February 22, 2024
Funds

3 Must-Buy Funds on a Solid Rebound in Semiconductor Sales – February 13, 2024


Global semiconductor sales totaled $526.8 billion in 2023, declining 8.2% from $574.1 billion in 2022, the Semiconductor Industry Association (SIA) reported. The semiconductor industry started suffering in the second half of 2022, which continued into 2023.

However, the industry has been trying to make a solid comeback and is poised to grow in the near term as sales started rebounding in the second half of 2023.

Semiconductor sales totaled $146 billion in the fourth quarter of 2023, increasing 11.6% year over year and 8.4% quarter over quarter.

Also, monthly sales came in impressive, with December sales totaling $48.6 billion, up 1.5% month over month, according to the SIA.

The semiconductor industry reached unprecedented heights during the peak of the pandemic and in the following months. However, soaring costs, supply-chain crisis and higher interest rates owing to the Federal Reserve’s monetary tightening policy started taking a toll on sales as demand dried up.

The sluggish sales of semiconductors in the first half of 2022 can be attributed to inventory adjustments made by client PC, consumer electronics and server sectors. The picture started looking brighter in the second half of 2023 as inflation started showing signs of a decline, which eased price pressures.

The SIA now expects semiconductor sales to grow double digits on increasing demand.

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).

Putnam Global Technology Fund A Shs (PGTAX Free Report) aims for capital appreciation. PGTAX invests primarily in common stocks of large and mid-size companies worldwide. Putnam Global Technology Fund Class A invests the majority of its assets in securities of companies in the technology industries.

Specifically, Putnam Global Technology Fund A Shs’returns over the three and five-year benchmarks are 4.9% and 23.7%, respectively. The annual expense ratio of 0.73% is lower than the category average of 1.05%. PGTAX carries 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.

Janus Henderson Global Technology and Innovation Fund (JNGTX Free Report) aims for long-term growth of capital and specializes in technology. JNGTX invests at least the majority of its net assets in securities of companies that the portfolio manager believes will benefit significantly from advances or improvements in technology.

Janus Henderson Global Technology and Innovation Fund has a track of positive total returns for over 10 years. Specifically, JNGTX’s returns over the three and five-year benchmarks are 4.5% and 20.1%, respectively. The annual expense ratio of 0.81% is lower than the category average of 1.05%. Janus Henderson Global Technology and Innovation Fund has a Zacks Mutual Fund Rank #1.

To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.

Fidelity Select Semiconductors Portfolio (FSELX Free Report) 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 23.4% and 34.8%, respectively. The annual expense ratio of 0.69% is lower than the category average of 1.05%. FSELX has a Zacks Mutual Fund Rank #1.

To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.

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