Best Three Technology Investing Funds for 2022

Sep 01, 2022 By Triston Martin

Consider a technology mutual fund if you want to invest in a professionally managed portfolio of technology assets. By pooling together various holdings in the technology industry, these funds provide investors with a low-hassle way to diversify their holdings while reducing overall portfolio risk.

Mutual funds investing in technology frequently own shares of established firms like Alphabet Inc. and Amazon.com Inc. and emerging, smaller but rapidly expanding firms. Looking at their one-year trailing total return as of the closing of markets on December 14, 2021, we can see which three technology mutual funds performed the best.

What Exactly Is A Technology Fund?

Equity in technology businesses is a joint holding for technology funds. Many of their bets are placed on up-and-coming technologies that promise to shake up the I.T. industry. Some well-known Indian technology funds include the ICICI Prudential Technology Fund, the SBI IT Funds, and the Aditya Birla Sun Life New Millennium Fund.

Infosys, HCL Technologies, Tech Mahindra, Mind Tree, etc., are a few technology firms in its portfolio. Most startups supported by these capital pools focus on developing ground-breaking technology solutions to address intricate problems established businesses face.

The Rising Demand for Technology Investment Funds

Investment options in technology funds have grown in popularity in recent years. This is because the export of I.T. goods and services and the proportion of GDP devoted to the I.T. industry have been rising steadily in recent years. For FY17, NASSCOM expected total I.T. sales to be $38 billion in the home market, with an additional $117 billion coming in from overseas sales.

Suitability

Over five years, technology funds in India have regularly returned 14% to 19% annually. With a return like that, they make for a solid diversification choice for anybody hoping to profit from the booming technology industry in the nation.

Taxation

Technology funds are taxed the same way as other funds: according to the proportion of their portfolios invested in debt and equity. For tax purposes, they are classified as equity funds if at least 65% of their holdings are made up of stocks and shares.

Therefore, a 15% tax rate is applied to the capital gains realized within one year from investing in equity-oriented hybrid funds. Long-term capital gains on these investments are subject to a 10% tax rate above Rs. 1 lakh if held for more than a year.

The Funds for the Emerging Technology Future

The Standard & Poor's 500 Index rose 8% in June 2017, while the FANG companies increased by 25% to 30%. The future seems bright, thanks to technological advancements. As the market for personal computers and mobile phones nears saturation, development is anticipated to remain sluggish.

Cloud computing and artificial intelligence are two emerging industries that are upending the I.T. industry and are poised to become the future's golden geese. Gordon E. Moore, the co-founder of Intel, foresaw the tech industry's expansion in 1965.

Fidelity Select Semiconductors Portfolio

Adam Benjamin is in charge of FSELX. The fund's investment objective is capital appreciation through exposure to firms involved in creating, distributing, and retail selling electronic components. FSELX has more than 87% of its assets in U.S. stocks and the rest in non-U.S. equities.

Nearly three-quarters of the portfolio is invested in technology companies. The majority of the fund's holdings are in large growth companies. NVIDIA Corp., Marvell Technology Inc., and NXP Semiconductors N.V. are the top three holdings of FSELX, all of which are semiconductor businesses.

Columbia Seligman Global Technology Fund

Paul H. Wick, Sanjay Devgan are the company's managers. The fund's primary investment objective is long-term capital growth through exposure to firms worldwide that operate in the technology sector. Approximately 96% of CGTYX's assets are invested in U.S. firms across a wide range of market capitalizations.

Its top three investments are in Apple Inc., a global leader in consumer electronics, software, and online services; Teradyne Inc., a designer and manufacturer of automatic test equipment; and Lam Research Corp., a supplier of wafer fabrication equipment to the semiconductor industry.

Columbia Seligman Technology and Information Fund

Paul H. Wick are SCMIX's management team. The fund's investment strategy is an equity one that prioritizes stocks connected to technology in the hopes of long-term capital gain. The fund makes investments in businesses of varying sizes.

Nearly 86% of the fund is invested in I.T. firms, with the rest spread among communication services, industrials, and other sectors. 13 It holds shares in both fast-growing and stable companies. Lam Research, Apple, and Teradyne are its top three holdings.

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