Disruptive technology is changing the way we envision things, right from our households to businesses. This emerging technology bucket is capable of transforming almost every sector. The innovation across artificial intelligence (AI), robotics, 5G, machine learning, edge computing and bitcoin will help technology stocks and mutual funds outperform in the market.
Fidelity Select Technology Portfolio (FSPTX – Free Report) , Fidelity Select Semiconductors Portfolio (FSELX – Free Report) , Franklin DynaTech Fund Class A (FKDNX – Free Report) and Fidelity Select Software & IT Services Portfolio (FSCSX – Free Report) are the mutual funds that investors should consider to make the most in such a scenario.
As mentioned earlier, these disruptive technologies, products and services have the potential to alter the way we live. Disruptive innovation is being adopted rapidly this year and is poised to grow multiple folds in years to come. At the forefront of this tech boom is 5G adoption and expansion. This high speed and low latency wireless Internet access will accelerate digitalization, which already got a boost during the pandemic. From medical science (telemedicine to vaccine discovery), education, factory floor operation, entertainment to security, 5G meets the requirement of connectivity and computing power.
Let us now talk about the everyday essentials like AI, robotics, cloud computing and machine language. Businesses, globally, are now transitioning to the cloud spacey to cope up and stay operational during the pandemic, creating a digital atmosphere for employees to work from home and connect with customers, and most importantly, to get a competitive edge. Digital assistants simplified work across all business verticals, leaving mundane work to computers while employees focused completely on addressing the customers.
In the field of robotics, the expansion has been broad so far, ranging from the giant arms on the factory floor assembling the cars to tiny bots cleaning the house without any supervision. In fact, more and more fast-food chains and cloud kitchens are adopting robots to help cook food without guidance and consistently, reduce dependency or irregularity.
Per an Analytics Insight report, the market revenues of six disruptive technologies are expected to grow from $1.091million in 2019 to $1.893 million in 2023, seeing a CAGR of 11.6%. The six technologies in consideration are AI (3.9%), robotics (4.4%), big data (16.5%), cybersecurity (14.1%), Internet of Things (59.9%) and augmented reality & virtual reality (1.3%).
4 Fund Picks
Disruptive technologies play a crucial role in the fourth industrial revolution and companies investing or providing such technologies are poised to grow. Hence, we shortlisted four mutual funds that currently carry a Zacks Mutual Fund Rank #1 (Strong Buy) with significant exposure to edge-computing technology.
Moreover, these funds have encouraging year-to-date 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 portfolio diversification without several commission charges 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 Portfoliofund aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies engaged in offering, using or developing products, processes or services that will provide or 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, a non-diversified fund, has returned 38.1% and 32.1% 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.
Fidelity Select Technology Portfolio has an annual expense ratio of 0.69% compared with the category average of 1.05%.
Fidelity Select Semiconductors Portfolio fund aims for capital appreciation. As a non-diversified fund, FSELX invests a majority of assets in the securities of companies, principally engaged in the design, manufacturing or the sale of semiconductors and semiconductor equipment.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSELX has returned 45.2% and 32.6% over 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.
Fidelity Select Semiconductors Portfolio has an annual expense ratio of 0.70%, below the category average of 1.05%.
Franklin DynaTech Fund Class Aaims for capital appreciation. FKDNX invests primarily in common stocks. As a fund manager, FKDNX focuses on leaders in innovation, taking advantage of new technologies, having superior management and benefiting from the new industry conditions.
This Sector-Tech product has a history of positive total returns for more than 10 years. Specifically, FKDNX has returned 34.6% and 29.5% over the past three- and five-year periods, respectively. To see how this fund performed compared with its category, and other 1 and #2 Ranked Mutual Funds, please click here.
Franklin DynaTech Fund Class A has an annual expense ratio of 0.85% compared with the category average of 0.99%.
Fidelity Select Software & IT Services Portfolioaims for capital appreciation. The non-diversified fund invests most assets in the common stocks of companies engaged in research, design, production or distribution of products or processes related 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 returned 31.9% and 28.2% over the past three and five-year periods, respectively. To see how this fund performed compared with its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Software & IT Services Portfolio has an annual expense ratio of 0.70% compared with the category average of 1.05%.
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