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3 Must-Buy Technology Mutual Funds for Long-Term Gains
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The technology sector in the United States saw a major reality check in the first quarter of this year, with the NASDAQ 100 Technology Sector Index declining from 9,596.48 on Jan 1, 2022, to 6,358.35 on Jun 29, 2022, after a massive rally last year, especially during the pandemic period. The Federal Reserve’s tightening monetary policy, higher interest rates, a spike in global inflation, and supply-chain disruption across the globe due to the Russia-Ukraine war are the major reasons for a decline in tech stocks.
However, the future holds good for tech stocks. Needless to say, the importance of cloud computing and artificial intelligence, including its subset machine learning along with other technologies like the Internet of Things, robotics, and autonomous vehicles, to name a few, has increased by leaps and bounds in recent times. Even though there are many new-age tech companies that are apparently doing well, there is substantially less risk involved in investing in mature tech players like Google, Apple, Microsoft, Lam Research, etc., which have structured business, good revenue models, and cash reserves to withstand economic downturns.
Thus, it will be prudent for investors to invest currently in technology mutual funds having matured tech companies as their major holdings for better returns in the long run. Also, due to the current market downturn, individually, the stocks are less pricey and are trading at an attractive valuation.
We have thus selected three such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, and minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Semiconductors Fund (FELIX - Free Report) invests most of its assets in common stocks of both foreign and domestic companies that are primarily engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. FELIX advisors takes investment decisions based on fundamental analysis factors like financial condition and industry position, as well as market and economic conditions.
Adam Benjamin has been the lead manager of FELIX since Mar 16, 2020. Of its net assets, the fund has invested 21.50% in NVIDIA, 8.58% in NXP Semiconductors and 7.93% in Marvell Technology along with various other tech companies as of 1/31/2022.
FELIX’s three-year and five-year annualized returns are nearly 36.7% and 24.1%, respectively. FELIX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.75%, which is less than the category average of 1.05%.
To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Columbia Seligman Technology and Information Fund (CCIZX - Free Report) invests most of its net assets in securities of domestic information technology and communications services sector companies. CCIZX also invests a small portion of its net assets in foreign-based companies in similar sectors.
Paul H. Wick has been the lead manager of CCIZX since Jan 1, 1990. The fund has invested 6.06% in Lam Research, 5.49% in Apple and 4.23% in Synaptics as well as in other tech companies as of 2/28/2022.
CCIZX’s three-year and five-year annualized returns are 29.6% and 20.3%, respectively. CCIZXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.92%, which is less than the category average of 1.05%
DWS Science and Technology Fund (KTCSX - Free Report) seeks capital growth by investing most of its assets along with borrowings, if any, in common stocks of science and technology companies primarily based in the United States, irrespective of its market capitalization. KTCSX invests a small portion of its net assets in an initial public offerings as well as the foreign-based technology sector.
Daniel J. Fletcher has been the lead manager of KTCSX since Dec 1, 2017. The fund has invested 9.17% in Microsoft, 7.68%inApple and 7.07% in Alphabet Inc.along with various other tech companies as of 1/31/2022.
KTCSX’s three-year and five-year annualized returns are 17.5% and 16.2%, respectively. KTCSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.69%, which is less than the category average of 1.05%.
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3 Must-Buy Technology Mutual Funds for Long-Term Gains
The technology sector in the United States saw a major reality check in the first quarter of this year, with the NASDAQ 100 Technology Sector Index declining from 9,596.48 on Jan 1, 2022, to 6,358.35 on Jun 29, 2022, after a massive rally last year, especially during the pandemic period. The Federal Reserve’s tightening monetary policy, higher interest rates, a spike in global inflation, and supply-chain disruption across the globe due to the Russia-Ukraine war are the major reasons for a decline in tech stocks.
However, the future holds good for tech stocks. Needless to say, the importance of cloud computing and artificial intelligence, including its subset machine learning along with other technologies like the Internet of Things, robotics, and autonomous vehicles, to name a few, has increased by leaps and bounds in recent times. Even though there are many new-age tech companies that are apparently doing well, there is substantially less risk involved in investing in mature tech players like Google, Apple, Microsoft, Lam Research, etc., which have structured business, good revenue models, and cash reserves to withstand economic downturns.
Thus, it will be prudent for investors to invest currently in technology mutual funds having matured tech companies as their major holdings for better returns in the long run. Also, due to the current market downturn, individually, the stocks are less pricey and are trading at an attractive valuation.
We have thus selected three such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, and minimum initial investments within $5000, and carry a low expense ratio. Notably, mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Semiconductors Fund (FELIX - Free Report) invests most of its assets in common stocks of both foreign and domestic companies that are primarily engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. FELIX advisors takes investment decisions based on fundamental analysis factors like financial condition and industry position, as well as market and economic conditions.
Adam Benjamin has been the lead manager of FELIX since Mar 16, 2020. Of its net assets, the fund has invested 21.50% in NVIDIA, 8.58% in NXP Semiconductors and 7.93% in Marvell Technology along with various other tech companies as of 1/31/2022.
FELIX’s three-year and five-year annualized returns are nearly 36.7% and 24.1%, respectively. FELIX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.75%, which is less than the category average of 1.05%.
To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Columbia Seligman Technology and Information Fund (CCIZX - Free Report) invests most of its net assets in securities of domestic information technology and communications services sector companies. CCIZX also invests a small portion of its net assets in foreign-based companies in similar sectors.
Paul H. Wick has been the lead manager of CCIZX since Jan 1, 1990. The fund has invested 6.06% in Lam Research, 5.49% in Apple and 4.23% in Synaptics as well as in other tech companies as of 2/28/2022.
CCIZX’s three-year and five-year annualized returns are 29.6% and 20.3%, respectively. CCIZXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.92%, which is less than the category average of 1.05%
DWS Science and Technology Fund (KTCSX - Free Report) seeks capital growth by investing most of its assets along with borrowings, if any, in common stocks of science and technology companies primarily based in the United States, irrespective of its market capitalization. KTCSX invests a small portion of its net assets in an initial public offerings as well as the foreign-based technology sector.
Daniel J. Fletcher has been the lead manager of KTCSX since Dec 1, 2017. The fund has invested 9.17% in Microsoft, 7.68%inApple and 7.07% in Alphabet Inc.along with various other tech companies as of 1/31/2022.
KTCSX’s three-year and five-year annualized returns are 17.5% and 16.2%, respectively. KTCSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.69%, which is less than the category average of 1.05%.
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 >>