4 Top-Performing Tech Funds Of 2019
Zacks Investment Research | Jan 28, 2020 09:58PM ET
The U.S. technology sector clearly outpaced other S&P 500 sectors in 2019, thanks to new trends and advancements. Although the sector encountered volatility because of the rather long U.S.-China tariffs war and a slowdown in global economic growth around the first half of the year, the sector managed to recover later on.
A major reason behind the recovery was the reconciliation on the trade front between the United States and China in the fourth quarter. The result is evident in the striking fourth-quarter 2019 earnings reports of technology giants reported so far. This is why the sector is ideal for investments at present.
Technology Becomes Top-Gaining Sector of 2019
The Technology Select Sector SPDR Fund’s (XLK) 47.9% growth in 2019 was instrumental in pushing the overall returns of the broader S&P 500. Most of this growth is attributed to the second half of 2019, when the United States and China made significant progress in trade talks before zeroing in on an initial trade agreement.
However, trade-related progress wasn’t the only reason behind the technology sector’s remarkable performance last year. Significant development in 5G networks, implementation of new technologies in defense projects, and implementation of AI and machine learning technologies to automate industrial production across the country also boosted the sector.
In addition, the low-rate environment created by the Federal Reserve last year through three interest rate cuts also aided technology companies to an extent. The central bank cut interest rates in July, September and October. The current benchmark rates are in the range of 1.5 to 1.75%.
4 Best Technology Mutual Funds
We have, therefore, selected four technology mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and were some of the top performing funds last year. In addition, the minimum initial investment for these funds is within $5,000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
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: Zacks Investment Research
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