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 the other sectors due to greater demand for technology and innovation. Improving industry fundamentals and emerging technologies such as wearables, VR headsets, drones, virtual reality devices, and artificial intelligence are the key catalysts to the sector’s growth.
Meanwhile, most of the mutual funds investing in securities from these sectors take a growth-oriented approach that includes focusing on companies with strong fundamentals and a relatively higher investment prospect. Moreover, technology has come to have a broader meaning than just hardware and software companies. Social media and Internet companies are now part of the technology landscape.
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 technology funds, their Zacks Rank and past performance.
BlackRock Science & Technology Opportunities Investor A (BGSAX – Free Report) invests the majority of its assets in equity securities issued by domestic and foreign science and technology companies. BGSAX may invest a maximum 25% of its net assets in emerging economies. BGSAX generally invests in common stocks but may also pick preferred stocks and convertible securities. The BlackRock Science & Technology Opportunities Investor A has three-year annualized returns of 23%.
As of May 2018, BGSAX held 134 issues with 4.53% invested in amazon.com Inc.
Fidelity Advisor Electronics A (FELAX – Free Report) seeks capital appreciation. FELAX invests a large portion of its assets in common stocks of companies whose primary operations are related to electronic components, equipment vendors, electronic component manufacturers, electronic component distributors, electronic instruments and electronic systems vendors. Investments are made in both domestic and foreign companies. FELAX uses a fundamental analysis to select companies for investment purposes. The Fidelity Advisor Electronics A has three-year annualized returns of 22.5%.
FELAX has an expense ratio of 1.16% as compared to the category average of 1.33%.
Columbia Global Technology Growth Z (CMTFX – Free Report) invests a large chunk of its assets in companies related to the technology sector. CMTFX invests a minimum of 40% of its assets in foreign companies. Though CMTFX invests in companies irrespective of their market capitalization, it may invest a sizable portion of its assets in small-cap companies. Columbia Global Technology Growth Z has three-year annualized returns of 22.9%.
Rahul Narang is the fund manager of CMTFX since 2012.
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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