10 Best Technology Mutual Funds Of May 2024

As impressive as the technology sector has been over the past 10 years, BlackRock Technology Opportunities Fund has fared even better.

BSTSX seeks U.S. and global technology stocks of all sizes that exhibit rapid, sustainable growth and which aim to disrupt the status quo. BSTSX holds Morningstar’s silver rating. That rating reflects the research firm analysts’ conviction in a fund’s prospects for outperformance.

Well over 80% of BSTSX’s holdings possess either wide or narrow moats, which should make it difficult for rivals to steal market share for about 10 to 20 years, in Morningstar’s estimation.

The fund’s managers have high conviction in their strategy as well. They’ve invested nearly 50% of their shareholders’ money in their top-10 holdings. If you crave exposure to the technology sector, this fund is worth checking out.

The Columbia Global Technology Growth fund ferrets out technology companies that create cutting edge innovation and technological advancements. Within this group, the managers seek a balance of stocks with competitive advantages, growth and reasonable valuations. Since 2013, the only year the fund underperformed the Morningstar tech fund category was 2020.

CTYRX tilts toward mega-cap companies such as Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA) and Alphabet (GOOGL). Over 70% of the companies have a competitive moat wide enough to fend off rivals for at least 20 years, Morningstar forecasts.

The fund can be purchased through an advisor or eligible brokerage or retirement plans. Do-it-yourself investors can enter via A-class shares (CTCAX).

The Fidelity Select Semiconductors Portfolio’s 10-year average annual return of 26.73% isn’t a typo. The semiconductor subsector of technology funds was the place to invest during the last 10 years. But proceed with caution. The past is no guarantee of future returns.

Also, bear in mind that this fund is highly focused on one industrial segment. Plus, FSELX bets about 75% of its money on its top-10 holdings. Those traits likely make this fund more volatile than its Morningstar category on average.

How much more volatile? Over the past 10 years, FSELX’s standard deviation has been about 27 versus roughly 21 for its peer group. That’s statistician shorthand for saying that the fund deviated from its average annual return by plus or minus 27 percentage points 68% of the time over the past 10 years. Its peer group’s deviation—from a lower average annual return—was just 21 percentage points.

As for FSELX’s torrid performance, can the fund keep it up? Its sales and earnings far outstripped its Morningstar category’s average over the past five years. But its earnings per share growth is expected to lag its category average’s in the next three to five years.

Meanwhile, the fund’s expense ratio is lower than its category average. And investors can buy FSELX without paying a transaction fee.

T. Rowe Price Science & Technology Fund’s mission is to invest in a diverse mix of technology and scientific companies that have strong earnings and sales growth, as well as leading and improving market share.

The average annual earnings growth of PRSCX has topped its category’s average over the past five years. Over the next five years its earnings growth is projected to continue outperforming.

About 75% of PRSCX’s stocks are U.S. based. PRSCX’s roughly 7% cash weighting enables it to snap up promising opportunities. PRSCX has outperformed its category average over the past one, three, five, 10 and 15 years.

The Janus Henderson Global Technology and Innovation Fund seeks U.S. and international companies that are at the forefront of technological change and innovation. The fund leans toward rapidly growing large and mega-capitalization firms. Seventy percent of JNGTX’s portfolio consists of established, resilient firms. The balance consists of the highest growing, riskier companies.

JNGTX’s earnings and sales growth over the past five years far outpaced the category average. About 75% of JNGTX holdings have competitive moats wide enough to keep rivals at bay for at least 20 years, Morningstar says. JNGTX average annual returns topped its category averages over the past one, three, five, 10 and 15 years.

The Rydex Electronics Fund owns stocks of all sizes, although the bulk are large caps. Around 90% of RYSIX money is at work in semiconductor and semiconductor equipment stocks.

Semiconductors or microchips are at the heart of electronic devices in a wide range of industries such as communications, computing, military systems, transportation, and clean energy. They are also widely used in phones, TVs, computers, medical equipment and more. You can expect rising future demand for products from companies in this fund.

RYSIX’s turnover ratio around 145% is nearly triple its category average’s. That might help explain RYSIX’s higher-than-category-average expense ratio. However, RYSIX’s average annual return outshined its category average over the past one, three, five, 10 and 15 years.

On average, RYSIX currently holds more smaller, undervalued and higher quality firms than its technology peers. Still, the top-10 holdings account for more than 505 of the fund’s assets and include well-known names Nvidia (NVDA), Broadcom (AVGO), Intel (INTC), Texas Instruments (TXN) and Advanced Micro Devices (AMD).

The Fidelity Select Technology Fund’s $13.8 billion in total net assets make it the second largest fund on this list, just behind its stablemate Fidelity Select Semiconductors, which is also on our list. Although FSPTX manager Adam Benjamin has been at the helm only since the start of 2020, Fidelity believes in Benjamin enough to put him in charge of additional tech-focused portfolios as well, including white-hot FSELX.

With FSPTX, Benjamin is the jockey of a winning thoroughbred. FSPTX has outperformed its category average over the past one, three, five, 10 and 15 years.

FSPTX targets companies that develop products or provide services that should benefit from technological advances. Benjamin strives to do that by plumbing themes that he expects will be disruptive—like digital transformation, cloud computing and artificial intelligence—for stock ideas.

Nearly half the fund is invested in Microsoft (MSFT), Apple and Nvidia. That makes FSPTX performance vulnerable to a drop in the price of one of these companies.

Also, Benjamin has upped FSPTX’s exposure to privately held firms. But those bets only account for a cautious low-single-digit percent portion of the portfolio. Time will tell how well Benjamin’s boldness pays off.

The Fidelity Select Software and IT Services Portfolio invests in companies involved in research, production and distribution of products and services involved in software and information-based services. This no-transaction-fee fund has an annual expense ratio that’s less than 75% the size of its category average. A meager 4% annual turnover rate helps keep costs down for shareholders.

FSCSX has an appetite for companies with higher financial leverage and lower profits. Those tend to be lower volatility stocks. Such stocks commonly help a fund limit losses amid market weakness, but they also tend to lag in bull markets. Currently, such equities are a key reason why FSCSX’s volatility is lower than its category average.

But that does not mean FSCSX’s portfolio is full of lackluster stocks. On the contrary. Its stocks had a higher rate of sales growth than FSCSX’s category average over the past five years. And their earnings growth over the next five years is projected to top the category’s average.

Nor does this fund’s penchant for low volatility stocks mean it is shy. FSCSX had roughly 50% of its money at work in its top 10 holdings. That reflects an informed professional manager’s bet on the likelihood of society’s growing demand for software and information technology services.

Columbia Seligman Technology & Information Fund is a big fan of information technology and communications services. SCIOX has nearly 90% of its money at work in those sectors. Lead manager Paul Wick, at the helm since 1990, also favors reasonably priced stocks. SCIOX typically avoids buying companies that are highly priced relative to their intrinsic value.

Results? SCIOX’s average annual returns are superior to its category average over the past one, three, five and 10 years. The fund has a low 13% annual turnover rate. SCIOX is a fund for value-leaning investors—who work with a financial advisor or an eligible brokerage or retirement plan—to consider.

The Columbia Seligman Global Technology Fund averaged an annual return around 20% over the past 10 years. That’s roughly five percentage points a year better than its category average. And that outperformance looks like a good bet going forward.

About 50% of CCHRX holdings bear what Morningstar calls “wide moat coverage.” This means the firms have a patent or other characteristics that should make it hard for rivals to make inroads for at least the next 20 years.

Roughly 40% of CCHRX’s money is bet on its top-10 holdings. Overall, holdings range from small stocks to large stocks. That group includes well-known and less-familiar tech names. Recent big bets include Lam Research (LAM), maker of semiconductor manufacturing equipment, as well as Apple and Broadcom.

With its high price volatility, investing in the tech sector is not for the faint of heart. Investors can purchase this fund through an advisor or eligible brokerage or retirement plan if available.