Risk lovers seeking to derive healthy return over a fairly long investment horizon may opt for technology mutual funds. It is believed that the technology sector is poised for brighter earnings performance compared to other sectors due to higher demand for technology and innovation. Though the sector is likely to experience more volatility than others in the short term, the extent of volatility is believed to decline over a longer time horizon.
Meanwhile, most of the mutual funds investing in securities from these sectors opt for a growth-oriented approach that includes focusing on strong fundamentals of companies and a relatively higher investment horizon. Moreover, technology has come to have a broader meaning than just hardware and software companies. Social media and "Internet" companies are now a part of the technology landscape.
Below, we will share with you four buy-rated technology mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy), as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all technology funds, investors can click here.
Fidelity Select Technology Portfolio No Load (MUTF:FSPTX) seeks capital growth over the long run. It invests a large chunk of its assets in common stocks of companies primarily involved in production, development and sale of products used for technological advancement. FSPTX invests in both US and non-US companies. Factors including financial strength and economic condition are considered before investing in a company. The fund is non-diversified and has a three-year annualized return of 14.2%.
Charlie Chai is the fund manager and has managed FSPTX since 2007.
MFS Technology Fund A (MUTF:MTCAX) invests a large chunk of its assets in securities of companies involved in operations related to products and services that are believed to benefit from advancement and improvement of technology. It invests in securities issued throughout the globe, including those from emerging markets. This is a non-diversified fund and has a three-year annualized return of 15.1%.
As of February 2016, MTCAX held 80 issues, with 12.28% of its assets invested in Alphabet Inc. A (NASDAQ:GOOGL).
T. Rowe Price Media And Telecommunications Fund No Load (MUTF:PRMTX) seeks to provide long-term capital growth. It invests a major portion of its assets in securities of companies involved in operations related to media and telecommunications. PRMTX primarily invests in common stocks of large- and mid-cap companies. The fund has a three-year annualized return of 13.5%.
Paul D. Greene II has been the fund manager of PRMTX since 2013.
Matthews Asia Science and Technology Fund Inv (MUTF:MATFX) invests the majority of its assets in securities of technology companies located in Asia. According to the fund's advisors, companies that earn a maximum share of their revenue by carrying out operations related to the technology domain are considered as technology companies. MATFX primarily invests in common and preferred stocks of companies. It has a three-year annualized return of 11.6%.
MATFX has an expense ratio of 1.18%, as compared to the category average of 1.45%.