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 greater demand for technology and innovation. 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 a 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 its peers in the future. Investors can click here to see the complete list of funds.
Red Oak Technology Select Fund ROGSX seeks long-term capital appreciation. The fund invests the majority of its assets in equity securities of companies operating in the technology sector. Although the fund mostly invests in common stocks of U.S. companies, it may also invest in securities of foreign issuers and American Depositary Receipts that satisfy the fund’s investment criteria. ROGSX has returned 16.5% in the past three years.
As of the end of June 2020, ROGSX held 30 issues with 8.1% of its assets invested in Apple Inc.
Fidelity Select Software & IT Services Portfolio FSCSX fund invests the majority of its assets in companies whose primary operations are related to software or information-based services. It primarily focuses on acquiring common stocks of both domestic and foreign companies. FSCSX has three-year annualized returns of 23.2%.
Ali Khan is the fund manager of FSCSX since 2014.
Fidelity Select Wireless Portfolio FWRLX 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. FWRLX has three-year annualized returns of 13%.
FWRLX has an expense ratio of 0.81% compared to the category average of 1.23%.
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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