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Which 5 Technology Mutual Funds Should Outperform Their Peers?

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Zacks reveals its top choices.

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Investors seeking long-term aggressive holdings need not look beyond mutual funds betting on the technology sector. Even though such funds experience relatively higher levels of volatility, they tend to outperform other categories when markets as a whole are seeing an uptrend. Recent results from tech firms have also shown that the sector is gearing up to enter a new era of success and prosperity. Further, fund prices are based on stronger fundamentals compared to their initial boom period, substantially reducing the risk involved.

Below we will share with you five top rated technology mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.

Franklin DynaTech A (FKDNX) seeks capital growth. The fund focuses on investing in companies that rely on new technologies and are leaders in innovation. It primarily invests in equity securities, primarily purchasing common stock. The technology mutual fund has a five year annualized return of 6.57%.

The technology mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.97% compared to a category average of 1.27%.

USAA Science & Technology (USSCX) invests the majority of its assets in companies that expect to gain from scientific and technological advances. A maximum of half of its assets may be utilized to purchase foreign securities from either domestic or foreign markets. The technology mutual fund has a five year annualized return of 3.8%.

The fund manager is Nicolas B. Boullet and he has managed this technology mutual fund since 2008.

Fidelity Select Software and Computer Services (FSCSX) seeks capital appreciation. The fund invests a large share of its assets in companies whose principal operations are related to software or information-based services. The fund may purchase foreign securities and invest a heavily in a single issuer. The technology mutual fund has a five year annualized return of 9.63%.

As of March 2012, this technology mutual fund held 127 issues, with 15.07% of its total assets invested in Microsoft, Inc.(MSFT).

Buffalo Science & Technology (BUFTX) primarily invests in common stocks of domestic companies whose securities may gain from advances in science and technology. Not more than 20% of its assets may be invested in ADRs or foreign securities. The technology mutual fund has a five year annualized return of 6.92%.

The technology mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.02% compared to a category average of 1.63%.

HighMark NYSE ArcaTech 100 Index A (PPTIX) seeks capital appreciation. The fund invests in nearly all of the securities which make up the NYSE Arca Tech 100 Index in nearly the same proportion. A minimum of 90% of its assets are invested in securities included in the index. The technology mutual fund has a five year annualized return of 6.06%.

The fund manager is Donald J. Nesbitt and he has managed this technology mutual fund since 2009.

Learn more about the Zacks Mutual Fund Rank here.

Editor's Note: For more from Zacks.com, click here.
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No positions in stocks mentioned.
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