Wall Street has enjoyed a strong rally this year amid ongoing geopolitical uncertainty and rising inflation that have repeatedly unsettled investors. The S&P 500 has been among the standout performers, reaching another record closing high on Monday.

The benchmark index has been supported by growing optimism around artificial intelligence and the impressive performance of mega-cap technology companies.

Given the market’s steady momentum since 2023, investors may find opportunities in tech funds such as DWS Science and Technology A (KTCAX Quick QuoteKTCAX - Free Report) , Fidelity Select Semiconductors Portfolio (FSELX Quick QuoteFSELX - Free Report) and Janus Henderson Global Technology and Innovation Fund (JNGTX Quick QuoteJNGTX - Free Report) .

S&P 500 Reaches Another Milestone

The S&P 500 climbed 21.99 points, or 0.3%, on Monday to finish at 7,405.73, marking a fresh all-time closing high. It was the index's 24th record close of the year. Much of the advance has been fueled by strong first-quarter earnings from major corporations and sustained spending on AI initiatives.

The index had started the year on a positive note before surrendering its gains in March as escalating tensions in the Middle East rattled markets. During March and April, the S&P 500 fell roughly 8%. It later recovered after President Donald Trump announced a temporary ceasefire and expressed his intention to pursue a peace agreement with Iran.

While the ceasefire remains fragile and little progress has been made toward a broader peace deal, enthusiasm surrounding AI has continued to bolster market sentiment. Leading technology companies have poured billions of dollars into expanding their AI capabilities.

So far this year, the S&P 500 has advanced 8.2%, with technology stocks driving much of the gains. The Information Technology Select Sector SPDR (XLK) has surged 25.2%, making it one of the market's strongest-performing sectors. Within technology, semiconductor companies have emerged as clear favorites as demand for chips continues to soar alongside breakthroughs in AI development.

The Philadelphia Semiconductor Index has jumped about 73.6% year to date. Looking ahead, the S&P 500 appears positioned for further gains in the months ahead. Several major brokerage firms have also lifted their forecasts for 2026. According to a Goldman Sachs report, the index could rise another 12% in 2026.

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).

DWS Science and Technology A fund seeks growth of capital. Under normal circumstances, KTCAX invests at least 80% of net assets in common stocks of U.S. companies in the technology sector.

DWS Science and Technology A fund has a track record of positive total returns for over 10 years. Specifically, KTCAX’s returns over the three and five-year benchmarks are 34.8% and 15.9%, respectively. DWS Science and Technology A fund has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.88, which is lower than the category average of 0.99%.

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

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 61.2% and 38.5%, respectively. The annual expense ratio of 0.61% is lower than the category average. FSELX 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 33.4% and 14.2%, respectively. The annual expense ratio of 0.81% is lower than the category average of 0.99%. Janus Henderson Global Technology and Innovation Fund has a Zacks Mutual Fund Rank #2.

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

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 >>