3 Technology Mutual Funds For 2019

Risk lovers seeking healthy returns over a fairly long investment horizon may opt for technology mutual funds. It is believed that the technology sector is poised for a brighter earnings performance than other sectors due to greater demand for technology and innovation.

Improving industry fundamentals and emerging technologies such as wearables, VR headsets, drones, virtual reality devices, and artificial intelligence are the key catalysts to the sectors’ growth.

Meanwhile, the Federal Reserve estimated that the U.S. economy will grow at a steady rate of 2.3% in 2019, which also bodes well for the tech sector. Under such circumstances in which the tech sector is poised for big gains this year, it calls for investing in mutual funds having significant exposure to tech companies.

Netflix to Lead the Tech Rally in 2019?

Video-streaming service provider Netflix announced on Tuesday that it was raising its monthly U.S. prices by as much 13% to 18%. Although high prices could alienate subscribers, the company is confident of retaining customers on the back of its high-quality content. Netflix’s positive business outlook has helped FAANG stocks rally significantly. Further, this marked the fourth time that the company has rolled out plans to hike prices, with the last hike taking place in 2017.

Moreover, this was the biggest hike in prices since Netflix’s launch 12 years ago. Analysts have cautioned that this hike will impact all of Netflix’s 58 million subscribers that the company had announced last September. The most popular monthly plan, which is currently priced at $11 a month, will now be hiked to $13 a month.

Meanwhile, Netflix came out with quarterly earnings of 30 cents per share, beating the Zacks Consensus Estimate of 24 cents per share. Netflix shares have added about 31.3% since the beginning of the year versus the S&P 500's gain of 5%.

Watch Out for Tech in 2019

However, in 2019 so far, XLK and Nasdaq Composite are up 3.1% and 5.9%, respectively. Currently, almost half of the tech stocks on the Nasdaq 100 are languishing in a bear market. Still, it helps to keep in mind that the dot com bubble was such a disaster that it took years for the Nasdaq 100 to move above its 2000 high. Several dotcom era favorites like Pets.com vanished altogether.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this ...

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