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3 Mutual Funds to Buy on Likely Tech Stock Recovery in 2019

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Wall Street encountered a sharp rebound on Dec 26 trading, with major indexes registering strongest one-day gains since Mar 23, 2009. The impressive bounce-back offset losses from Dec 24 trading, as stocks left the oversold territory.

Although a number of information technology stocks encountered rough waters as part of the broader sell-offs in recent weeks, these could witness a notable recovery next year.

Therefore, it could be beneficial to invest in some mutual funds that could gain from the technology stocks’ revival.

Tech Equities to Push Up Market Sentiment

According to financial services company TD Ameritrade Asia, various information technology stocks that were beaten down unfairly by investors during the recent sell-off in the United States could be crucial in lifting overall equity market sentiments in 2019.

Christopher Brankin, CEO of TD Ameritrade Asia, told CNBC, “I think tech is going to drive the overall sentiment higher.” He noted that many semiconductor companies along with the FAANG stocks were down in the last quarter, especially in December. FAANG stocks consist of tech giants Facebook, Inc. (FB), Amazon.com, Inc. (AMZN), Apple Inc. (AAPL), Netflix, Inc. (NFLX) and Google’s parent company Alphabet Inc. (GOOGL).

Investor sentiment and several analyst predictions around the stock market in 2019 aren’t encouraging, largely held down by Fed’s hawkish outlook and an expected economic slowdown. But Brankin believes that 2019 might still be a good year for stocks.

Positive developments such as an uptick in the demand for chips could help the broader information technology sector, the market research firm predicted, which in turn could boost the overall financial market.

John Buckingham, editor of the Prudent Speculator newsletter, also pointed out that the growth in chip-sector might ramp up in 2020 and investors could start taking positions from 2019.

3 Mutual Funds to Buy

Given the strong expectations of a technology stocks bounce-back, it would be prudent to add a couple of mutual funds from the space to your portfolio.

We have selected funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5,000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

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

Red Oak Technology Select (ROGSX - Free Report) invests 80% of its assets in securities of companies engaged in the technology sector. The fund invests in both U.S. and non-U.S. stocks.

This Zacks sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

ROGSX has an annual expense ratio of 0.97%, which is below the category average of 1.31%. The fund has three and five-year returns of 20.7% and 16.8%, respectively. The fund has minimal initial investment of $2000.

Fidelity Select Communications Equipment (FSDCX - Free Report) invests 80% of its assets in securities of companies engaged in manufacture and selling of communication equipment. The fund invests in both U.S. and foreign stocks.

This Zacks sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSDCX has an annual expense ratio of 0.85%, which is below the category average of 1.31%. The fund has three and five-year returns of 13.4% and 9.7%, respectively. The fund has a minimal initial investment of $2500.

Invesco Technology A (ITYAX - Free Report) seeks long-term capital appreciation by investing 80% of its net assets in securities of companies engaged in businesses related to technology.

This Zacks sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

ITYAX has an annual expense ratio of 1.27%, which is below the category average of 1.31%. The fund has three and five-year returns of 12.4% and 12.5%, respectively. The fund has a minimal initial investment of $1000.

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