Disruptive technologies are altering ways at workplaces and homes. From disruptive technology’s enormous bucket let’s pick up edge computing today.
What is edge computing? It is a transition concerning acquiring, storing, and processing data. Edge computing places the control functions closer to the data source and allows data processing and decision-making functions to happen closer to the source. This disruptive technology is distributed and has an open IT architecture that features decentralized processing power, enabling mobile computing and Internet of Things (IoT) technologies. In short, in edge computing, data does not have to be transmitted to a data center rather, it can be processed by the device itself or by a local computer or server.
During the pandemic, cloud computing got an enormous boost as businesses were forced to house data and use software services to enable employees to work from home. But, now with edge computing, the time taken to receive information (latency) is reduced and the amount of traffic traveling across the Internet’s not-unlimited infrastructure also decreases. And high-end cybersecurity is a bonus, making edge computing potentially a bigger disruptive technology trend than cloud computing.
Edge computing companies are helping to build and manage small, localized data centers that enable remote work and e-commerce trends. Moreover, the amalgamation of artificial intelligence (AI) into the edge ecosystem is expected to drive the market further as AI helps to make real-time decisions in a matter of just milliseconds. Hence, precision monitoring and machinery control will become easier. Per a Grand View Research forecast, the global edge computing market size is anticipated to reach $61.14 billion by 2028, at a CAGR of 38.4%.
4 Fund Picks
Disruptive technologies like edge computing play a crucial role in the fourth industrial revolution and companies investing or providing such technologies are poised to grow. Hence, we have shortlisted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and have significant exposure to edge computing technology.
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 portfolio diversification without several commission charges 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 engaged in offering, using, or developing products, processes, or services that will provide 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. Specifically, this non-diversified fund has returned 30.7% and 31.8% 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 0.69% versus 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 28.8% and 29.1% 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 0.99%.
Fidelity Select Semiconductors Portfolio FSELX fund aims for capital appreciation. The non-diversified fund invests a 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 34.9% and nearly 32% 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 0.70%, below the category average of 1.05%.
Fidelity Select Software & IT Services Portfolio FSCSX aims for capital appreciation. The non-diversified fund invests most assets in common stocks of companies engaged in research, design, production or distribution 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. Specifically, FSCSX has returned 27.3% and 28.3% over the past three and five-year period, respectively. 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 0.70% versus the category average of 1.05%.
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