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The technology sector, which inspired a market rally following the onset of the pandemic, has suddenly hit a low. Big tech companies are bleeding from the beginning of the year and multiple factors are responsible for it.
Rising rates have been a major cause for the high-growth tech sector. This undoubtedly made the first quarter of the year one of the worst for the tech sector. However, the bloodbath didn’t stop there, with April turning out to be even worse, as the Nasdaq ended the month with its largest single-day decline since 2020. Given this scenario, tech stocks have suddenly started looking undesirable.
Amid this tech bloodbath, BNY Mellon Technology Growth Fund Class A (DTGRX - Free Report) , Jacob Internet Investor Class (JAMFX - Free Report) and Victory RS Science and Technology Fund Class A (RSIFX - Free Report) have been the worst-performing tech funds.
Tech Sector Takes Massive Hit
It has been one of the worst starts to a year for tech investors in more than two decades. The Nasdaq has been battered this year, with more than $1.8 trillion in value being wiped out just in April amid a tumultuous earnings season, with not-so-impressive results from the big tech players.
The Technology Select Sector SPDR (XLK) has lost 18.7% on a year-to-date basis, which sums up the plight of the space.
The Nasdaq suffered its largest single-day decline since September 2020 on the last trading day of April. For the month, the index lost 13.3%, recording its worst monthly performance since October 2008. And this comes just days before the Fed’s FOMC gears up for another round of rate hikes, which is expected to be 50 basis points.
The Fed raised interest rates by 25 basis points in March, its first hike since 2018. Rising rates have already been worrying investors since the beginning of the year and markets took a massive hit since rates were hiked.
A second round of rate hike is will hit the high-growth tech stocks further. Higher rates in particular are negative for the technology sector as their valuation is based on future growth prospects.
Thus, investors are skeptical about investing in tech stocks right now owing to the uncertainty as the Fed is expected to go for three more rounds of rate hikes this year in a bid to curb inflation.
Worst Performers
We have, thus, selected three mutual funds with significant exposure to the technology sector carrying a Zacks Mutual Fund Rank #4 (Sell) or 5 (Strong Sell) that have suffered the most in recent times.
BNY Mellon Technology Growth Fund Class A aims for capital appreciation. DTGRX typically invests the majority of its net assets, plus any borrowings for investment purposes, in the stocks of small and medium-sized growth firms to achieve its objective. BNY Mellon Technology Growth Fund Class A seeks to invest in technology stocks with the potential for high earnings or sales growth rates when selecting stocks.
BNY Mellon Technology Growth Fund Class A has returned -18.12% as of Mar 31, 2022. DTGRX has a Zacks Mutual Fund Rank #4. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Jacob Internet Investor Class fund seeks capital appreciation. JAMFX typically invests the majority of its assets in Internet and Internet-related companies. Jacob Internet Investor Class fund mainly invests in ordinary stocks and securities convertible into common stocks, but it may also invest in fixed income or debt securities up to 35% of the time.
Jacob Internet Investor Class fund has returned -22.8% as of Mar 31, 2022. JAMFX has a Zacks Mutual Fund Rank #4. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Victory RS Science and Technology Fund Class A seeks capital appreciation. RSIFX typically invests the majority of its assets in research and technology companies. Victory RS Science and Technology Fund Class A primarily invests in equity securities and may invest in businesses of any size.
Victory RS Science and Technology Fund Class A has returned -21.3% as of Mar 31, 2022. RSIFX has a Zacks Mutual Fund Rank #5. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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3 Worst-Performing Tech Funds Amid Ongoing Market Turmoil
The technology sector, which inspired a market rally following the onset of the pandemic, has suddenly hit a low. Big tech companies are bleeding from the beginning of the year and multiple factors are responsible for it.
Rising rates have been a major cause for the high-growth tech sector. This undoubtedly made the first quarter of the year one of the worst for the tech sector. However, the bloodbath didn’t stop there, with April turning out to be even worse, as the Nasdaq ended the month with its largest single-day decline since 2020. Given this scenario, tech stocks have suddenly started looking undesirable.
Amid this tech bloodbath, BNY Mellon Technology Growth Fund Class A (DTGRX - Free Report) , Jacob Internet Investor Class (JAMFX - Free Report) and Victory RS Science and Technology Fund Class A (RSIFX - Free Report) have been the worst-performing tech funds.
Tech Sector Takes Massive Hit
It has been one of the worst starts to a year for tech investors in more than two decades. The Nasdaq has been battered this year, with more than $1.8 trillion in value being wiped out just in April amid a tumultuous earnings season, with not-so-impressive results from the big tech players.
The Technology Select Sector SPDR (XLK) has lost 18.7% on a year-to-date basis, which sums up the plight of the space.
The Nasdaq suffered its largest single-day decline since September 2020 on the last trading day of April. For the month, the index lost 13.3%, recording its worst monthly performance since October 2008. And this comes just days before the Fed’s FOMC gears up for another round of rate hikes, which is expected to be 50 basis points.
The Fed raised interest rates by 25 basis points in March, its first hike since 2018. Rising rates have already been worrying investors since the beginning of the year and markets took a massive hit since rates were hiked.
A second round of rate hike is will hit the high-growth tech stocks further. Higher rates in particular are negative for the technology sector as their valuation is based on future growth prospects.
Thus, investors are skeptical about investing in tech stocks right now owing to the uncertainty as the Fed is expected to go for three more rounds of rate hikes this year in a bid to curb inflation.
Worst Performers
We have, thus, selected three mutual funds with significant exposure to the technology sector carrying a Zacks Mutual Fund Rank #4 (Sell) or 5 (Strong Sell) that have suffered the most in recent times.
BNY Mellon Technology Growth Fund Class A aims for capital appreciation. DTGRX typically invests the majority of its net assets, plus any borrowings for investment purposes, in the stocks of small and medium-sized growth firms to achieve its objective. BNY Mellon Technology Growth Fund Class A seeks to invest in technology stocks with the potential for high earnings or sales growth rates when selecting stocks.
BNY Mellon Technology Growth Fund Class A has returned -18.12% as of Mar 31, 2022. DTGRX has a Zacks Mutual Fund Rank #4. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Jacob Internet Investor Class fund seeks capital appreciation. JAMFX typically invests the majority of its assets in Internet and Internet-related companies. Jacob Internet Investor Class fund mainly invests in ordinary stocks and securities convertible into common stocks, but it may also invest in fixed income or debt securities up to 35% of the time.
Jacob Internet Investor Class fund has returned -22.8% as of Mar 31, 2022. JAMFX has a Zacks Mutual Fund Rank #4. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Victory RS Science and Technology Fund Class A seeks capital appreciation. RSIFX typically invests the majority of its assets in research and technology companies. Victory RS Science and Technology Fund Class A primarily invests in equity securities and may invest in businesses of any size.
Victory RS Science and Technology Fund Class A has returned -21.3% as of Mar 31, 2022. RSIFX has a Zacks Mutual Fund Rank #5. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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 >>