The fourth quarter 2014 earnings season is the tale of two factors: Oil prices, and global economic shifts.  The decline in oil has given the consumer more disposable income, but that income has yet to be seen positively impacting other sectors as it would be expected.  Further, global economic shifts have caused the dollar to be stronger against other currencies.  This is having a negative impact on international conglomerates, and most other companies that have a significant international exposure.

The oil situation is the main culprit for the volatility due to the fact it impacts so many other segments of the world economy.  Further, the decline in oil has given a slight rise of better performances in some other sectors due to consumers having more money in their pocket, but not as much as analysts initially thought. 

On the other side, the strengthening dollar is cutting into profits for international companies, causing negative revisions in 2015.  But there is one segment that is showing double digit growth, but has no real dependence upon oil prices, or is adversely impacted by the stronger dollar; the Technology Sector. 

The Technology sector earnings growth is almost twice as much as the S&P 500 for Q4, and is expected to outperform the S&P 500 over the next three quarters after that (Q4 14 +12.4 vs. 6.4% for S&P 500, Q1 15 expected growth +6.4%, S&P 500 -2.1%, Q2 15 +3.8% vs. S&P 500 at -3.0%, Q3 15 +6.8% vs. S&P 500 at +0.6%).   

So with growth prospects outperforming the S&P 500 through Q3 15 it would be wise to look into the segment to see what Zack Ranked #1 Mutual Funds in the Technology sector are poised to capitalize on the expected growth levels in 2015.  Using the Zacks Mutual Fund Rank, and then separating out funds with high expense ratios, and load fees we were able to identify 4 funds that are well positioned to capture the expected growth through FY 15.   

Technology Funds for 2015

Fidelity Select Electronics (FSELX - MF report) a Zacks Rank #1 (Strong Buy) is designed to seek capital appreciation by investing 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.  The fund offers dividends and capital gains twice a year in April and December.

This fund allocates its capital between Large Cap Growth, Small Cap Value, and Foreign Stocks, and holds over 80% of their portfolio in the technology segment.  The fund holds companies like Intel (INTC), Broadcom (BRCM), Texas Instruments (TXN), Samsung, and Qualcomm (QCOM).  The current fund manager (Stephen Barwikowski) has been with the fund since 2009, and has shown solid gains for his clients.

This tech fund has a very low expense ratio, 0.79, and has no front or back loaded fees.  The minimal investment is $2,500.

Past Performance: 1 year +38.37%, 3 year 25.89%, 5 year 16.36%. 

T Rowe Price Global Tech Fund (PRGTX - MF report) a Zacks Rank #1 (Strong Buy) seeks long-term capital growth.  The fund invests at least 80% of its net assets throughout the world in the common stocks of companies that generate a majority of their revenues from the development, advancement and use of technology.  The fund’s holdings can range from small companies to blue chip firms with established track records.  Dividends and capital gains, are declared annually in December. 

The fund allocates its capital between Large Cap Growth, Foreign stocks, and Intermediate Bonds.  Further, the fund holds companies like Amazon (AMZN), Alibaba (BABA), Priceline.com (PCLN), and Qualcomm. 

This fund has a low expense ratio, 0.92, and does not have a front or back loaded fee.  The minimal investment is $2,500.

Past Performance: 1 year 24.0%, 3 year 27.44%, and 5 year 20.08%.

T Rowe Price Science and Tech Fund (PRSCX - MF report) a Zacks Rank #1 (Strong Buy) invests at least 80% of net assets in common stocks of companies expected by T. Rowe Price to benefit from the development, advancement, and use of science and technology.  While most assets are invested in U.S. common stocks, other securities may also be purchased, including foreign stocks, futures, and options, in keeping with the fund objectives.  This fund declares dividends annually in December.

This fund allocates its capital between Large Cap Growth, Foreign Bonds, and Foreign Stocks.  Further the fund holds companies like Amazon, Altera (ALTR), Western Digital (WDC), and LinkedIn (LNKD). 

Like our other choices, this fund carries a very low expense ratio, 0.85, and is not front or back loaded.  The minimal investment is $2,500.

Past Performance: 1 year 12.59%, 3 year 19.79%, 5 year 14.76%.

Fidelity Select Software & Computer Fund (FSCSX - MF report) a Zacks Rank #1 (Strong Buy) seeks capital appreciation by investing at least 80% of assets in common stocks of companies principally engaged in research, design, production, or distribution of products or processes that relate to software or information-based services.  The fund offers dividends and capital gains twice a year in April and December. 

This fund allocates its capital between Large Cap Growth stocks, Foreign Bonds, and Small Cap Growth Stocks.  Further the fund holds companies like Microsoft (MSFT), Google (GOOG), Oracle (ORCL), Facebook (FB), and Adobe (ADBE). 

This fund carries a low expense ratio, 0.78, and is not front loaded but does have a back load of 0.75.  The minimal investment is $2,500.

Past Performance: 1 year 8.22%, 3 year 26.48%, 5 year 19.72%.

Bottom Line

With growth expectations outpacing the S&P 500 for the next three quarters, the Technology sector is an area to explore while many other sectors are being negatively impacted by outside economic forces.  All four of these Technology Mutual Funds have large exposure to the Tech industry, and also have a portion of their position in foreign markets to hedge against the stronger dollar. A look into these 4 mutual funds may enable you to outpace the S&P 500 through most of 2015.