This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Technology Funds That Are Built to Last

BOSTON ( TheStreet) -- A decade after technology mutual funds imploded, a new crop of managers who learned from others' blunders are finding success.

How? Old-fashioned stock-picking fundamentals. Back then, it was, and Today, it's the solidly profitable and stable Apple (AAPL - Get Report), Qualcomm (QCOM - Get Report) and Check Point Software Technologies (CHKP) that head fund manager's top-pick lists.

Technology funds are the second-best-performing sector this year, with a return of 5.4%, behind only energy, at 9.7%, out of 21 domestic fund categories tracked by Morningstar. During the past 12 months, technology funds are up 26%. The S&P 500 Index has risen 4.5% this year and 17.4% over 12 months.

If one needs a reminder of the investing environment around the time of technology's last big bust, one need only look at what happened to one of the hottest funds of its day, the Van Wagoner Emerging Growth Fund.

The mutual fund quadrupled in 1999, helped by the rapid-fire investing style of manager Garrett Van Wagoner, who had rock-star status in the investment community.

His success lured investors, and the fund's assets rocketed to about $1.5 billion in 2000 from $189 million the year before.

But the technology bust of March 2000, 11 years ago this week, resulted in the fund losing 21% in 2000, 60% in 2001 and 65% in 2002. Investors disappeared as quickly as they had appeared. Not much later, what was left of the the fund was absorbed by another firm.

But mutual fund analysts now say the sector is more stable and portfolio choices are based more on financial fundamentals than wishful thinking, so the impact of boom-and-bust cycles have been mitigated. "Many have viewed the sector with skepticism since the tech bubble burst more than a decade ago, but times have clearly changed for the better," Zacks Investment Research said in a Feb. 18 note. "Valuations are now based on stronger fundamentals, and careful selection of investments has yielded good long-term returns for many funds."

Morningstar mutual fund analyst Courtney Goethals Dobrow said in an interview that "the gun-slinging (investment) environment" of a decade ago is a thing of the past. "You don't see managers building up a 40% (stake) in one stock.

"Technology firms came out of the downturn somewhat chastened," such that they manage their businesses more conservatively and so have been able to handle downturns better than before, she said, which, in turn, helps the funds maintain stability in a period of volatility.

Indicative of its newfound stability, the technology sector is the top-performing sector over the past three years, with an average annual return of 10.6%, notes Dobrow, citing Morningstar data.

Here are five technology mutual funds that have shown solid returns over the past few years, despite the stock-market crash of 2008:
1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.21 -0.44%
ATML $8.14 0.25%
CSCO $26.22 -0.85%
GOOG $701.26 0.80%
GLW $18.32 -0.24%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs