The recent fourth quarter gross domestic product (GDP) report highlights the performance of investing in technology mutual funds. According to the Commerce Department, the annual GDP growth rate of 3.3% exceeded the expected 2%. Consumer spending, which accounts for two-thirds of U.S. economic activity, rose 2.8 percent in the October-December quarter, showing that consumers are willing to spend across sectors, including technology.
Business investment also played a role in supporting GDP growth. This positive trend can be attributed to increased exports, government spending and business investment. The technology sector, known for its innovation and efficiency, is expected to benefit from this increased business investment.
The resilience of the US economy is evident with its growth of 3.1% from the fourth quarter of 2022 to the fourth quarter of 2023. This growth can be attributed to factors such as job cuts, strong wage increases and the creation of 2.7 million jobs in 2023
Strong GDP data, along with consumer support and an uptick in business investment, bodes well for the tech industry, which is already booming on AI optimism.
Thus, investing in technology mutual funds seems reasonable at the moment. In addition, mutual funds generally diversify portfolios without several commissions, which are mainly associated with stock purchases, and reduce transaction costs (read more: Mutual funds: advantages, disadvantages and how they make money for investors).
So we’ve picked three technology mutual funds that investors should buy now for the long term. These funds hold a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5,000, and expense ratios significantly lower than the category average. So these funds have delivered relatively strong performance along with lower fees.
Fidelity Select Semiconductors (FSELX – Free report) is looking for a capital increase. FSELX invests in the design, manufacture or sale of electronic components, equipment suppliers to electronic component manufacturers; distributors of electronic components; and suppliers of electronic instruments and electronic systems.
Adam Benjamin has been the lead manager of FSELX since March 15, 2020. Most of the fund’s holdings are in companies such as NVIDIA Corp (24.8%), NXP Semiconductors NV (8.4%) and ON Semiconductor Corp (8%) as of 31 August 2023
FSELX’s 3-year and 5-year returns are 23.4% and 34.8%, respectively. Its net expense ratio is 0.68% compared to the category average of 1.05%. FSELX has a Zacks Mutual Fund Rank #1.
To see how this fund is performing compared to its category and other 1 and 2 ranked mutual funds, please click here.
Red Oak Technology Select (ROGSX – Free Report) seeks long-term capital growth by investing primarily in stocks of companies that rely heavily on technology in their product development or operations, or that may have sales and earnings growth driven by related technology products and services. ROGSX also invests in technology companies that develop, manufacture or distribute products or services related to computers, semiconductors and electronics.
Robert D. Stimpson has been the lead manager of ROGSX since January 16, 2019. Most of the fund’s holdings are in companies such as Alphabet Inc. (7.4%), Apple Inc (6.8%) and KLA Corp (6.4%) as of July 31, 2023.
ROGSX’s 3-year and 5-year annualized returns are 8.3% and 16.6%, respectively. Its net expense ratio is 0.94% compared to the category average of 1.05%. ROGSX has a Zacks Mutual Fund Rank #2.
DWS Fund for Science and Technology (KTCAX – Free Report) invests the majority of its net assets in common stocks of science and technology companies of all sizes. KTCAX focuses on one or more industries in the technology sector. The fund also invests in foreign securities and is not diversified.
Sebastian P. Werner has been the lead manager of KTCAX since November 30, 2017. Most of the fund’s holdings are in companies such as NVIDIA Corp (11.1%), Meta Platforms, Inc. (8.2%) and Microsoft Corp (7.4%) as of July 31, 2023.
KTCAX’s 3-year and 5-year annualized returns are 7% and 20.6%, respectively. Its net expense ratio is 0.91% compared to the category average of 1.05%. KTCAX has a Zacks Mutual Fund Rank #2.
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