Risk lovers seeking healthy returns over a fairly long investment horizon may opt for technology mutual funds. The technology sector is believed to be poised for a brighter earnings performance than others, owing to innovation and greater demand. Improving industry fundamentals and emerging technologies — such as wearables, VR headsets, drones, virtual reality devices and artificial intelligence — are the key catalysts for the sector.
Most mutual funds investing in securities from these sectors prefer a growth-oriented approach, focusing on companies with solid fundamentals and relatively higher investment prospects. Technology now has broader coverage than just hardware and software companies. Social media and Internet companies are also part of the technology landscape today.
Below, we share with you three top-ranked Technology mutual funds, namely Fidelity Select Semiconductors FSELX, Fidelity Select Technology FSPTX and Fidelity Advisor Technology Fund FATEX. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
Fidelity Select Semiconductors invests in companies engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. FSELX uses fundamental analysis like financial condition, industry position and market conditions to select investments.
Fidelity Select Semiconductors has three-year annualized returns of 28.2%. As of May 2024, FSELX held 40 issues, with 25% of its assets invested in Nvidia.
Fidelity Select Technology aims for capital appreciation by investing the majority of its net assets in common stocks of domestic and foreign companies that benefit significantly from technological advances and improvement. FSPTX uses fundamental analysis, like financial condition, industry position and market conditions to select investments.
Fidelity Select Technology has three-year annualized returns of 11.5%. FSPTX has an expense ratio of 0.68% compared to the category average of 1.25%.
Fidelity Advisor Technology Fund invests most of its net assets in common stocks of foreign and domestic companies principally engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements. FATEX advisors choose to invest in stocks based on the fundamental analysis of factors such as each issuer’s financial condition, industry position, as well as market and economic conditions.