5 Hot Technology Investments for Your 401k Funds

Advertisement

computer chip

When it comes to investment, many businesses have seasonal patterns.  For example, in the technology industry, there is usually a boost in business later in the year.  Why?  Well, this is generally when customers determine their capital budgets and big businesses make big technology investments.

And research from Adviser Investments bears this out.  According to the firm’s analysis, tech stocks have usually outperformed the general market from November to February (this is based on data for the past 26 years).  Of course, the past four months was certainly another example of this.  So far for those investors who have tech mutual funds, it’s been a nice ride.

OK, what are some of the top technology funds?  Here’s a look at 5:

Allianz RCM Technology (RAGTX)

The Allianz RCM Technology (MUTF: RAGTX) fund definitely has experienced managers.  Huachen Chen and Walter Price have been at the helm of the operation since the mid 1990s.  In other words, they’ve navigated some of the biggest trends in tech, including the dot-com boom and bust.

And lately, the Allianz RCM fund has been sizzling.  For the past year, it is up 40.03%.

To get these returns, the fund will invest in early-stage companies.  Some examples include SuccessFactors (NASDAQ: SFSF), Qlik Technologies (NASDAQ: QLIK) and Riverbed (NASDAQ: RVBD).  These are in hot categories like cloud computing and virtualization.

Interestingly enough, the fund will periodically short companies, which can help to lower the risk levels of the portfolio.  Besides, in the frothy tech sector, there are often companies that will eventually plunge.

Fidelity Select Electronics Portfolio (FSELX)

The Fidelity Select Electronics Portfolio (MUTF: FSELX) mutual fund, which has about $1.3 billion in assets, tends to focus on large tech companies.  Its top holdings include Oracle (NASDAQ: ORCL), Microsoft (NASDAQ: MSFT), Google (Nasdaq: GOOG), IBM (NYSE: IBM) and CA, Inc. (NYSE: CA).

All in all, the Select fund has been relatively consistent (at least compared to other tech funds).  Over the past five years, the average annual return was 11.71%.  The expense ratio is also a reasonable 0.89% and the turnover is at only 56%.

Ivy Science & Technology (WSTAX)

Source: iStock
For the past ten years, Zack Shafran has run the Ivy Science & Technology (MUTF: WSTAX) fund.  During this period, the average annual return was 7.29%.

Shafran goes beyond looking at the typical tech companies, like semiconductor, software and hardware plays.  For example, he will invest in biotech and other healthcare companies (they represent about 12% of the portfolio).  This added diversification helps to mute the volatility.

As for tech stocks, Shafran tries to find secular trends.  Often, these should result in opportunities that generate outsized returns.

Yet it can be fraught with risk.  Just look at one of its top holdings:  Cree (NASDAQ: CREE).  The company is a dominant player for next-generation lighting technologies.  However, the market has been volatile and so has the stock.

Henderson Global Tech I (HFGIX)

While the U.S .is the dominant player in technology and innovation, there are many other countries that are gaining ground.  This has been a nice boost for Henderson Global Tech I (MUTF: HFGIX).  About 17% of the portfolio has companies from Europe and nearly 18% from Asia.  In fact, 13% of Henderson Global stocks are in emerging markets.  Yes, this is a way to supercharge returns.

However, the fund also focuses on the larger companies — and still has a big position in the US.  Some of the top holdings include Apple (NASDAQ: AAPL), Adobe (NASDAQ: ADBE) and Oracle (NASDAQ: ORCL).

Columbia Seligman Communications & Info (SLMCX)

Columbia Seligman Communications & Info (MUTF: SLMCX), which has $4.3 billion in assets, has a value-approach to picking tech stocks.  The result is that the portfolio has lots of mature companies, like BMC Software (NYSE: BMC) and Symantec (NASDAQ: SYMC).

The strategy has helped to deal with market volatility.  For example, in the 2008 financial crisis, the fund was only off by 36.52%.  But then again, the conservatism often means that it will not be a big winner during the rallies.

As of this writing, Tom Taulli did not own a position in any of the stocks named here.

Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.


Article printed from InvestorPlace Media, https://investorplace.com/2011/03/technology-investment-funds-tech-investing-mutual-fund/.

©2024 InvestorPlace Media, LLC