4 Mutual Funds to Ride the Boom in Artificial Intelligence – September 22, 2020

The coronavirus pandemic has made global economies collapse but the digital technologies space continues to boom. Several businesses have pushed into digital transformation and virtual workspaces which in turn requires artificial intelligence (AI) to engage with customers, collaborate with employees and keep a track of supply chains.

While remote working is the new normal now, AI has moved further than just Internet searching. At present, AI boasts of some big changes like cloud and productivity boosters. Public cloud leaders Amazon Web Services, Microsoft Azure and Google Cloud have seen significant growth so far this year and still have scope for growth.

The pandemic has forced businesses to adapt to the digital era and AI companies are propelling this digital transformation. A suite of software can help organizations with all aspects of customer relationship and data management, and can also cover sales, service, marketing, and more. The AI-based insight gives users instant actionable options to help in decision making and deliver a better experience to customers. Additionally, AI has the power to liberate human time to help them focus on higher-order activities and rational decision making.

AI is expanding opportunities, driving revenues and enhancing efficiencies in almost every field, from advertising to healthcare, robotics, agriculture, retail, entertainment and much more. In fact, post the pandemic, innovations in digital technology especially AI, will help businesses to return to full productivity with fewer repetitive jobs and less bloat.

Per an Analytics Insight report, the global AI market is estimated to witness a CAGR of 29% from $42.8 billion in 2019 to $152.9 billion in 2023. And, given the fast-changing business landscape, several companies are investing a huge sum to foster this market. For example, in 2019, Microsoft invested $1 billion in a research firm OpenAI which is working on Artificial General Intelligence developments.

Top 4 Fund Picks

We have selected four mutual funds that could stand to gain from advancements in AI and carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is less than $5000. We expect these funds to outperform their peers in the future.

Now we come to the most vital question: 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).

DWS Science and Technology Fund – Class A (KTCAX Free Report) aims for growth of capital. The fund invests the majority of its assets in common stocks of science and technology companies. Some of the fund’s top AI stock holdings are Microsoft, Nvidia and Twilio.

This Zacks Sector – Tech product 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 has an annual expense ratio of 0.93%, which is below the category average of 1.29%. It has three and five-year annualized returns of 27.4% and 21.4%, respectively. The fund has a minimum initial investment of $1,000.

Fidelity Select Technology Portfolio (FSPTX Free Report) is a non-diversified fund that aims for capital appreciation. The fund invests the majority of its assets in securities of companies principally engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements. Some of the fund’s top AI stock holdings are Amazon, Facebook and Microsoft.

This Zacks sector – Tech fund has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSPTX has an annual expense ratio of 0.71%, which is below the category average of 1.29%. It has three and five-year annualized returns of 29.2% and 29.6%, respectively. The fund has no minimum initial investment.

Franklin DynaTech Fund Class A (FKDNX Free Report) aims for capital appreciation. The fund invest in common stocks of companies that its manager believes are leaders in innovation, take advantage of new technologies, have superior management, and benefit from new industry conditions in the dynamically changing global economy. Some of the fund’s top AI stock holdings are Amazon, Microsoft and Google.

This Zacks sector – Tech fund has a history of positive total returns for more than 10 years. 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 0.86%, which is below the category average of 1.05%. It has three and five-year annualized returns of 27.9% and 23.9%, respectively. The fund has a minimum initial investment of $1,000.

Janus Henderson Global Technology and Innovation Fund Class A (JATAX Free Report) aims to long-term growth of capital. The fund invests the majority of its assets in securities of companies that the portfolio managers believe will benefit significantly from advances or improvements in technology. Some of the fund’s top AI stock holdings are Salesforce, Twilio and Tencent.

This Zacks sector – Tech fund has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

JATAX has an annual expense ratio of 1.01%, which is below the category average of 1.29%. It has three and five0year annualized returns of 30.3% and 28.6%, respectively. The fund has a minimum initial investment of $2,500.

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