3 Solid Funds to Buy on Soaring Semiconductor Revenues

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The dream run for the semiconductor industry has continued into 2022 amid a supply shortage that has crippled several industries. While the supply-chain crisis has been a major issue over the past year amid surging demand, the semiconductor industry has been raking in revenues almost every month.

Moreover, semiconductor demand has been getting a boost from the increased adoption of semiconductors in autos, networking and communication equipment, consumer electronics, and automotive. Thus, funds like Fidelity Select Semiconductors Portfolio FSELX, Putnam Global Technology Fund Class C PGTDX and Fidelity Advisor Semiconductors Fund Class I FELIX are likely to benefit in the near term.

Semiconductor Sales Rise

The Semiconductor Industry Association said earlier this month that global semiconductor sales jumped a whopping 21.1% to $50.9 billion in April from $42 billion on a year-over-year basis. On a month-over-month basis, semiconductor sales grew 0.7% in April.

It has been a great 2022 for the semiconductor industry, with sales jumping in the first four months. Moreover, April was the 13th consecutive month when semiconductor sales jumped more than 20% on a year-over-year basis.

The surge in sales comes amid the growing shortage of semiconductor supply globally. The supply-chain crisis has been crippling several industries, especially automobiles, over the past year. This is compelling automakers to cut down production almost every month.

Semiconductor manufacturers have thus ramped up production, but the crisis is far from over. The shortage is only benefiting chipmakers, driving their revenues.

That said, demand for semiconductors has been on the rise over the past few years now. Over the past few years, demand for semiconductors has increased on Internet of Things (IoT), artificial intelligence (AI), and virtual reality, resulting in higher revenues.

The creation of these cutting-edge technologies requires semiconductor technology. As a result, semiconductor demand is expected to rise in the near future as these services grow in popularity.

According to the Worldwide Semiconductor Technology and Supply Chain Intelligence service from International Data Corporation (IDC), global semiconductor revenues are projected to grow 13.7% in 2022 on a year-over-year basis to $661 billion. This comes after a solid 2021 when revenues hit a whopping $582 billion.

3 Best Choices

We have, thus, selected three mutual funds with significant exposure to semiconductor producers carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

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

Fidelity Select Semiconductors Portfolio fund seeks capital appreciation. FSELX normally invests at least 80% of assets in common stocks of companies principally engaged in the design, manufacture, or sale of electronic components (semiconductors, connectors, printed circuit boards, and other components); equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.

Fidelity Select Semiconductors Portfolio fund has a track of positive total returns for over 10 years. Specifically, FSELX’s returns over the three and five-year benchmarks are 37% and 24.4%, respectively. Fidelity Select Semiconductors Portfolio fund has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

Putnam Global Technology Fund Class C seeks capital appreciation. PGTDX invests primarily in common stocks. Putnam Global Technology Fund Class Cfundnormally invests at least 80% of assets in securities of companies principally engaged in technology companies.

Putnam Global Technology Fund Class Chas a track of positive total returns for over 10 years. Specifically, PGTDX’s returns over the three and five-year benchmarks are 19.6% and 16.8%, respectively. Putnam Global Technology Fund Class Cfundhas a Zacks Mutual Fund Rank #2. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

Fidelity Advisor Semiconductors Fund Class I seeks capital appreciation. FELIX invests primarily in common stocks. Fidelity Advisor Semiconductors Fund Class I normally invests at least 80% of assets in securities of companies principally engaged in the design, manufacture, or sale of electronic components; equipment vendors to electronic component manufacturers; electronic component distributors; and electronic instruments and electronic systems vendors.

Fidelity Advisor Semiconductors Fund Class I has a track of positive total returns for over 10 years. Specifically, FELIX’s returns over the three and five-year benchmarks are 36.7% and 24.1%, respectively. Fidelity Advisor Semiconductors Fund Class I has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

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