4 ways to capitalize on the disruptive tech boom

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Disruptive technology is changing the way we think about things, from our homes to businesses. This emerging bucket of technology is capable of transforming almost every sector. Innovation in artificial intelligence (AI), robotics, 5G, machine learning, edge computing, and Bitcoin will help tech stocks and mutual funds outperform in the market.

Fidelity Select technology portfolio FSPTX, Fidelity Select Semiconductors portfolio FSELX, Franklin DynaTech Fund Class A FKDNX and Fidelity Select software and IT service portfolio FSCSX are the mutual funds that investors should consider to make the best in such a scenario.

As previously mentioned, these disruptive technologies, products and services have the potential to transform the way we live. Disruptive innovation is being introduced rapidly this year and is poised to grow exponentially in the years to come. At the forefront of this technology boom is the introduction and expansion of 5G. This high-speed, low-latency wireless Internet access will accelerate digitization, which has already received a boost during the pandemic. From medical science (telemedicine to vaccine discovery), education, factory operations, entertainment to security, 5G meets the needs of connectivity and computing power.

Now let’s talk about the everyday things like AI, robotics, cloud computing and machine language. Businesses around the world are now moving to the cloud to manage the pandemic and stay operational, create a digital atmosphere where employees can work from home and connect with customers, and most importantly, to unite to gain a competitive advantage. Digital assistants simplified work across all industries, leaving day-to-day work to computers while employees focused entirely on engaging with customers.

In the field of robotics, the expansion so far has been broad, ranging from giant arms on the factory floor assembling cars to tiny bots cleaning the house unattended. In fact, more and more fast food chains and cloud kitchens are adopting robots to support unaided food cooking, consistently reducing dependency or irregularity.

According to an Analytics Insight report, market revenues of six disruptive technologies are projected to grow from $1.091 million in 2019 to $1.893 million in 2023, at a CAGR of 11.6%. The six technologies considered are AI (3.9%), robotics (4.4%), big data (16.5%), cybersecurity (14.1%), internet of things (59.9%) and augmented reality & Virtual Reality (1.3%).

4 Fund Selection

Disruptive technologies are playing a critical role in the fourth industrial revolution, and companies that invest or deploy such technologies are poised to thrive. As such, we have shortlisted four mutual funds that currently have a Zacks Mutual Fund Rank #1 (Strong Buy) with significant exposure to edge computing technology.

In addition, these funds have posted encouraging year-to-date returns. Moreover, the minimum initial investment is within $5000. We expect these funds to outperform their peers going forward.

This begs the question of why investors should consider mutual funds. Reduced transaction costs and portfolio diversification without multiple commission fees associated with stock purchases is the primary reason to park money in mutual funds (read more: Mutual Funds: Pros, Cons, and How They Make Investors Money).

Fidelity Select technology portfolioFund seeks capital appreciation. The Fund invests primarily in equity securities, particularly the common stocks of companies that offer, use or develop products, processes or services that offer or benefit significantly from technological advances and improvements.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Notably, the FSPTX, an undiversified fund, has returned 38.1% and 32.1% over the past three and five years, respectively. To see how this fund compares to its category and other 1 and 2 ranked mutual funds, please click here.

Fidelity Select Technology Portfolio has an annual expense ratio of 0.69% compared to the category average of 1.05%.

Fidelity Select Semiconductors portfolio Fund seeks capital appreciation. As an undiversified fund, FSELX invests a majority of its assets in the securities of companies principally engaged in the design, manufacture or sale of semiconductors and semiconductor equipment.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSELX has returned 45.2% and 32.6% over the past three and five years, respectively. To see how this fund compares to its category and other 1 and 2 ranked mutual funds, please click here.

The Fidelity Select Semiconductors portfolio has an annual expense ratio of 0.70%, below the category average of 1.05%.

Franklin DynaTech Fund Class Aseeks capital growth. FKDNX invests primarily in common stocks. As a fund manager, FKDNX focuses on innovation leaders, leverages new technologies, has superior management and benefits from new industry conditions.

This Sector Tech product has had positive total returns for more than 10 years. Specifically, FKDNX has returned 34.6% and 29.5% over the past three and five years, respectively. Click here to see how this fund compares to its category and other 1st and 2nd place mutual funds.

Franklin DynaTech Fund Class A has an annual expense ratio of 0.85% compared to the category average of 0.99%.

Fidelity Select software and IT service portfolioseeks capital growth. The undiversified fund invests most of its assets in the common stocks of companies engaged in the research, development, manufacture or sale of products or processes related to software or information-based services.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Notably, the FSCSX has returned 31.9% and 28.2% over the past three and five years, respectively. To see how this fund compares to its category and other 1 and 2 ranked mutual funds, please click here.

Fidelity Select Software & IT Services portfolio has an annual expense ratio of 0.70% compared to the category average of 1.05%.

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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.

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