On the 10th anniversary of iPhone, tech behemoth Apple Inc. AAPL launched three new varieties of iPhones — iPhone 8, 8 Plus and the high-end iPhone X. Although shares of Apple declined following the launch of new iPhones, the company is expected to gain momentum post launch. Moreover, iPhone is expected to surpass $1 trillion in sales by the end of 2018 bolstered by iPhone X.
Starting from iPhone 4, Apple’s share price has spiked before the release of almost every iPhone, only to dip immediately after launch. However, this decline is usually followed by an extended increase in share performance. Following these promising trends, investing in technology mutual funds with a significant holding in the iPhone maker and other tech giants will be a prudent decision.
Apple’s Performance Pre and Post iPhone Launch
iPhone X is expected to be far better than its predecessors, featuring a 5.8-inch edge-to-edge OLED display for the first time. Additionally, it has no home button and sports facial recognition, augmented reality directions, new dual-lens camera, and wireless charging.
There is also speculation that robust iPhone X sales will make Apple the first company to touch the $1-trillion valuation mark by the end of 2018, per a report by TheStreet. Currently, Apple’s market cap is $823 billion. Its shares have increased about 37.6% year over year and hit a 52-week high of $164.9.
A report issued by RBC Capital Markets compares Apple’s price returns for the period of one, three and six months both before and after the launch of a new iPhone. Per the report, Apple’s price performance was comparatively better during the six-month period as compared with the three-month and one-month periods pre iPhone launch. However, performance before iPhone 5s and iPhone 6s releases slumped as Apple was slated to launch phones with slight upgrades instead of issuing devices with brand new designs.
After the launch of every iPhone, Apple’s performance was initially far from satisfactory. Price performance in the first 30-day post launch of iPhone 4, 4S, 5 and 6 was negative, while prices rose slightly after the launch of iPhone 5S, 6S and 7. However, price performance for the tech giant was strong after the first 180 days for most of the iPhones. Only in the case of iPhone 5, prices declined 35.4% after the first 160 days. This is because the company removed Google Maps from that iPhone series and replaced it with less dependable Apple Maps app.
Buy These 5 Technology Mutual Funds
Following the encouraging price performance of Apple post launch of most iPhones, we have selected five mutual funds that have significant exposure to the tech sector and Apple as one of its top five holdings. Moreover, these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). 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.
These funds have encouraging three-month and year-to-date (YTD) returns and minimum initial investment is within $5000. Also, each of these funds has a low expense ratio.
Fidelity Advisor Technology Fund FADTX seeks growth of capital. FADTX invests a bulk of its assets in common stocks of companies involved in using and developing products and services that have benefited from technological improvements. The fund invests in both U.S. and non-U.S. technology companies. This non-diversified fund uses fundamental analysis of several key factors.
The fund has three-month and YTD returns of 8.5% and 41.1%, respectively, and an expense ratio of 1.07% as compared with the category average of 1.46%. FADTX has a Zacks Mutual Fund Rank #1. Further, as of the last filing, Apple, Alphabet and Facebook were the top holdings for FADTX.
Vanguard Information Technology Index VITAX seeks to mimic the performance of the MSCI US Investable Market Information Technology 25/50 Index by utilizing an indexing -investment approach. The fund invests almost all its assets in equity securities, including domestic companies from different market-cap categories, on the index.
The fund has three-month and YTD returns of 5.9% and 25.7%, respectively, and an expense ratio of 0.10% as compared with the category average of 1.46%. VITAX has a Zacks Mutual Fund Rank #1. Further, as of the last filing, Apple, Microsoft and Facebook were the top holdings for VITAX.
Putnam Global Technology A PGTAX invests the lion’s share of its assets in common stocks, including either value or growth stocks or both, of technology companies. The fund invests mainly in large- and mid-cap tech companies that are expected to have strong investment prospects. PGTAX seeks appreciation of capital. It is a non-diversified fund.
The fund has three-month and YTD returns of 8.5% and 38.8%, respectively, and an expense ratio of 1.28% as compared with the category average of 1.46%. PGTAX has a Zacks Mutual Fund Rank #1. Further, as of the last filing, Alphabet, Apple and Facebook were the top holdings for PGTAX.
Columbia Global Technology Growth Z CMTFX seeks appreciation of capital. CMTFX invests a bulk of its assets in equity securities, including common stocks, preferred stocks and securities that can be converted to common or preferred stocks. It invests heavily in equity securities issued by technology companies.
The fund has three-month and YTD returns of 7.1% and 32.4%, respectively, and an expense ratio of 1.11% as compared with the category average of 1.46%. CMTFX has a Zacks Mutual Fund Rank #1. Further, as of the last filing, Apple, Alphabet and Amazon were the top holdings for CMTFX.
USAA Science & Technology USSCX seeks capital growth over the long run. USSCX invests the lion’s share of its assets in equity securities of companies that are believed to gain from technological development and advancement. USSCX may invest a maximum of half of its assets in securities of companies located in foreign lands.
The fund has three-month and YTD returns of 6.2% and 30.2%, respectively, and an expense ratio of 1.17% as compared with the category average of 1.46%. USSCX has a Zacks Mutual Fund Rank #2. Further, as of the last filing, Apple remained among the top holdings for USSCX.
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