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 brighter earnings performance than others owing to innovation and greater demand. Improving industry fundamentals and emerging technologies — such as wearables, VR headsets, drones, virtual reality devices and AI — are the key catalysts for the sector.
Meanwhile, most mutual funds investing in securities from these sectors prefer a growth-oriented approach that includes focusing on companies with strong fundamentals and a relatively higher investment prospect. Moreover, technology now has broader coverage than just hardware and software companies. Social media and Internet companies are also part of the technology landscape today.
Below we share with you three top-ranked technology mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform peers in the future. Investors can click here to see the complete list of funds.
Putnam Global Technology Fund Class A (PGTAX – Free Report) aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of large and midsize companies worldwide. PGTAX has returned nearly 23% in the past three years.
As of the end of September 2020, PGTAX held 82 issues with 16.68% of its assets invested in Microsoft Corp.
Fidelity Select Technology Portfolio (FSPTX – Free Report) fund aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements. FSPTX has three-year annualized returns of 27.8%.
Denny Fish is the fund manager of FSPTX since 2016.
Fidelity Select Software & IT Services Portfolio (FSCSX – Free Report) aims for capital appreciation. The non-diversified fund invests the majority of its assets in common stocks of companies engaged in research, design, production, or distribution of products or processes that relate to software or information-based services. FSCSX has three-year annualized returns of 26%.
FSCSX has an expense ratio of 0.71% compared to the category average of 1.25%.
To view the Zacks Rank and past performance of all technology mutual funds, investors can click here to see the complete list of funds.
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