The coronavirus pandemic may be crippling the broader markets but the technology sector managed to mitigate losses in the past few months. A major reason behind the sector’s insulation against the lockdown’s impact is large-scale digitalization and continued innovation from technology giants to fight the fast-spreading virus.

To analyze the activities that are putting a floor under the sector, one may note that online classes (schools, colleges and universities), option to work remotely and the growing popularity of indoor entertainment are significantly propping up the sector. Companies, namely Zoom Video Communications, Inc., Microsoft Corporation, Adobe Inc and NVIDIA Corp are benefiting from these trends under social distancing norm.

The rampant spread of the infection triggered a slew of innovations. For example, Apple Inc. and Alphabet’s Google recently came together to fight the disease. The collaboration announced a new set of tools that will allow mobile devices to transfer information through Bluetooth connections and alert people when they are in close proximity to a COVID-19 patient. The technology is expected to be available in mid-May.

In addition, advancement in emerging technologies, such as artificial intelligence, machine learning and data science are playing a crucial role in driving rapid growth for the sector. To put the sector’s growth into perspective, the Technology Select Sector SPDR Fund (XLK) has returned 106.2% in the past five years.

Finally, speaking from an investment angle, the technology sector is ideal for mutual fund investors who seek considerable growth from their investments. This is because mutual funds that invest in technology space usually take a growth-oriented approach while keeping in mind the companies’ strong fundamentals and potential for higher earnings.

3 Funds to Buy

We have, therefore, selected three mutual funds that invest in companies in the technology sector. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). In addition, the minimum initial investment for these funds is within $5,000.

We expect these funds to outperform 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.

Putnam Global Technology Fund Class A (PGTAX - Free Report) aims for capital appreciation. The fund invests mostly in common stocks of large and medium-sized companies globally. The non-diversified fund invests the majority of its assets in securities of companies from the technology sector. Microsoft Corp, NVIDIA Corp, and Activision Blizzard Inc are among the fund’s top holdings.

This Zacks Sector – Tech has a history of positive total returns for more than 10 years.

PGTAX has an annual expense ratio of 1.16%, which is below the category average of 1.29%. It has returned 17.2% over the past three years. The fund has a minimum initial investment of $500.

Red Oak Technology Select Fund (ROGSX - Free Report) aims for long-term capital appreciation. The fund invests the majority of its assets in the technology sector. The fund mostly invests in common stocks of U.S. companies, along with investing a smaller portion of its assets in equity REITs, common stocks of foreign companies and American Depositary Receipts that satisfy the fund’s investment criteria. Microsoft Corp, Apple Inc, Intel Corp and Alphabet Inc Class C are among the fund’s top holdings.

This Zacks Sector – Tech has a history of positive total returns for more than 10 years.

ROGSX has an annual expense ratio of 0.95%, which is below the category average of 1.29%. It has returned 11.7% over the past three years. The fund has a minimum initial investment of $2000.

Janus Henderson Global Technology and Innovation Fund Class A (JATAX - Free Report) aims for long-term capital growth. The fund invests the majority of its assets in securities of companies that, according to the portfolio managers, are set to gain from advancements in technology. The fund also invests a lesser portion of its assets in securities of non-U.S. companies. Microsoft Corp, Apple Inc and Salesforce.com Inc are among the fund’s top holdings.

This Zacks Sector – Tech has a history of positive total returns for more than 10 years.

JATAX has an annual expense ratio of 1.01%, which is below the category average of 1.29%. It has returned 18.2% over the past three years. The fund has a minimum initial investment of $2500.