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Tuesday, December 7th, 2021

The pandemic acted as a major driver for innovation and digitalization across businesses and homes last year. This transformation is likely to continue even after the pandemic, driven by shifting consumer expectations, increased competition, innovative technology, evolving legislation and regulations. Digital transformation holds the key to compile humongous data archives and assess multiple facets of the market to draw logical conclusions. Artificial intelligence (AI) and the Internet of Things (IoT) are redefining advertising, healthcare, robotics, retail, entertainment, education and more.

AI has given us new ways to address problems with far-reaching consequences. Its application in the field of drug discovery, content generation, security & surveillance has been remarkable, making it a trend poised to pick up pace. In the field of drug discovery and research, the AI-assisted method predicted around 26 potential vaccines to fight coronavirus and it could make accurate predictions with more than 700,000 different proteins in the dataset provided for vaccine hunt.

Additionally, the pandemic has brought about several lifestyle changes, promoting indoor activities and allowing extended hours of family time and changing the way we think, work, study, communicate and spend money. These lifestyle changes have deeply impacted the business landscape and enhanced technological adoption rapidly. For instance, even small and mid-sized businesses adopted contactless payment channels and professional service robots, while the shortage of house help and fear of virus spreading perked up demand for cleaning bots, AI-enabled security and smart home devices.

IoT is part of daily life and has a place in our homes and businesses. It is a network of digital and analog machines and computing devices provided with unique identifiers that have the ability to exchange data without human intervention. IoT helps users to connect and personalize smart home devices and robots, which can be used for monitoring security and controlling the home environment. One can monitor their health with the help of wearables and collect data to help doctors make a proper diagnosis.

The usage of AI, IoT and machine learning has also brought us at the cusp of creating a new generation of advanced robots that can think and act like humans. These robots can now replicate a wide number of human tasks and also do those tasks efficiently, with greater accuracy and at a lower cost. Manufacturers can collect and analyze data from various interconnected equipment and this will help increase efficiency and productivity.

Additionally, the pandemic has amplified the need for cloud computing, which helps employees access devices at offices and use collaboration platforms to communicate with clients and colleagues. AI is being used to develop complex algorithms to protect networks and systems.

4 Mutual Fund Choices

AI and IoT have become the cornerstone of digital transformation and will constantly keep the technology space booming. We have, thus, shortlisted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.

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: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Technology Portfolio FSPTX fund aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, this non-diversified fund that has returned 31.3% and 32.7% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSPTX has an annual expense ratio of 0.71%, which is below the category average of 1.05%.

Fidelity Select Semiconductors Portfolio FSELX fund aims for capital appreciation. The non-diversified fund invests majority of assets in 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 32.1% and 33.6% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSELX has an annual expense ratio of 0.72%, which is below the category average of 1.05%.

Franklin DynaTech Fund Class A FKDNX aims for capital appreciation. The fund invests primarily in common stocks and the fund manager focuses on companies that are leaders in innovation, take advantage of new technologies, have superior management, and benefit from new industry conditions.

This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, FKDNX has returned 29.1% and 28.1% over the past three- and five-year period, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.

FKDNX has an annual expense ratio of 0.85% versus the category average of 1.00%.

Fidelity Select Software & IT Services Portfolio FSCSX aims for capital appreciation. The non-diversified fund invests majority of assets in common stocks of companies engaged in research, design, production or distribution of products or processes that relate to software or information-based services.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSCSX has returned 28.6% over both the past three and five-year period. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSCSX has an annual expense ratio of 0.71% versus the category average of 1.05%.

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