Individual investors seeking access to a professionally managed portfolio of technology securities may wish to consider a technology mutual fund. These funds allow investors to access a broad range of technology securities, thereby mitigating risk and simplifying the investment process while maximizing diversification within the sector.
Some popular technology stocks often included in these mutual funds’ portfolios are major players like Alphabet Inc. (GOOG) and Amazon.com Inc. (AMZN), as well as newer, smaller, and fast-growing companies.
- Technology mutual funds outperformed the benchmark Morningstar US Technology Index over the past year.
- The funds with the best one-year trailing total returns are FSELX, CGTYX, and SCMIX.
- The top holding of the first fund is NVIDIA Corp., and the top holding of the second and third funds is Lam Research Corp.
We look at the top three technology mutual funds as ranked by their one-year trailing total return (TTM) as of the close of markets on Dec. 14, 2021. The funds were selected from a group of technology funds that are open to new investors, require a minimum initial investment of $1,000 at most, and have assets under management (AUM) of at least $50 million.
All three of these funds outperformed the benchmark Morningstar US Technology Index, which provided a one-year trailing total return of 36.2%. They also all significantly outperformed the total return for the category average for technology sector funds, which was 15.8%.
All data below is from Dec. 15, 2021.
- One-Year Trailing Return: 55.5%
- Expense Ratio: 0.70%
- Trailing-12-Month (TTM) Dividend Yield: 0.30%
- Assets Under Management: $9.4 billion
- Inception Date: July 29, 1985
FSELX is managed by Adam Benjamin. The fund seeks to achieve capital appreciation by investing in companies engaged in the design, manufacture, or sale of electronic components, as well as in equipment vendors and distributors.
More than 87% of FSELX assets are invested in U.S. equities, with non-U.S. equities making up nearly all of the remainder. Technology stocks comprise nearly three-fourths of the portfolio. The fund primarily invests in large-cap growth equities.
- One-Year Trailing Return: 39.1%
- Expense Ratio: 0.95%
- Trailing-12-Month (TTM) Dividend Yield: 0.38%
- Assets Under Management: $2.2 billion
- Inception Date: May 23, 1994
CGTYX is managed by Paul H. Wick, Sanjay Devgan, and Shekhar Pramanick. The fund seeks to achieve long-term capital appreciation by targeting global technology- or technology-related companies.
CGTYX invests in companies across market capitalizations, and about 96% of its assets are invested in U.S. companies. Its top three holdings are Lam Research Corp. (LRCX), a supplier of wafer fabrication equipment to the semiconductor industry; Apple Inc. (AAPL), a multinational technology company offering consumer electronics, software, and online services; and Teradyne Inc. (TER), an automatic test equipment designer and manufacturer.
- One-Year Trailing Return: 39.0%
- Expense Ratio: 0.91%
- Trailing-12-Month (TTM) Dividend Yield: 0.32%
- Assets Under Management: $11.8 billion
- Inception Date: June 23, 1983
SCMIX is managed by Paul H. Wick, Sanjay Devgan, and Shekhar Pramanick. The fund targets long-term capital appreciation by investing in an equity strategy focused on technology-related securities.
The fund invests in companies across the market capitalization spectrum. Information technology stocks comprise nearly 86% of the fund’s holdings, though the fund also holds communication services, industrials, and other names. It invests in a blend of growth and value stocks. Its top three holdings are Lam Research, Apple, and Teradyne, all described above.
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