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3 Solid Tech Funds to Buy as Fed Gears Up to Cut Rates
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Investors have been rotating out of the mega-cap tech stocks and placing their bets on small-cap and cyclical stocks over the past couple of weeks, resulting in all three major indexes taking a hit. However, the tech rally resumed on Jul 26, after investors rotated back into growth stocks, a day after the Nasdaq suffered its worst day since 2022.
Investors have lately been rushing toward small-cap and cyclical stocks, expecting that the Federal Reserve would soon start rate cuts that would benefit such stocks. However, growth stocks have been largely responsible for the Wall Street rally in 2023 and this year.
On Jul 26, the S&P 500 jumped 1.1% to close at 5,459.10 points, while the Nasdaq rose 1% to finish at 17,357.88.
Both the indexes suffered over the past couple of weeks but have regained the lost ground. Needless to say, the tech rally is far from over. The ongoing enthusiasm surrounding artificial intelligence (AI), particularly generative AI, is fueling the tech rally led by NVIDIA Corporation (NVDA).
Experts believe AI has huge potential that’s not fully tapped yet. NVIDIA’s recent success has motivated many tech companies to look into AI to gain future business benefits.
The development of smart devices is key here because they need strong computing and learning power for things like face detection, image recognition and video analysis. These tasks require fast processing, lots of memory, low power use, and improved graphics, which is helping the semiconductor industry.
Besides, the Federal Reserve is likely to start its easing cycle in September with a 25-basis-point rate cut. Lower interest rates make borrowing cheaper, which benefits growth stocks.
3 Best Choices
As a result, we've chosen three funds from the tech sector that are worth buying. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Semiconductors Portfolio (FSELX - Free Report) fund seeks capital appreciation. FSELX normally invests at least 80% of its assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Select Semiconductors Portfolio fund has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 30.4% and 38.4%, respectively. FSELX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.67%.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
DWS Science and Technology A (KTCAX - Free Report) fund seeks growth of capital. Under normal circumstances, KTCAX invests at least 80% of net assets in common stocks of U.S. companies in the technology sector.
DWS Science and Technology A fund has a track of positive total returns for over 10 years. Specifically, KTCAX’s returns over the three and five-year benchmarks are 10.7% and 21.1%, respectively. The annual expense ratio of 0.87% is lower than the category average of 1.02%. DWS Science and Technology A fund has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
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.
Specifically, Fidelity Select Technology Portfolio’s returns over the three and five-year benchmarks are 11.4% and 24.3%, respectively. The annual expense ratio of 0.68% is lower than the category average of 1.24%. FSPTX carries 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.
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3 Solid Tech Funds to Buy as Fed Gears Up to Cut Rates
Investors have been rotating out of the mega-cap tech stocks and placing their bets on small-cap and cyclical stocks over the past couple of weeks, resulting in all three major indexes taking a hit. However, the tech rally resumed on Jul 26, after investors rotated back into growth stocks, a day after the Nasdaq suffered its worst day since 2022.
Investors have lately been rushing toward small-cap and cyclical stocks, expecting that the Federal Reserve would soon start rate cuts that would benefit such stocks. However, growth stocks have been largely responsible for the Wall Street rally in 2023 and this year.
On Jul 26, the S&P 500 jumped 1.1% to close at 5,459.10 points, while the Nasdaq rose 1% to finish at 17,357.88.
Both the indexes suffered over the past couple of weeks but have regained the lost ground. Needless to say, the tech rally is far from over. The ongoing enthusiasm surrounding artificial intelligence (AI), particularly generative AI, is fueling the tech rally led by NVIDIA Corporation (NVDA).
Experts believe AI has huge potential that’s not fully tapped yet. NVIDIA’s recent success has motivated many tech companies to look into AI to gain future business benefits.
The development of smart devices is key here because they need strong computing and learning power for things like face detection, image recognition and video analysis. These tasks require fast processing, lots of memory, low power use, and improved graphics, which is helping the semiconductor industry.
Besides, the Federal Reserve is likely to start its easing cycle in September with a 25-basis-point rate cut. Lower interest rates make borrowing cheaper, which benefits growth stocks.
3 Best Choices
As a result, we've chosen three funds from the tech sector that are worth buying. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Semiconductors Portfolio (FSELX - Free Report) fund seeks capital appreciation. FSELX normally invests at least 80% of its assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Select Semiconductors Portfolio fund has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 30.4% and 38.4%, respectively. FSELX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.67%.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
DWS Science and Technology A (KTCAX - Free Report) fund seeks growth of capital. Under normal circumstances, KTCAX invests at least 80% of net assets in common stocks of U.S. companies in the technology sector.
DWS Science and Technology A fund has a track of positive total returns for over 10 years. Specifically, KTCAX’s returns over the three and five-year benchmarks are 10.7% and 21.1%, respectively. The annual expense ratio of 0.87% is lower than the category average of 1.02%. DWS Science and Technology A fund has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
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.
Specifically, Fidelity Select Technology Portfolio’s returns over the three and five-year benchmarks are 11.4% and 24.3%, respectively. The annual expense ratio of 0.68% is lower than the category average of 1.24%. FSPTX carries 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.
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 >>