The Nasdaq extended its gains on Thursday to close at a fresh record high, fueled by investor optimism that interest rate cuts could be coming soon. Despite market turbulence in recent months, the tech-heavy index has rebounded strongly thanks to easing geopolitical tensions, easing tariff woes, and growing optimism surrounding rate cuts.

Much of the Nasdaq's upward momentum is being driven by large-cap technology companies, which are poised to benefit from rate cuts and continued enthusiasm surrounding artificial intelligence (AI).

Given the positive sentiment and the likelihood of further rate cuts in 2025, now could be a great time to consider investing in tech funds such as Fidelity Select Computers Portfolio (FDCPX Quick QuoteFDCPX - Free Report) , Janus Henderson Global Technology and Innovation Fund (JNGTX Quick QuoteJNGTX - Free Report) and Red Oak Technology Select (ROGSX Quick QuoteROGSX - Free Report) .

Nasdaq Hits Fresh All-Time High

On Thursday, the Nasdaq extended its gains by 1% to end at a new high of 20,601.10 after hitting an all-time closing high of 20,393.13. So far in 2025, the index has risen 5.7%, building on its impressive 28.6% gain in 2024 — the best annual performance since 2020.

Tech stocks have been leading the ongoing rally after the White House announced that the United States had finalized a trade deal with Vietnam, a key production hub for several U.S. tech companies. Earlier setbacks in the sector were triggered by President Donald Trump’s sweeping tariff hikes, including a steep 145% tariff on Chinese imports. But a temporary rollback of those measures and ongoing global trade talks have helped revive investor confidence.

Also, AI continues to be a major growth driver. Though opinions vary on its long-term impact, the sector is still developing and holds immense promise. NVIDIA Corporation (NVDA Quick QuoteNVDA - Free Report) , in particular, has gained 17.2% this year, spearheading advances in generative AI. Its success has spurred competition among other tech giants, while rising demand for smart devices is further fueling growth in the semiconductor space.

Cooling inflation and a tightening labor market have also led many to believe that the Fed may cut rates as early as July. Lower rates generally boost growth-oriented sectors like technology, and investors are now pricing in two 25-basis-point rate cuts in 2025 — a trend that could further strengthen the tech rally.

3 Best Choices

We've chosen three funds from the tech sector that are a must-buy because of their exposure to AI. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.

Also, these funds boast an expense ratio of less than 1% and have a minimum initial investment of $5,000.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Computers Portfolio fund seeks capital appreciation. FDCPX normally invests at least 80% of its assets in common stocks of companies principally engaged in research, design, development, manufacture, or distribution of products, processes, or services that relate to currently available or experimental hardware technology within the computer industry.

Fidelity Select Computers Portfolio fund has a track of positive total returns for over 10 years. Specifically, FDCPX’s returns over the three and five-year benchmarks are 15.3% and 18.3%, respectively. Fidelity Select Computers Portfolio fund has an annual expense ratio of 0.68%, which is below the category average of 1.26%.

To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

Janus Henderson Global Technology and Innovation Fund aims for long-term growth of capital and specializes in technology. JNGTX invests at least the majority of its net assets in securities of companies that the portfolio manager believes will benefit significantly from advances or improvements in technology.

Janus Henderson Global Technology and Innovation Fund has a track of positive total returns for over 10 years. Specifically, JNGTX’s returns over the three and five-year benchmarks are 23.8% and 16.7%, respectively. The annual expense ratio of 0.78% is lower than the category average of 0.99%. Janus Henderson Global Technology and Innovation Fund has a Zacks Mutual Fund Rank #1.

To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.

Red Oak Technology Select fund seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations, or which may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX primarily invests in technology companies that develop, produce, or distribute products or services related to computers, semiconductors and electronics.

Specifically, Red Oak Technology Select fund’s returns over the three and five-year benchmarks are 16.5% and 14.8%, respectively. ROGSX carries a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.92%, which is lower than the category average of 1.26%.  

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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