3 Mutual Funds to Buy on the Ongoing Nasdaq Rally
This tech rally is being fueled by a mix of positive factors, including substantial domestic investments from major tech companies and persistent enthusiasm for artificial intelligence (AI), particularly generative AI.
This tech-driven rally makes it a favorable time to consider investing in tech funds such as DWS Science and Technology A KTCAX, Janus Henderson Global Technology and Innovation Fund JNGTX and Fidelity Select Semiconductors Portfolio FSELX.
Nasdaq Reaches New Record High
The Nasdaq climbed 1% on Friday to close at 21,450.02 points, marking another all-time high, with an earlier intraday record also achieved. Although the index gave up some of its gains on Monday, the upward momentum is likely to continue given the optimism surrounding tech stocks.
The ongoing rally is being fueled by robust earnings, major investments in chips in the domestic market, and AI-driven optimism.
Friday's surge was largely powered by Apple Inc. AAPL after it revealed plans to invest $600 billion over four years in U.S. manufacturing. Apple's stock jumped 13% last week — its best weekly performance since July 2020. Over the past month, the Nasdaq has risen 3.9% and is up 12.3% year to date.
Apple's announcement came just before President Donald Trump said he would impose a 100% tariff on imported semiconductors, but would exempt those companies 'building' in America. This move may encourage more tech companies to shift production to the United States.
AI Driving the Tech Boom
While opinions differ on generative AI's long-term potential, interest in the technology has grown rapidly. NVIDIA Corporation NVDA remains a major player, with its stock climbing 38.6% in 2025 so far. This success has prompted other tech giants to accelerate investments in AI.
Rising demand for smart devices — which rely on features like facial recognition, video analysis, and image processing — is boosting the need for high-performance, energy-efficient processors, fueling a strong recovery in the semiconductor industry over the last two years.
Although interest rate cuts have been delayed, investors are optimistic that the Federal Reserve will implement at least two 25-basis-point reductions this year, starting in September. Such cuts could further strengthen growth-oriented assets, particularly tech stocks, which tend to benefit from lower borrowing costs.
3 Best Choices
We've chosen three funds from the tech sector that are a must-buy because of their exposure to AI. These funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.
Also, these funds boast an expense ratio of less than 1% and have a minimum initial investment of $5,000.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
DWS Science and Technology A fund seeks growth of capital. Under normal circumstances, KTCAX invests at least 80% of its net assets in common stocks of U.S. companies in the technology sector.
DWS Science and Technology A fund has a track record of positive total returns for over 10 years. Specifically, KTCAX's returns over the three and five-year benchmarks are 30.5% and 18.1%, respectively. DWS Science and Technology A fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.88, which is lower than the category average of 1.03%.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Janus Henderson Global Technology and Innovation Fund aims for long-term growth of capital and specializes in technology. JNGTX invests the majority of its net assets in securities of companies that the portfolio manager believes will benefit significantly from advances or improvements in technology.
Janus Henderson Global Technology and Innovation Fund has a track of positive total returns for over 10 years. Specifically, JNGTX's returns over the three and five-year benchmarks are 32.4% and 17.1%, respectively. The annual expense ratio of 0.83% is lower than the category average of 0.99%. JNGTX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category and other #1 or 2 Ranked Mutual Funds, please click here.
Fidelity Select Semiconductors Portfolio fund seeks capital appreciation. FSELX normally invests 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.
Fidelity Select Semiconductors Portfolio fund has a track record of positive total returns for over 10 years. Specifically, FSELX's returns over the three and five-year benchmarks are 44.8% and 32.9%, respectively. The annual expense ratio of 0.62% is lower than the category average. FSELX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other #1 or 2 Ranked Mutual Funds, please click here.
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Apple Inc. (AAPL) : Free Stock Analysis Report
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