Core Funds with an Accent on Tech
These diversified funds offer some extra exposure to tech.
Although they rallied a bit in recent months, tech stocks are still trading at much lower P/Es than they did three years ago. Interestingly, not many fund managers are sticking their necks out and buying technology shares. Thus, you may find your portfolio is skimpy on tech. That's a fine place to be when P/Es are stratospheric, but at this point, you run the risk of missing out on a rally.
You could correct that by taking the direct approach and buying a tech fund. Click here to see a list of some of our favorites.
But there's more than one way to gain additional tech exposure. For example, using our Premium Fund Screener, you can home in on core holdings whose portfolios have precisely the characteristics you want, including, say, overweighted positions in tech industries. This way, you're not making a big bet--you're just adjusting your mix to a neutral position.
In this week's screen, we've narrowed the universe of funds to those portfolio anchors that feature above-average stakes in software and hardware names relative to their category rivals. We weeded out duds by selecting only those funds with 4- and 5-star ratings, and we required managers to have above-average tenure, too. As usual, to pass the screen, funds had to be open to new investment and cheap relative to their peers. (The "Distinct Portfolios Only" screen eliminates multiple share classes of the same fund.)
Click here to run this screen yourself.
And there you have it: a star-studded list of keepers that will tilt your portfolio toward tech land. That orientation can change over time, of course, so be sure to save this screen for future reference--and tweaking. (Use the "Save Criteria" button at the bottom-right of the Premium Fund Screener.)
In the meantime, you may peruse these analyst-report highlights from some of the funds that made the grade.
PIMCO CCM Capital Appreciation (PAPIX)
This fund buys large companies with solid growth rates but doesn't want them to be too expensive. Though the strategy is unexceptional, the results are extraordinary. It boasts one of the best long-run records of any large-blend fund.
Victory Diversified Stock (SRVEX)
This offering proves you can beat 'em by not joining 'em. Management looks for beaten-down stocks poised for a rebound. That search for bargains has borne fruit more often than not. The fund won't suit value purists, but investors seeking a core holding may want to take a look here.
Vanguard Primecap (VPMCX)
This fund has been a strong long-term performer. Its management team looks for cheap stocks in unpopular industries. The fund's expense ratio is among the lowest for actively managed funds. Thanks to its low turnover, the fund has also been tax-efficient.
Shannon Zimmerman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.