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Risk lovers, seeking healthy returns over a fairly long investment horizon, may opt for technology mutual funds. It is believed that the technology sector is poised for a better earnings performance than the other sectors due to greater demand for technology and innovation. Improving industry fundamentals and emerging technologies such as AI, machine learning, robotics and data science are key catalysts.
Meanwhile, most of the mutual funds investing in securities from these sectors take a growth-oriented approach that includes focusing on companies with strong fundamentals and a relatively higher investment prospect. Moreover, technology has come to have a broader meaning than just hardware and software companies. Social media and Internet companies are now part of the technology landscape.
The U.S. technology sector performed remarkably well in 2019 despite fears related to a slowdown in the global economy as well as trade tensions. In fact, tech turned out to be the best-performing sector last, with the Technology Select Sector SPDR Fund (XLK) gaining 46.8% in the past year.
In such circumstances, investing in technology mutual funds seems prudent. However, choosing the right mutual funds for your portfolio can be cumbersome. To that end, let us find out which of the two funds discussed below is better.
This fund aims for capital appreciation. It invests the majority of its assets in securities of companies that are engaged in activities relating to wireless communications services or products.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 16.8% over a 3-year period and 12.3% over a 5-year period. To see how this fund performed in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The Fidelity Select Wireless Portfolio fund, as of the last filing, allocates its assets in the top two major groups; Foreign Bond and Large Growth. Further, as of the last filing, Apple Inc, AT&T Inc. and Verizon Communications Inc were the top holdings for FWRLX.
Sporting a Zacks Mutual Fund Rank #1 (Strong Buy), FWRLX was incepted in September 2000 and is managed by Fidelity. FWRLX carries an expense ratio of 0.83% and has no minimal initial investment.
This fund aims for capital growth that can be achieved by investing in technology companies. Therefore, the fund invests the majority of its assets in common stocks of companies that operate in the technology sector. The fund mostly aims to invest in companies that develop and implement scientific and technological innovation, which can offer high levels of growth.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the 3 and 5-year benchmarks are 23.6% and 17.9%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The DWS Science and Technology Fund, as of the last filing, allocates its assets in the top two major groups — Large Growth and Emerging Market. Further, as of the last filing, Microsoft Inc, Apple Inc. and Amazon.com Inc were the top holdings for KTCAX.
This Zacks Rank #2 (Buy) fund was incepted in September 1948 and carries an expense ratio of 0.93%. The fund requires a minimal initial investment of $1,000.
To Conclude
While both FWRLX and KTCAX are recommended buys, upon taking a closer look, we find that the latter is a clear winner. However, the administrative and other operating expenses of KTCAX are higher than FWRLX’s.
Also, FWRLX has returned 33.5% over the past year compared with 36.3% returned by KTCAX in the same period. Meanwhile, FWRLX offers lower risk compared to KTCAX. Notably, KTCAX has a 3-year beta of 1.11 compared with FWRLX’s 0.82. However, KTCAX is worth the risk, given its consistency in providing high returns on investment.
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Which Tech Mutual Fund to Buy: FWRLX or KTCAX?
Risk lovers, seeking healthy returns over a fairly long investment horizon, may opt for technology mutual funds. It is believed that the technology sector is poised for a better earnings performance than the other sectors due to greater demand for technology and innovation. Improving industry fundamentals and emerging technologies such as AI, machine learning, robotics and data science are key catalysts.
Meanwhile, most of the mutual funds investing in securities from these sectors take a growth-oriented approach that includes focusing on companies with strong fundamentals and a relatively higher investment prospect. Moreover, technology has come to have a broader meaning than just hardware and software companies. Social media and Internet companies are now part of the technology landscape.
The U.S. technology sector performed remarkably well in 2019 despite fears related to a slowdown in the global economy as well as trade tensions. In fact, tech turned out to be the best-performing sector last, with the Technology Select Sector SPDR Fund (XLK) gaining 46.8% in the past year.
In such circumstances, investing in technology mutual funds seems prudent. However, choosing the right mutual funds for your portfolio can be cumbersome. To that end, let us find out which of the two funds discussed below is better.
Fidelity Select Wireless Portfolio (FWRLX - Free Report)
This fund aims for capital appreciation. It invests the majority of its assets in securities of companies that are engaged in activities relating to wireless communications services or products.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 16.8% over a 3-year period and 12.3% over a 5-year period. To see how this fund performed in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The Fidelity Select Wireless Portfolio fund, as of the last filing, allocates its assets in the top two major groups; Foreign Bond and Large Growth. Further, as of the last filing, Apple Inc, AT&T Inc. and Verizon Communications Inc were the top holdings for FWRLX.
Sporting a Zacks Mutual Fund Rank #1 (Strong Buy), FWRLX was incepted in September 2000 and is managed by Fidelity. FWRLX carries an expense ratio of 0.83% and has no minimal initial investment.
DWS Science and Technology Fund - Class A (KTCAX - Free Report)
This fund aims for capital growth that can be achieved by investing in technology companies. Therefore, the fund invests the majority of its assets in common stocks of companies that operate in the technology sector. The fund mostly aims to invest in companies that develop and implement scientific and technological innovation, which can offer high levels of growth.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the 3 and 5-year benchmarks are 23.6% and 17.9%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The DWS Science and Technology Fund, as of the last filing, allocates its assets in the top two major groups — Large Growth and Emerging Market. Further, as of the last filing, Microsoft Inc, Apple Inc. and Amazon.com Inc were the top holdings for KTCAX.
This Zacks Rank #2 (Buy) fund was incepted in September 1948 and carries an expense ratio of 0.93%. The fund requires a minimal initial investment of $1,000.
To Conclude
While both FWRLX and KTCAX are recommended buys, upon taking a closer look, we find that the latter is a clear winner. However, the administrative and other operating expenses of KTCAX are higher than FWRLX’s.
Also, FWRLX has returned 33.5% over the past year compared with 36.3% returned by KTCAX in the same period. Meanwhile, FWRLX offers lower risk compared to KTCAX. Notably, KTCAX has a 3-year beta of 1.11 compared with FWRLX’s 0.82. However, KTCAX is worth the risk, given its consistency in providing high returns on investment.
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 >>