4 Top Tech Funds To Ride The Strong Q1 Rally

The technology sector’s prominent rebound in the first quarter has been the center of attraction for tech-enthusiastic investors. This impressive bounce back was prompted by a rally in semiconductor stocks, FAANG stocks’ remarkable price performances and substantial progress in U.S.-China trade talks. 

In fact, the Technology Select Sector SPDR (XLK) has returned 22.4% so far this year, significantly outpacing the S&P 500’s rally of 14.8%. The recovery in technology stocks has also boosted the tech-laden Nasdaq Composite index, which has gained 19.2% since Jan 1.

Tech equities may have incurred a setback in late 2018, but the tailwinds driving the sector in 2019 are strong. The rebound in the semiconductor industry, in particular, helped the sector post stellar gains. The chip-making industry had registered a rather lackluster performance in the fourth quarter, mostly due to the economic slowdown in China and trade tensions. However, the iShares PHLX Semiconductor Index has gained 26.9% on a year-to-date basis.

This revival in the semiconductor industry is mostly because of increased chip demand, jump in activity in the data center segment and a slew of technological trends like the Internet of Things, high-end gaming and 5G wireless. A rebound in China’s manufacturing activity and encouraging trade talks are also boosting the industry.

Second, a rebound in FAANG stocks in the first quarter promptly gave the technology sector a push. FAANG stocks have gained more than 15% so far this year, with Netflix registering highest gains, up 36.3%. This remarkable recovery boosted the overall technology sector.

Third, rapid implementation of technology in other sectors such as aerospace, defense, healthcare, and banking to name a few is helping the tech sector to register unparalleled growth. Given the growth prospects and positive developments in the technology arena, it would be prudent to pick mutual funds that invest in technology companies. But why invest in funds and not stocks?

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