Risk lovers seeking healthy returns over a fairly long investment horizon may opt for technology mutual funds. It is believed that the technology sector is poised for a brighter earnings performance than others owing to greater demand for technology and innovation. Improving industry fundamentals and emerging technologies — such as wearables, VR headsets, drones, virtual reality devices and AI — are the key catalysts for the sector.
Meanwhile, most mutual funds investing in securities from these sectors prefer a growth-oriented approach that includes focusing on companies with strong fundamentals and a relatively higher investment prospect. Moreover, technology now has a 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. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform peers in the future. Investors can click here to see the complete list of funds.
Putnam Global Technology Fund Class A PGTAX aims for capital appreciation. This non-diversified fund invests majority of its assets in common stocks of large and midsize companies worldwide. PGTAX has returned nearly 23% in the past three years.
As of the end of September 2020, PGTAX held 82 issues with 16.68% of its assets invested in Microsoft Corp (NASDAQ:).
Janus Henderson Global Technology and Innovation Fund Class D JNGTX aims for long-term growth of capital. The fund invests majority of its assets in securities of companies that the fund managers believe will benefit significantly from advances in technology. JNGTX has returned 24.7% in the past three years.
Denny Fish is the fund manager of JNGTX since 2016.
Fidelity Select Software & IT Services Portfolio FSCSX aims for capital appreciation. The non-diversified fund invests majority of its assets in common stocks of companies engaged in research, design, production, or distribution of products or processes that relate to software or information-based services. FSCSX has three-year annualized returns of 26%.
FSCSX has an expense ratio of 0.71% compared to the category average of 1.25%.
To view the Zacks Rank and past performance of all technology mutual funds, investors can click here to see the complete list of funds.
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