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4 Mutual Funds to Buy on Apple's Strong Q2 Earnings

Apple Inc AAPL posted favorable earnings results in its fiscal second quarter. The good show was driven by impressive iPhone X, iPhone 8 and iPhone 8 Plus sales.

Apple's encouraging earnings results had a positive impact on the tech sector and boosted investor sentiment. Following these promising trends, investing in technology mutual funds with a significant holding in the iPhone maker will be a prudent decision.

Q2 Earnings in Focus

Apple's fiscal second-quarter earnings of $2.73 per share and revenues of $61.14 billion easily topped the respective Zacks Consensus Estimate of $2.69 and $60.99 billion. On a year-over-year basis, earnings and revenues registered growth of 30% and 15.6%, respectively.

Apple benefited from robust iPhone and Services segment revenue growth. iPhone X has been its top-selling phone every week since its launch in November 2017. Apple mentioned that the device was the most popular smartphone in China in the reported quarter. Another iPhone model was also among the top three in the country.

Apple Services' revenues, that constitute 15% of total sales, were $9.19 billion, beating the consensus estimate of $8.33 billion backed by record growth in App Store, Apple Music, iCloud and AppleCare revenues in the quarter.Total iPhone unit sales of 52.2 million increased 3% year over year on the back of iPhone X, iPhone 8 and iPhone 8 Plus. (Read More: Apple Q2 Earnings & Revenues Top Estimates, Up Y/Y )

Apple Rally Boosts Tech Sector

Apple became the latest tech giant to come up with upbeat earnings and revenue growth levels. Apple's March-quarter earnings are followed by Alphabet Inc.'s GOOGL 23.5% and Facebook, Inc.'s FB 49% revenue growth.

Total Q1 earnings for the 444 S&P 500 companies that have reported results already are up 24.5% from the same period last year on 9.3% higher revenues, with 77.7% beating EPS estimates and 75% beating revenue estimates. (Read More: A Critical Look at the Q1 Earnings Season )

In the past one year, the tech sector jumped 23.6%, becoming the best performing sector in the S&P 500. In fact in the last three months, the tech sector rose 10.1%, higher than the S&P 500's increase of 3.5%. Additionally, mutual funds related to this sector registered strong returns. According to Morningstar, technology mutual funds have returned 27.8% over the last one year.

Buy These 4Mutual Funds

Here, we have selected four mutual funds that have significant exposure to the tech sector and have Apple as one of its top three holdings. Moreover, these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more:  Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money ).

These funds also have encouraging one-year and year-to-date (YTD) returns and minimum initial investment is within $5000. Also, each of these funds has a low expense ratio.

Dreyfus Technology Growth A DTGRX invests the majority of its assets in stocks of growth-oriented technology companies from different market caps. The fund invests around one-fourth of its assets in foreign companies.

DTGRX carries an  expense ratio of 1.26% compared with the category average of 1.38%. Moreover, DTGRX requires a minimal initial investment of $1,000. The fund has one-year and YTD returns of 26.8% and 6%, respectively.

DTGRX has a Zacks Mutual Fund Rank #2. Further, as of the last filing, Microsoft, Apple and Amazon were the top holdings for DTGRX.

Fidelity Select TechnologyFSPTX invests a large chunk of its assets in common stocks of companies primarily involved in production, development and sale of products used for technological advancement. The fund invests in both U.S. and non-U.S. companies. Factors including financial strength and economic condition are considered before investing in a company.

FSPTX carries an expense ratio of 0.74%, compared with the category average of 1.38%. Moreover, FSPTX requires a minimal initial investment of $2,500. The fund has one-year and YTD returns of 28.5% and 5.1%, respectively.

FSPTX has a Zacks Mutual Fund Rank #1. Further, as of the last filing, Apple, Alphabet and Microsoft were the top holdings for FSPTX.

Columbia Global Technology Growth A CTCAX invests a huge part of its assets in common stocks, preferred stocks and securities that are convertible into common or preferred stocks. These equity securities are issued by technology companies that will benefit from technological advancements or improvements.

CTCAX carries an expense ratio of 1.32% compared with the category average of 1.38%. Moreover, CTCAX requires a minimal initial investment of $2,000. The fund has one-year and YTD returns of 28.8% and 5.6%, respectively.

CTCAX has a Zacks Mutual Fund Rank #1. Further, as of the last filing, Microsoft, Apple and Alphabet were the top holdings for CTCAX.

Deutsche Science and Technology AKTCAX invests a big portion of its assets in securities of companies of any size and involved in the science and technology sector. The fund may also invest in initial public offerings.

KTCAX carries an expense ratio of 0.96% compared with the category average of 1.38%. Moreover, KTCAX requires a minimal initial investment of $1,000. The fund has one-year and YTD returns of 25.3% and 6.4%, respectively.

KTCAX has a Zacks Mutual Fund Rank #1. Further, as of the last filing, Microsoft, Apple and Alphabet were the top holdings for KTCAX. 

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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.


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

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