The pandemic has accelerated several technology trends, and staying, studying and working from home last year created an urgent need to adapt to the changing lifestyle. Tech trends like artificial intelligence (AI), robotics, cloud computing and cyber security played a pivotal role in digital transformation. Hence, investors planning to shift from traditional funds can watch out for these thematic tech funds.
The pandemic-induced remote working trend amplified the requirement for cloud computing. This helped access devices back in the office and use cloud collaboration platforms for communication with clients and colleagues.
While cloud computing got employees to work from home with ease, it exposed businesses, governments and organizations to cyber risks. Per the cybersecurity firm Kaspersky, nearly 1.5 billion cyber attacks occurred globally last year as shift to remote working and outdated systems created opportunities for hackers during the global health crisis. Companies are spending millions to update their digital infrastructure and quite a heft amount is definitely being invested in cybersecurity. According to a Grand View Research report, the global cyber-security market is expected to reach $241.1 billion in 2025, at a CAGR of 11% from 2019.
Another trend hogging investor attention is AI. The fast changing business landscape calls for technological advancements and AI provides opportunities by driving revenues and enhancing efficiencies. AI can be used in advertising, healthcare, robotics, retail, entertainment, education and much more. Businesses are now opting for the hybrid computing approach to solve problems and AI plays a prime role in this change.
The pandemic has created ample opportunity for the robotics market. From sanitizing hospitals, homes and workplaces to monitoring, surveying, handling, and delivering food and medicines, robotics has found a wide spectrum of usage in both industrial and domestic fields. Manufactures who had to replace staff with robotic arms during the pandemic will continue to use them as it lowers work load and ease of daily routines and most importantly, saves labor costs.
4 Funds to Buy
Given the promising tech trends, we have shortlisted four mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to grow. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.
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 Software & IT Services Portfolio (FSCSX – Free Report) aims for capital appreciation. This non-diversified fund invests majority of 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.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSCSX has three and five-year returns of 28.1% and 26.3%, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSCSX has an annual expense ratio of 0.71% versus the category average of 1.24%.
Fidelity Select Technology Portfolio (FSPTX – Free Report) aims for capital appreciation. This non-diversified 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.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSPTX has returned 31.1% and 30.5% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPTX has an annual expense ratio of 0.71% versus the category average of 1.24%.
Janus Henderson Global Technology and Innovation Fund Class A (JATAX – Free Report) aims long-term growth of capital. The fund invests majority of assets in securities of companies that the portfolio managers believe will benefit significantly from advances or improvements in technology.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, JATAXhas returned 30% and 29.3% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
JATAX has an annual expense ratio of 0.99%, which is below the category average of 1.24%.
Franklin DynaTech Fund Class A (FKDNX – Free Report) aims for capital appreciation. The fund invests in common stocks of companies that its manager believes are leaders in innovation, have superior management, and benefit from new industry conditions in the dynamically changing global economy.
This Zacks sector – Tech fund has a history of positive total returns for more than 10 years. Specifically, FKDNX has three and five-year annualized returns of 30.3% and 25.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FKDNX has an annual expense ratio of 0.85%, which is below the category average of 1.04%.
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