication, emergency incident management, automation control and management, real-time workforce tracking and management, logistics and supply chain management, asset tracking and management, business process optimization, and predictive maintenance.
4 Tech Fund Choices
Transformational technologies play a crucial role in the fourth industrial revolution and companies investing or providing such technologies are poised to grow. Hence, we have shortlisted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and have significant exposure to transformational technology companies.
Moreover, these funds have encouraging year-to-date 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 Quick Quote FSPTX - Free Report) 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 Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, this non-diversified fund that has returned 31.4% and 31.9% 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 0.69% versus the category average of 1.05%.
Fidelity Select Software & IT Services Portfolio ( FSCSX Quick Quote FSCSX - Free Report) aims for capital appreciation. The non-diversified fund invests majority of 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.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSCSX has returned 27.8% and 28.1% over the past three and five-year period, 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 0.70% versus the category average of 1.05%.
Franklin DynaTech Fund Class A ( FKDNX Quick Quote 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, FKDNX has returned 29.4% and nearly 28% 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.
FKDNX has an annual expense ratio of 0.85% versus the category average of 0.99%.
Fidelity Select Semiconductors Portfolio ( FSELX Quick Quote FSELX - Free Report) fund aims for capital appreciation. The non-diversified fund invests majority of assets in securities of companies principally engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSELX has returned 33.5% and 32% over 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.
FSELX has an annual expense ratio of 0.70%, which is below the category average of 1.05%.
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