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3 Tech Mutual Funds to Gain on Signs of Cooling Inflation
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The Personal Consumption Expenditures (PCE) price index advanced 3% year on year in October. The core PCE Index, which excludes the volatile food and energy components, increased 3.5% year on year in October, less than the previous month’s increase of 3.7%, and registered the smallest rise since April 2021. In addition, the super core index, which focuses on PCE services, excluding energy and housing, also showed a deceleration in its year-on-year growth, reaching 3.9% in October.
As inflation cools down, there is an increasing expectation that the Federal Reserve might temporarily halt interest rate hikes further. The benchmark overnight interest rate has risen by 525 basis points since March 2022 and currently stands at 5.25-5.50%.
With reduced pressure, the Federal Reserve is expected to pause further interest rate hikes. This will lead to lower borrowing costs for tech businesses, enabling them to make more efficient capital investments in research, development, innovation and technological advancements.
Thus, from an investment standpoint, we have selected three tech mutual funds from the aforementioned areas that are expected to hedge your portfolio against any economic downturn and provide attractive returns.
These mutual funds, by the way, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
Fidelity Select Technology Portfolio (FSPTX - Free Report) seeks capital appreciation by investing most of its assets in common stocks of companies principally engaged in offering, using, or developing products, processes, or services that will provide or benefit significantly from technological advances and improvements.
Adam Benjamin has been the lead manager of FSPTX since Jan 17, 2022. Most of the fund's holdings were in companies like Microsoft Corp (17.3%), Apple (17%) and Nvidia Corp (13.4%) as of Aug 31, 2023.
FSPTX’s 3-year and 5-year returns are 8% and 18%, respectively. The annual expense ratio is 0.69% compared to the category average of 1.05%. FSPTX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other 1 and 2 Ranked Mutual Funds, please click here.
DWS Science and Technology Fund (KTCAX - Free Report) seeks growth of capital by investing in common stocks of U.S. companies in the technology sector. KTCAX advisors use in-depth research to select a diverse portfolio of technology companies that have robust and sustainable earnings growth, large and growing markets, leading products and services, and strong balance sheets.
Sebastian P. Werner has been the lead manager of KTCAX since Nov 30, 2017. Most of the fund's holdings were in companies like Nvidia Corp (11.1%), Meta Platforms, Inc. (8.2%) and Microsoft Corp (7.4%) as of Jul 31, 2023.
KTCAX's 3-year and 5-year returns are 6.7% and 14.4%, respectively. The annual expense ratio is 0.91% compared to the category average of 1.05%. KTCAX has a Zacks Mutual Fund Rank #1.
Red Oak Technology Select (ROGSX - Free Report) fund seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations, or which may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX primarily invests in technology companies that develop, produce, or distribute products or services related to computers, semiconductors and electronics.
Robert D. Stimpson has been the lead manager of ROGSX since Jan 16, 2019. Most of the fund's holdings were in companies like Alphabet Inc. (7.4%), Apple Inc. (6.8%) and KLA Corp (6.4%) as of Jul 31, 2023.
ROGSX's 3-year and 5-year returns are 8% and 11.4%, respectively. The annual expense ratio is 0.94% compared to the category average of 1.05%. ROGSX has a Zacks Mutual Fund Rank #1.
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3 Tech Mutual Funds to Gain on Signs of Cooling Inflation
The Personal Consumption Expenditures (PCE) price index advanced 3% year on year in October. The core PCE Index, which excludes the volatile food and energy components, increased 3.5% year on year in October, less than the previous month’s increase of 3.7%, and registered the smallest rise since April 2021. In addition, the super core index, which focuses on PCE services, excluding energy and housing, also showed a deceleration in its year-on-year growth, reaching 3.9% in October.
As inflation cools down, there is an increasing expectation that the Federal Reserve might temporarily halt interest rate hikes further. The benchmark overnight interest rate has risen by 525 basis points since March 2022 and currently stands at 5.25-5.50%.
With reduced pressure, the Federal Reserve is expected to pause further interest rate hikes. This will lead to lower borrowing costs for tech businesses, enabling them to make more efficient capital investments in research, development, innovation and technological advancements.
Thus, from an investment standpoint, we have selected three tech mutual funds from the aforementioned areas that are expected to hedge your portfolio against any economic downturn and provide attractive returns.
Mutual funds, in general, reduce transaction costs and diversify the portfolio without commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
These mutual funds, by the way, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
Fidelity Select Technology Portfolio (FSPTX - Free Report) seeks capital appreciation by investing most of its assets in common stocks of companies principally engaged in offering, using, or developing products, processes, or services that will provide or benefit significantly from technological advances and improvements.
Adam Benjamin has been the lead manager of FSPTX since Jan 17, 2022. Most of the fund's holdings were in companies like Microsoft Corp (17.3%), Apple (17%) and Nvidia Corp (13.4%) as of Aug 31, 2023.
FSPTX’s 3-year and 5-year returns are 8% and 18%, respectively. The annual expense ratio is 0.69% compared to the category average of 1.05%. FSPTX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other 1 and 2 Ranked Mutual Funds, please click here.
DWS Science and Technology Fund (KTCAX - Free Report) seeks growth of capital by investing in common stocks of U.S. companies in the technology sector. KTCAX advisors use in-depth research to select a diverse portfolio of technology companies that have robust and sustainable earnings growth, large and growing markets, leading products and services, and strong balance sheets.
Sebastian P. Werner has been the lead manager of KTCAX since Nov 30, 2017. Most of the fund's holdings were in companies like Nvidia Corp (11.1%), Meta Platforms, Inc. (8.2%) and Microsoft Corp (7.4%) as of Jul 31, 2023.
KTCAX's 3-year and 5-year returns are 6.7% and 14.4%, respectively. The annual expense ratio is 0.91% compared to the category average of 1.05%. KTCAX has a Zacks Mutual Fund Rank #1.
Red Oak Technology Select (ROGSX - Free Report) fund seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations, or which may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX primarily invests in technology companies that develop, produce, or distribute products or services related to computers, semiconductors and electronics.
Robert D. Stimpson has been the lead manager of ROGSX since Jan 16, 2019. Most of the fund's holdings were in companies like Alphabet Inc. (7.4%), Apple Inc. (6.8%) and KLA Corp (6.4%) as of Jul 31, 2023.
ROGSX's 3-year and 5-year returns are 8% and 11.4%, respectively. The annual expense ratio is 0.94% compared to the category average of 1.05%. ROGSX has a Zacks Mutual Fund Rank #1.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>