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3 Must-Buy Fund on Surging Sales of Semiconductors

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The dream run for the semiconductor industry has continued into 2022 as sales have been on the rise driven by strong demand. Increased adoption of semiconductors in automobiles, networking and communication tools, consumer electronics and automotive has been giving a boost to demand for microchips.

Rising demand saw the semiconductor sales skyrocket in 2020 and 2021. In fact, several industries dependent on semiconductors are now facing a problem owing to a supply crunch. However, this is at the same time helping semiconductor manufacturers as sales have been skyrocketing. Thus, funds like Fidelity Advisor Semiconductors Fund Class I (FELIX - Free Report) , Fidelity Select Semiconductors Portfolio (FSELX - Free Report) and Putnam Global Technology Fund Class C (PGTDX - Free Report) are likely to benefit in the near term.

Semiconductor Sales Skyrocket

The first three months of 2022 have so far been great for the semiconductor industry, with sales growing steadily. According to the Semiconductor Industry Association (SIA), semiconductor sales jumped 23% in the first quarter on a year-over-year basis to $151.7 billion.

Besides sales also grew month over month. Sales increased 1.1% month over month in March to $50.6 billion. Semiconductor sales have now increased in each of the past three months. The report also states that sales increased year over year in all key markets.

Demand for semiconductors has been on the rise over the past few years.  As the Internet of Things (IoT), artificial intelligence (AI), and virtual reality continue to rise in popularity, demand for semiconductors has seen a jump, which is eventually transforming into higher revenues for semiconductor manufacturers.

Semiconductor technology is essential for the development of these cutting-edge technologies. As a result, as demand for these services develops, semiconductor demand is projected to climb in the near future.

Moreover, microchip sales are benefiting from the growing demand for 5G devices, with unit output more than tripling to 555 million in 2021 from 250 million in 2020.

The pandemic further helped the semiconductors industry, as demand for electronic goods, networking, and communication equipment rose during this time as more people stayed at home to work and learn. This increased semiconductor sales.

The challenge now is to meet the demand as several industries are now suffering owing to a shortage in semiconductor supply. Although many companies have ramped up production, the supply crisis is far from over and the problem is expected to continue for the rest of the year.

3 Best Choices

We have, thus, selected three mutual funds with significant exposure to semiconductor producers carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

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 Semiconductors Portfolio fund seeks capital appreciation. FSELX normally invests at least 80% of assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards, and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.

Fidelity Select Semiconductors Portfolio fund has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 25.9% and 24.6%, respectively. Fidelity Select Semiconductors Portfolio fund has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

Fidelity Advisor Semiconductors Fund Class I seeks capital appreciation. FELIX invests primarily in common stocks. Fidelity Advisor Semiconductors Fund Class I normally invests at least 80% of assets in securities of companies principally engaged in the design, manufacture, or sale of electronic components; equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors. 

Fidelity Advisor Semiconductors Fund Class I has a track of positive total returns for over 10 years. Specifically, FELIX’s returns over the three and five-year benchmarks are 25.5% and 24.2%, respectively. Fidelity Advisor Semiconductors Fund Class I has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

Putnam Global Technology Fund Class C (PGTDX - Free Report) fund seeks capital appreciation. PDTDX invests primarily in common stocks. Putnam Global Technology Fund Class Cfundnormally invests at least 80% of assets in securities of companies principally engaged in technology companies.

Putnam Global Technology Fund Class Cfundhas a track of positive total returns for over 10 years. Specifically, PGTDX’s returns over the three and five-year benchmarks are 17% and 18%, respectively. Putnam Global Technology Fund Class Cfundhas a Zacks Mutual Fund Rank #1. 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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