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The recent report on gross domestic product (GDP) for the fourth quarter highlights the effectiveness of investing in tech mutual funds. According to data from the Commerce Department, the 3.3% annualized GDP growth rate surpassed the estimated 2%. Consumer spending, which makes up two-thirds of the U.S. economic activity grew 2.8% in the October-December quarter, showing that consumers are willing to spend across various sectors, including technology.
Business investment also played a role in supporting GDP growth. This positive trend can be attributed to increased exports, government spending and investment by businesses. The technology sector, known for its innovation and efficiency is expected to benefit from this increased business investment.
The resilience of the U.S. economy is evident with its 3.1% growth from Q4 2022 through Q4 2023. This growth can be attributed to factors such as job layoffs, strong wage increases and the creation of 2.7 million jobs, in 2023.
The strong GDP figures, along with the support from consumers and a rise in business investments indicate prospects for the technology industry, which is anyhow booming on AI optimism.
Investing in technology mutual funds, thus, seems to be judicious as of now. Also, mutual funds, in general, diversify portfolios without several commission charges that are mainly associated with stock purchases and trim transaction costs (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have, thus, chosen three technology mutual funds that investors should buy now for the long term. These funds possess 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 expense ratios considerably lower than the category average. So, these funds have provided a comparatively strong performance along with lower fees.
Fidelity Select Semiconductors (FSELX - Free Report) seeks capital appreciation. FSELX invests in the design, manufacture, or sale of electronic components, equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Adam Benjamin has been the lead manager of FSELX since Mar 15, 2020. Most of the fund’s holdings were in companies like NVIDIA Corp (24.8%), NXP Semiconductors N.V. (8.4%) and ON Semiconductor Corp (8%) as of Aug 31, 2023.
FSELX’s 3-year and 5-year annualized returns are 23.4% and 34.8%, respectively. Its net expense ratio is 0.68% compared to the category average of 1.05%. FSELX 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.
Red Oak Technology Select (ROGSX - Free Report) seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations or the ones that may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX also 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 annualized returns are 8.3% and 16.6%, respectively. Its net expense ratio is 0.94% compared to the category average of 1.05%. ROGSX has a Zacks Mutual Fund Rank #2.
DWS Science and Technology Fund (KTCAX - Free Report) invests the majority of its net assets in common stocks of science and technology companies of any size. KTCAX focuses on one or more industries in the technology sector. The fund also invests in foreign securities and is non-diversified.
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 annualized returns are 7% and 20.6%, respectively. Its net expense ratio is 0.91% compared to the category average of 1.05%. KTCAX has a Zacks Mutual Fund Rank #2.
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3 Technology Mutual Funds Worth Investing in
The recent report on gross domestic product (GDP) for the fourth quarter highlights the effectiveness of investing in tech mutual funds. According to data from the Commerce Department, the 3.3% annualized GDP growth rate surpassed the estimated 2%. Consumer spending, which makes up two-thirds of the U.S. economic activity grew 2.8% in the October-December quarter, showing that consumers are willing to spend across various sectors, including technology.
Business investment also played a role in supporting GDP growth. This positive trend can be attributed to increased exports, government spending and investment by businesses. The technology sector, known for its innovation and efficiency is expected to benefit from this increased business investment.
The resilience of the U.S. economy is evident with its 3.1% growth from Q4 2022 through Q4 2023. This growth can be attributed to factors such as job layoffs, strong wage increases and the creation of 2.7 million jobs, in 2023.
The strong GDP figures, along with the support from consumers and a rise in business investments indicate prospects for the technology industry, which is anyhow booming on AI optimism.
Investing in technology mutual funds, thus, seems to be judicious as of now. Also, mutual funds, in general, diversify portfolios without several commission charges that are mainly associated with stock purchases and trim transaction costs (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have, thus, chosen three technology mutual funds that investors should buy now for the long term. These funds possess 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 expense ratios considerably lower than the category average. So, these funds have provided a comparatively strong performance along with lower fees.
Fidelity Select Semiconductors (FSELX - Free Report) seeks capital appreciation. FSELX invests in the design, manufacture, or sale of electronic components, equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Adam Benjamin has been the lead manager of FSELX since Mar 15, 2020. Most of the fund’s holdings were in companies like NVIDIA Corp (24.8%), NXP Semiconductors N.V. (8.4%) and ON Semiconductor Corp (8%) as of Aug 31, 2023.
FSELX’s 3-year and 5-year annualized returns are 23.4% and 34.8%, respectively. Its net expense ratio is 0.68% compared to the category average of 1.05%. FSELX 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.
Red Oak Technology Select (ROGSX - Free Report) seeks long-term capital growth by investing primarily in stocks of companies that rely extensively on technology in their product development or operations or the ones that may be experiencing growth in sales and earnings driven by technology-related products and services. ROGSX also 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 annualized returns are 8.3% and 16.6%, respectively. Its net expense ratio is 0.94% compared to the category average of 1.05%. ROGSX has a Zacks Mutual Fund Rank #2.
DWS Science and Technology Fund (KTCAX - Free Report) invests the majority of its net assets in common stocks of science and technology companies of any size. KTCAX focuses on one or more industries in the technology sector. The fund also invests in foreign securities and is non-diversified.
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 annualized returns are 7% and 20.6%, respectively. Its net expense ratio is 0.91% compared to the category average of 1.05%. KTCAX has a Zacks Mutual Fund Rank #2.
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 >>