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4 Must-Buy Technology Mutual Funds for Long-Term Gains
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The technology sector in the United States has given investors handsome returns so far this year. The tech-heavy NASDAQ composite and the NASDAQ 100 Technology Sector Index have gained 30.23% and 36.94% year to date.
In comparison, the S&P 500 and the Dow have posted positive returns of 14.13%, and 2.41%, respectively in the same period.
Technology companies are interest rate sensitive due to higher expenditures incurred on hiring cost, research and development, and other related cost. Higher borrowing cost impacts profitability and vice-versa. Tech companies bled in 2022 due to the Federal Reserve’s aggressive rate hike campaign to counter multi-decade high inflation. However, Fed’s action has shown results, and inflation is currently on a downward trajectory.
Responding to the current situation, the Fed paused its interest rate hike in the June FOMC meeting. Though Fed Chairman Jerome Powell hinted at an interest rate rise by another half a percentage point this year, investors have already discounted such a move.
The future of tech stocks remains optimistic. The new wave of artificial intelligence and cloud computing, along with critical technologies like machine learning, Internet of Things, robotics, and autonomous vehicles, is changing the future landscape.
Even though many new-age tech companies are doing well and bringing in innovation, there is substantially lesser risk involved in investing in mature tech companies like Google, Apple, Microsoft, Lam Research, etc., which have organized business, proven revenue models and higher cash reserves to withstand any economic downturn. Thus, it will be prudent for investors to invest in mutual funds having major tech companies as their holdings for better returns in the long run.
We have thus selected four such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (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 take 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 24.7% in NVIDIA, 9.7% in NXP Semiconductors and 8.6% in ON Semiconductor, along with various other tech companies as of 1/31/2023.
FELIX’s three-year and five-year annualized returns are nearly 31.6% and 23.7%, 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 to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Columbia Seligman Technology and Information Fund (SCIOX - Free Report) invests most of its net assets in securities of domestic information technology and communications services sector companies. SCIOX 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 SCIOX since Jan 1, 1990. The fund has invested 6.4% in Lam Research, 5.6% in Apple and 4.9% in Broadcom as well as in other tech companies as of 2/28/2023.
SCIOX’s three-year and five-year annualized returns are 19.6% and 17.4%, respectively. SCIOX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.95%, which is less than the category average of 1.05%
Black Oak Emerging Technology Fund (BOGSX - Free Report) invests most of its net assets in equity securities of emerging technology companies. BOGSX advisors choose to invest in companies well-positioned to become market leaders among other emerging companies in the technology industry.
Robert D. Stimpson has been the lead manager of BOGSX since Apr 7, 2006. The fund has invested 5.1% in Apple, 4.6% in KLA and 4.4% in Kulicke & Soffa, along with various other tech companies as of 1/31/2023.
BOGSX’s three-year and five-year annualized returns are 14.3% and 11.8%, respectively. BOGSX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 1.03%, which is less than the category average of 1.05%.
Putnam Global Technology Fund (PGTAX - Free Report) invests most of its net assets in common stocks of large and mid-capitalization companies worldwide, which its advisors believe to have favorable investment potential in the technology sector. PGTAX advisors choose to invest in companies that have growth or value or sometimes both characteristics.
Di Yao has been the lead manager of PGTAX since Dec 30, 2012. The fund has invested 12.9% in Microsoft, 12.7%inAppleand 6.0% in Taiwan Semiconductor, along with various other tech companies as of 2/28/2023.
PGTAX’s three-year and five-year annualized returns are 13.3% and 14.8%, respectively. PGTAX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.56%, which is less than the category average of 1.05%.
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4 Must-Buy Technology Mutual Funds for Long-Term Gains
The technology sector in the United States has given investors handsome returns so far this year. The tech-heavy NASDAQ composite and the NASDAQ 100 Technology Sector Index have gained 30.23% and 36.94% year to date.
In comparison, the S&P 500 and the Dow have posted positive returns of 14.13%, and 2.41%, respectively in the same period.
Technology companies are interest rate sensitive due to higher expenditures incurred on hiring cost, research and development, and other related cost. Higher borrowing cost impacts profitability and vice-versa. Tech companies bled in 2022 due to the Federal Reserve’s aggressive rate hike campaign to counter multi-decade high inflation. However, Fed’s action has shown results, and inflation is currently on a downward trajectory.
Responding to the current situation, the Fed paused its interest rate hike in the June FOMC meeting. Though Fed Chairman Jerome Powell hinted at an interest rate rise by another half a percentage point this year, investors have already discounted such a move.
The future of tech stocks remains optimistic. The new wave of artificial intelligence and cloud computing, along with critical technologies like machine learning, Internet of Things, robotics, and autonomous vehicles, is changing the future landscape.
Even though many new-age tech companies are doing well and bringing in innovation, there is substantially lesser risk involved in investing in mature tech companies like Google, Apple, Microsoft, Lam Research, etc., which have organized business, proven revenue models and higher cash reserves to withstand any economic downturn. Thus, it will be prudent for investors to invest in mutual funds having major tech companies as their holdings for better returns in the long run.
We have thus selected four such mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (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 take 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 24.7% in NVIDIA, 9.7% in NXP Semiconductors and 8.6% in ON Semiconductor, along with various other tech companies as of 1/31/2023.
FELIX’s three-year and five-year annualized returns are nearly 31.6% and 23.7%, 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 to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Columbia Seligman Technology and Information Fund (SCIOX - Free Report) invests most of its net assets in securities of domestic information technology and communications services sector companies. SCIOX 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 SCIOX since Jan 1, 1990. The fund has invested 6.4% in Lam Research, 5.6% in Apple and 4.9% in Broadcom as well as in other tech companies as of 2/28/2023.
SCIOX’s three-year and five-year annualized returns are 19.6% and 17.4%, respectively. SCIOX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.95%, which is less than the category average of 1.05%
Black Oak Emerging Technology Fund (BOGSX - Free Report) invests most of its net assets in equity securities of emerging technology companies. BOGSX advisors choose to invest in companies well-positioned to become market leaders among other emerging companies in the technology industry.
Robert D. Stimpson has been the lead manager of BOGSX since Apr 7, 2006. The fund has invested 5.1% in Apple, 4.6% in KLA and 4.4% in Kulicke & Soffa, along with various other tech companies as of 1/31/2023.
BOGSX’s three-year and five-year annualized returns are 14.3% and 11.8%, respectively. BOGSX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 1.03%, which is less than the category average of 1.05%.
Putnam Global Technology Fund (PGTAX - Free Report) invests most of its net assets in common stocks of large and mid-capitalization companies worldwide, which its advisors believe to have favorable investment potential in the technology sector. PGTAX advisors choose to invest in companies that have growth or value or sometimes both characteristics.
Di Yao has been the lead manager of PGTAX since Dec 30, 2012. The fund has invested 12.9% in Microsoft, 12.7%inAppleand 6.0% in Taiwan Semiconductor, along with various other tech companies as of 2/28/2023.
PGTAX’s three-year and five-year annualized returns are 13.3% and 14.8%, respectively. PGTAX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.56%, 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 >>