The Wall Street rally continues after a solid 2023 and a robust first quarter. All three major indexes hit all-time highs earlier this year. Since then, the indexes have attained multiple fresh all-time highs.
On Jun 11, the Nasdaq Composite and the S&P 500 hit new all-time highs. The Nasdaq gained 0.9% on Tuesday to close at a record high of 17,343.55 points.
The tech-heavy index has had a solid 2023 after a difficult 2022. Year to date, the Nasdaq has climbed 15.5% after gaining 43.4% in 2023, to record its best year since 2020.
Tech stocks have been largely responsible for the broader rally, led by NVIDIA Corporation NVDA, which has been at the heart of the ongoing enthusiasm surrounding artificial intelligence (AI), especially generative AI.
NVIDIA is the market leader in AI chipsets and its massive surge is being driven by its graphic processing units. Its shares have soared 211.9% in the past 12 months and 144.2% year to date.
The AI market is anticipated to grow rapidly in the near future, with demand for AI chipsets already increasing.
Moreover, the proliferation of smart devices is driving the growth of the AI sector. These devices require sophisticated computing and learning capabilities for tasks like face detection, image recognition, and video analytics.
This has led tech giants such as Microsoft Corporation MSFT, Meta Platforms META, Alphabet, Inc. GOOGL and Amazon.com, Inc. AMZN to accelerate their development of AI technologies.
3 Best Choices
As a result, we've chosen three funds from the tech sector that are worth buying. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Advisor Semiconductors Fund Class I FELIX fund seeks capital appreciation. FELIX invests primarily in common stocks. Fidelity Advisor Semiconductors Fund Class I normally invests at least 80% of its assets in securities of companies principally engaged in the design, manufacture, or sale of electronic components; equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.
Fidelity Advisor Semiconductors Fund Class I fund has a track of positive total returns for over 10 years. Specifically, FELIX’s returns over the three and five-year benchmarks are 26.4% and 31%, respectively. The annual expense ratio of 0.74% is lower than the category average of 1.02%. FELIX has a Zacks Mutual Fund Rank #2.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
DWS Science and Technology A KTCAX fund seeks growth of capital. Under normal circumstances, KTCAX invests at least 80% of net assets in common stocks of U.S. companies in the technology sector.
DWS Science and Technology A fund has a track of positive total returns for over 10 years. Specifically, KTCAX’s returns over the three and five-year benchmarks are 8.1% and 17.8%, respectively. The annual expense ratio of 0.90% is lower than the category average of 1.03%. DWS Science and Technology A fund has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Fidelity Select Technology Portfolio FSPTX seeks capital appreciation by investing most of its assets in common stocks of companies principally engaged in offering, using, or developing products, processes, or services that will provide or benefit significantly from technological advances and improvements.
Specifically, Fidelity Select Technology Portfolio’s returns over the three and five-year benchmarks are 7.9% and 20.6%, respectively. The annual expense ratio of 0.68% is lower than the category average of 1.23%. FSPTX carries a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
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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 Nasdaq, Inc.
