Which Tech Mutual Fund to Buy: FWRLX or ROGSX? – April 1, 2020

Despite COVID-19 wreaking havoc across all asset classes and securities, technology has managed to stay relatively unharmed. A big reason for this can be attributed to the fact that almost everyone, students and office-goers alike, has been forced to stay indoors due to lockdowns imposed to ensure social distancing.

While this has disrupted supply chains of almost every business, big or small, the need to stay indoors has led to mass-scale digitization, improved PC sales as well as boosted traffic to online service and broadcasting platforms.

It is believed that the technology sector is poised for a better earnings performance than the other sectors due to greater demand for technology and innovation. Improving industry fundamentals and emerging technologies such as AI, machine learning, robotics and data science are key catalysts.

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.

In such circumstances, investing in technology mutual funds seems prudent. However, choosing the right mutual funds for your portfolio can be quite tricky. To that end, let us find out which of the two funds discussed below is better.

Fidelity Select Wireless (FWRLX Free Report)

This fund aims for capital appreciation. It invests majority of its assets in securities of companies that are engaged in activities relating to wireless communications services or products.

This Sector-Tech product has a history of positive total returns for over 10 years.  Specifically, the fund’s returns are 13.1% over a three-year period and 9.8% over a five-year period. To see how this fund performed in its category, and other #1 and #2 Ranked Mutual Funds, please click here.

The Fidelity Select Wireless fund, as of the last filing, allocates its assets in the top two major groups; Large Growth and Large Value. Further, as of the last filing, Apple Inc and Verizon Communications Inc were the top holdings for FWRLX.

Sporting a Zacks Mutual Fund Rank #1 (Strong Buy), FWRLX was incepted in September 2000 and is managed by Fidelity. FWRLX carries an expense ratio of 0.83% and has no minimal initial investment.

Red Oak Technology Select (ROGSX Free Report)

The fund seeks long-term capital appreciation. The fund invests 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.

This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the three and five-year benchmarks are 14.9% and 15%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.

The Red Oak Technology Select fund, as of the last filing, allocates its assets in the top two major groups — Large Growth and Foreign Stock. Further, as of the last filing, Microsoft Inc and Apple Inc. were the top holdings for ROGSX.

This Zacks Rank #1 (Strong Buy) fund was incepted in December 1998 and carries an expense ratio of 0.95%. The fund requires a minimal initial investment of $2,000 and is managed by Oak Associates.

To Conclude

While both FWRLX and ROGSX are recommended buys, upon taking a closer look, we find that the former is a clear winner. Firstly, the administrative and other operating expenses of ROGSX are higher than FWRLX’s.

Also, FWRLX offers lower risk compared to ROGSX. Notably, ROGSX has a three-year beta of 1.07 compared with FWRLX’s 0.78. Therefore, given the current scenario, one should clearly bet on FWRLX.

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