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Technology giants that primarily operate in the arena of internet-based products and services are in the limelight from an investor’s point of view, courtesy of the tremendous advancement in the concerned space over the last couple of years. Mutual fund investors seeking investments that could gain immensely from the widespread usage of internet-based products and services could consider betting on related funds.
To get a clear picture of the progress in technology, one may take a look at two of the industry’s most-widely tracked indices over the past year, namely the Technology Select Sector SPDR Fund (XLK) and Vanguard Information Technology Index Fund ETF Shares (VGT), which have returned 34.3% and 31.1%, respectively. In addition, the Invesco NASDAQ Internet ETF (PNQI) has rallied a decent 12.3%.
Global Internet Set for Rapid Expansion
The fast expansion in internet-based services that cater to a wide range of consumer preferences is owing to advancements in AI, machine learning and data delivery services. Internet-based organizations are therefore incorporating these capabilities that can offer customers cloud-based infrastructure, internet-based application performance management, SaaS (Software as a Service) etc.
Of course, this expansion wouldn’t be possible without internet services covering more customers globally. Per a Cisco report, about a third of the world’s population will have internet access by 2023. The number is estimated to be a total of 5.3 billion internet users by the said year from 3.9 billion in 2018.
Fast Deployment of 5G to Boost Internet-Based Businesses
The rapid adoption of 5G this year is also expected to be a boon for businesses that generate the majority of revenues through internet-based products and services. Cloud-based services, online gaming, social-networking services, online delivery services, autonomous vehicles technology, et al are some of the many areas that are set to witness speedy growth as 5G becomes the norm.
As companies like U.S. Cellular gear up to provide 5G network solutions in the country, one must consider the pool of significant business opportunities to be created because of the increased reach of internet and internet-dependent services. In fact, going by the Cisco update, 5G connections are likely to be the reason behind the expected threefold spurt in traffic by 2023 compared with the same under 4G LTE networks.
3 Best Funds to Buy
We have, therefore, selected three mutual funds that invest in technology companies that are industry leaders in terms of internet-related innovation. These funds are expected to gain further ahead as demand for internet-based products and services rise more. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). In addition, the minimum initial investment for these funds 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).
Fidelity Select Technology Portfolio (FSPTX - Free Report) aims for capital growth. The fund invests the majority of its assets in securities of companies that are set to gain considerably from the advancement in technology. The non-diversified fun invests in both U.S. and non-U.S. companies.Microsoft, Netflix, Adobe and Salesforce.com are among the top holdings of FSPTX.
This Zacks sector – Tech has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPTXcarries a Zacks Rank #1 and has an annual expense ratio of 0.72%, which is below the category average of 1.29%. It has returned 47% over a year. The fund has no minimum initial investment.
Franklin DynaTech Fund Advisor Class (FDYZX - Free Report) invests the majority of its assets in securities of companies that lead the way in innovation and usage of new technology. FDYZX mostly invests in common stocks of companies and may also invest in foreign stocks. Microsoft, Amazon.com, Alphabet, Adobe and Salesforce.com are among the top holdings of FDYZX.
This Zacks sector – Tech has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FDYZX carries a Zacks Rank #1 and has an annual expense ratio of 0.61%, which is below the category average of 1.06%. It has returned 28.5% over a year. The fund has no minimum initial investment.
DWS Science and Technology Fund - Class A (KTCAX - Free Report) aims for capital appreciation. The fund invests the majority of its assets in securities of that benefit from progress in science and technology. The non-diversified fund invests in securities of both U.S. and non-U.S. companies. Amazon.com, Microsoft, Facebook, Alphabet and Salesforce.com are among the top holdings of KTCAX.
This Zacks sector – Tech has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
KTCAX carries a Zacks Rank #2 and has an annual expense ratio of 0.93%, which is below the category average of 1.29%. It has returned 36.3% over a year. The fund has a minimum initial investment of $1000.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week.
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3 Internet-Specific Funds to Bet on
Technology giants that primarily operate in the arena of internet-based products and services are in the limelight from an investor’s point of view, courtesy of the tremendous advancement in the concerned space over the last couple of years. Mutual fund investors seeking investments that could gain immensely from the widespread usage of internet-based products and services could consider betting on related funds.
To get a clear picture of the progress in technology, one may take a look at two of the industry’s most-widely tracked indices over the past year, namely the Technology Select Sector SPDR Fund (XLK) and Vanguard Information Technology Index Fund ETF Shares (VGT), which have returned 34.3% and 31.1%, respectively. In addition, the Invesco NASDAQ Internet ETF (PNQI) has rallied a decent 12.3%.
Global Internet Set for Rapid Expansion
The fast expansion in internet-based services that cater to a wide range of consumer preferences is owing to advancements in AI, machine learning and data delivery services. Internet-based organizations are therefore incorporating these capabilities that can offer customers cloud-based infrastructure, internet-based application performance management, SaaS (Software as a Service) etc.
Of course, this expansion wouldn’t be possible without internet services covering more customers globally. Per a Cisco report, about a third of the world’s population will have internet access by 2023. The number is estimated to be a total of 5.3 billion internet users by the said year from 3.9 billion in 2018.
Fast Deployment of 5G to Boost Internet-Based Businesses
The rapid adoption of 5G this year is also expected to be a boon for businesses that generate the majority of revenues through internet-based products and services. Cloud-based services, online gaming, social-networking services, online delivery services, autonomous vehicles technology, et al are some of the many areas that are set to witness speedy growth as 5G becomes the norm.
As companies like U.S. Cellular gear up to provide 5G network solutions in the country, one must consider the pool of significant business opportunities to be created because of the increased reach of internet and internet-dependent services. In fact, going by the Cisco update, 5G connections are likely to be the reason behind the expected threefold spurt in traffic by 2023 compared with the same under 4G LTE networks.
3 Best Funds to Buy
We have, therefore, selected three mutual funds that invest in technology companies that are industry leaders in terms of internet-related innovation. These funds are expected to gain further ahead as demand for internet-based products and services rise more. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). In addition, the minimum initial investment for these funds 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).
Fidelity Select Technology Portfolio (FSPTX - Free Report) aims for capital growth. The fund invests the majority of its assets in securities of companies that are set to gain considerably from the advancement in technology. The non-diversified fun invests in both U.S. and non-U.S. companies.Microsoft, Netflix, Adobe and Salesforce.com are among the top holdings of FSPTX.
This Zacks sector – Tech has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPTXcarries a Zacks Rank #1 and has an annual expense ratio of 0.72%, which is below the category average of 1.29%. It has returned 47% over a year. The fund has no minimum initial investment.
Franklin DynaTech Fund Advisor Class (FDYZX - Free Report) invests the majority of its assets in securities of companies that lead the way in innovation and usage of new technology. FDYZX mostly invests in common stocks of companies and may also invest in foreign stocks. Microsoft, Amazon.com, Alphabet, Adobe and Salesforce.com are among the top holdings of FDYZX.
This Zacks sector – Tech has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FDYZX carries a Zacks Rank #1 and has an annual expense ratio of 0.61%, which is below the category average of 1.06%. It has returned 28.5% over a year. The fund has no minimum initial investment.
DWS Science and Technology Fund - Class A (KTCAX - Free Report) aims for capital appreciation. The fund invests the majority of its assets in securities of that benefit from progress in science and technology. The non-diversified fund invests in securities of both U.S. and non-U.S. companies. Amazon.com, Microsoft, Facebook, Alphabet and Salesforce.com are among the top holdings of KTCAX.
This Zacks sector – Tech has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
KTCAX carries a Zacks Rank #2 and has an annual expense ratio of 0.93%, which is below the category average of 1.29%. It has returned 36.3% over a year. The fund has a minimum initial investment of $1000.
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.
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