3 Mutual Funds Set to Gain From AI's Accelerated Adoption

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Since the pandemic, artificial intelligence (AI) adoption has boomed exponentially, from marketing to financial services, transportation and logistics, media, retail, manufacturing and beyond. In fact, due to the drastic transition from man to machine that happened last year, several AI trends are here to stay and pick up pace. Per the analytics insight’s Global Artificial Intelligence Market 2020-2025 report, the global AI market is expected to grow to $252 billion by 2023 from $29 billion in 2019, at a CAGR of 42.5%.

The adoption of AI is inevitable. And why not? Recent developments in the space have given us new ways to address old problems with far-reaching consequences. Growth opportunities for AI have been witnessed in the fields of drug discovery, content generation, security & surveillance and more. For instance, machine-learning model can now accomplish vaccine design cycles in a matter of seconds and minutes, which took months or even years in the past. Notably, AI-assisted method predicted around 26 potential vaccines that would work against the coronavirus. AI could make accurate predictions with more than 700,000 different proteins in the dataset provided for vaccine hunt.

In the field of marketing and sales, according to a study by Salesforce, 70% of high-performance marketing teams have a fully defined AI strategy compared to 35% of their under-performing counterpart. The teams claim that new AI and machine learning skills provide improved social marketing performance and greater precision with marketing analytics. In fact, AI can help marketing professionals and agencies to create advertisement that include digital banners, social media posts and digital out-of-home advertisements, to impact or grab attention of the target audience.

In the first week for March, Yum Brands announced that it has bought Kvantum, a company that uses AI for consumer insights and marketing performance analytics. This will help the food giant to optimize its marketing spending, giving Yum Brands a leg up on fast-food rivals.

3 Funds for Maximum Returns

Given the prospects of AI, we have shortlisted three mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.

The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Technology Portfolio FSPTX fund aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, this non-diversified fund that has returned 31.1% and 30.5% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSPTX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%, which is below the category average of 1.24%. Some of the fund’s top AI stock holdings are Microsoft, Nvidia, and Apple.

Fidelity Select Semiconductors Portfolio FSELX fund aims for capital appreciation. The non-diversified fund invests the majority of its assets in securities of companies principally engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSELX has returned 27.9% and 30.2% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSELX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.72%, which is below the category average of 1.24%. Some of the fund’s top AI stock holdings are Intel, Nvidia, and Micron Technology.

T. Rowe Price Global Technology Fund PRGTX aims for long-term capital growth. The fund invests most of its assets in the common stocks of companies that its managers expect will generate the majority of revenues from the development, advancement and use of technology.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, PRGTX is a non-diversified fund and has returned 28.7% and 27.3% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PRGTX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.88%, which is below the category average of 1.24%. Some of the fund’s top AI stock holdings are Google, Micron Technology and Intuit.

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