Here are two tech-focused mutual funds that command a “Strong Buy” rating. Both these funds also have a Smart Score of eight, meaning they have the potential to outperform the market expectations.
Investing in the Technology sector can be a bit daunting. Not every investor is comfortable with the concept of high-risk, high-return, and growth stock investing. Companies from the technology sector are generally disruptive in nature. They invest heavily in research and development for the innovation and invention of new products. Thus, several of these tech start-ups are loss-making companies. However, once their products disrupt the market, they become leaders in their space and witness huge growth.
One caveat is that tech companies usually perform poorly during economic turmoil, as unfavorable macro factors often suppress an investor’s risk appetite. But once the economy picks up, the tech companies generally show the highest growth prospects out of all types of stocks. That’s why these two mutual funds can be a good choice for investors who want to place their money on tech.
Fidelity Select Technology (FSPTX)
The Fidelity Select Technology fund invests primarily in companies that it believes have or will develop products, processes, or services that will benefit significantly from technological advances.
As of today’s date, FSPTX has 48 holdings with total assets of $11.83 billion. As the investing strategy suggests, 91.8% of the fund’s portfolio consists of tech stocks.
On TipRanks, FSPTX has a Strong Buy consensus rating. This is based on the consensus rating of each stock held in the portfolio. Of the 48 stocks held, 33 have Buys, while 15 stocks have a Hold rating. The average Fidelity Select Technology price target of $30.82 implies 17.7% upside potential from the current levels.
Year-to-date, FSPTX has gained 48.6%. Its top five major holdings include (MSFT), Apple (AAPL), Nvidia (NVDA), Marvell Technology (MRVL), and NXP Semiconductors (NXPI).
Columbia Global Technology Growth Fund Class I (CMTFX)
Similar to FSPTX, Columbia Global Tech Gr Fund Cl I invests in technology companies that may benefit from technology innovations and implementations. CMTFX has 100 holdings with total assets of $2.49 billion. Nearly 89% of the fund is invested in tech sector companies.
On TipRanks, CMTFX has a Strong Buy consensus rating. This is based on 87 stocks with a Buy rating and 13 stocks with a Hold rating. The average Columbia Global Technology Growth Fund Class I price target of $74.57 implies 13.3% upside potential from the current levels.
Year to date, CMTFX has gained 44.8%. Its top five major holdings include Apple, Microsoft, Nvidia, Alphabet Class A (GOOGL), and Broadcom (AVGO).
Key Takeaways
Mutual fund investing is a simple way to diversify your portfolio and earn passive income. Importantly, investing in MFs that are focused on the technology sector may help you gain exposure to the lucrative sector without having to cherry pick stocks on your own.
