5 Hot Tech Mutual Funds for Earnings Growth - Best of Funds

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After a significant decline in earnings growth during Q1 2014, the Technology sector is bouncing back.  It is being led by the chip industry, increased PC sales, and most importantly mobile applications.  Specifically, the sector is anticipated to outperform the S&P 500 this year as well; with expected earnings growth for Technology Sector currently at 11.0% for 2014, while the S&P 500 is expected to grow only 6.9%.

As of today, 34 out of the 65 companies that make up the Tech sector have posted quarterly earnings.  The 34 that have already posted are showing year over year earnings growth of 14.1%, and YoY revenue growth of 7.3%.  Now if you add in the remaining 31 companies current expectations, the industry is expected to grow earnings 11.0%, and for revenues to grow 5.9% from the year ago quarter.

This is a significant jump from the weak Q1 where the Technology sector only grew earnings 3.7%, and saw revenues grow 3.1%.  Moreover, current expectations are for earnings to grow 7.4% in Q314, 6.9% in Q414, and 10.1% Q115.  Also, revenues are expected to rise for the next 3 quarters as well; 7.6% in Q314, 9.0% in Q414, and 10.9% in Q115.


With strong earnings and revenue growth projected for the next year, it would be wise to look at several Technology based mutual funds to capture the full force of this growth trend.  These mutual funds tend to be highly concentrated in one specific sector, and enable to owners to have much more of a range of tech companies than their individual investing would enable them to do.

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ProFunds Semiconductor UltraSector ProFund; Service ( SMPSX ) is a Zacks Rank #1 (Strong Buy), and invests in companies that are engaged in the production of semiconductors and other integrated chips.  It concentrates investments in a particular industry or group of industries to approximately the same extent as the Index.  Dividends and capital gains are distributed annually. 

Currently, this portfolio contains 68% Tech companies, and the remainder in the Other category.  The fund is heavy Intel Corp, Texas Instruments, Micron Tech, and Applied Materials.  Moreover, the fund is investing in Large, and Small cap Value companies, along with some Large cap Growth companies.

Past Portfolio Performance: 1 year 56.44%, 3 year 18.01%, 5 year 22.84%

T Rowe Price Global Tech Fund ( PRGTX ) a Zacks Rank #1 (Strong Buy) is a technology fund that seeks long term capital growth.  The fund invests at least 80% of its net assets throughout the world in the common stocks of companies that generate a majority of their revenues from the development, advancement, and use of technology.  The fund's holdings can range from small companies to blue chip firms with established track records.  Dividends and capital gains are declared in December.

As of the end of June, technology companies comprised 60% of the total portfolio, with less than 7% in 5 other industries.  The company is heavy Apple Inc., Taiwan Semiconductor, Amazon, and Charter Communications. 

Past Portfolio Performance: 1 year 51.65%, 3 year 20.81%, 5 year 24.74%

ProFunds Technology UltraSector ProFund; Investor ( TEPIX ) a Zacks Rank #1 (Strong Buy) which invests in technology companies or in instruments that provide exposure to these companies.  It concentrates investments in a particular industry or group of industries to approximately the same extent as the index.  Dividends and capital gains are distributed annually. 

This fund currently has 68% of their portfolio in technology, with 7 other sectors accounting for the remaining percentage of the fund.  The fund is heavy Apple Inc., Microsoft, International Business Machines, and Google. 

Past Performance: 1 year 49.97%, 3 years 20.21% 5 years 23.98%.

Fidelity Select Electronics Portfolio ( FSELX ) a Zacks Rank #1 (Strong Buy) invests in common stocks of companies principally engaged in the design, manufacture, sale of electronic components (semiconductors, connectors, printed circuit boards, and other components); equipment vendors to electronic component manufacturers; electronic component distributers; and electronic instruments and electronic systems vendors.  The fund offers dividends and capital gains twice a year in April and December. 

This fund holds 91% of their stocks in technology companies, and the remainder in 3 sectors.  Further, the fund is heavy Intel, Broadcom, Analog Devices, and Altera. 

Past Performance: 1 year 45.92%, 3 year 16.18%, 5 year 21.28%.

USAA Science and Technology Fund ( USSCX ) a Zacks Rank #1 (Strong Buy) which invests at least 80% of its assets in equity securities of companies expected to benefit from the development and use of scientific and technological advances and improvements.  The fund may invest up to 100% of its assets in investment grade short-term debt instruments.  The fund pays its dividends annually.  Capital gains are paid in December of each year.

This fund, while 47% in Tech companies, has a smaller percentage of Tech companies than our other Tech Mutual Funds listed above due to its diversification of other sectors; Health 15%, Other 13%, Services 10%, Finance 5%, Industrial 4.5%, and Retail 3% (non-durable accounts for the remainder). 

Past Performance: 1 year 38.22%, 3 year 18.93%, 5 year 21.52%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Earnings , Mutual Funds


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