The S&P 500 delivered an impressive performance in 2025, fueled mainly by technology stocks. Although the index struggled to gain traction in the final week of the year, it still managed to finish higher on Friday, the first trading session of the new year.

The traditional Santa Claus rally fizzled out toward the end of 2025, with the benchmark logging four straight losing sessions to close the year. Even so, the overall picture remained rosy after the index narrowly avoided slipping into a bear market earlier in the year.

Given the market’s steady momentum since 2023, investors may find opportunities in tech funds such as Fidelity Select Semiconductors Portfolio (FSELX Quick QuoteFSELX - Free Report) , T. Rowe Price Science & Tech (PRSCX Quick QuotePRSCX - Free Report) and Janus Henderson Global Technology and Innovation Fund (JNGTX Quick QuoteJNGTX - Free Report) .

A Solid Year for S&P 500

The S&P 500 began 2025 on an optimistic footing, driven by expectations around President Donald Trump’s pro-business policies. That confidence faded when sweeping tariffs were announced on many U.S. trading partners, raising concerns about a potential global trade war.

By April, the index had fallen nearly 18% for the year, hovering near bear market territory. The sentiment improved after trade negotiations resumed, eventually leading to new deals with several countries. From that point on, stocks staged a steady recovery.

Overall, the S&P 500 rose 16.4% in 2025, powered by a surge in tech and sustained enthusiasm for AI-related investments. The index has now posted gains for eight consecutive months and logged profits in 11 of the past 13 quarters, following standout performances in 2023 and 2024, according to a CNBC report.

The S&P 500 jumped 24% in 2023 and another 23% in 2024, bringing its total gain over the past three years to nearly 80%, according to the report. This marks its strongest winning streak since 2019-2021 and the second-best run since 2000.

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 Semiconductors Portfolio fund seeks capital appreciation. FSELX normally invests at least 80% of its 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 record of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 48% and 31.6%, respectively. The annual expense ratio of 0.62% is lower than the category average. FSELX has a Zacks Mutual Fund Rank #1.

T. Rowe Price Science & Tech fund seeks to invest in long-term capital growth by investing at least 80% of net assets in common stocks of companies expected by T. Rowe Price to benefit from the development, advancement and use of science and technology. While most of PRSCX’s assets are invested in U.S. common stocks, other securities may also be purchased, including foreign stocks, futures, and options, in keeping with the fund’s objectives.

T. Rowe Price Science & Tech fund has a track record of positive total returns for over 10 years. Specifically, PRSCX’s returns over the three and five-year benchmarks are 36.1% and 14.6%, respectively. PRSCX’s annual expense ratio of 0.81%, which is lower than its category average of 1.05%. PRSCX 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.

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 record of positive total returns for over 10 years. Specifically, JNGTX’s returns over the three and five-year benchmarks are 33.2% and 14.4%, respectively. The annual expense ratio of 0.83% 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.

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