Investors looking for an opportunity to invest in a growth-oriented sector may opt for communications mutual funds. The communications industry promises solid returns with strong growth prospects courtesy of continuous advancement in technology. This industry includes a wide variety of companies including those related to telephone services, media, wireless and computer networks.
The Communication Services Select Sector SPDR Fund (XLC) has gained 23.5% year to date (YTD). Despite its susceptibility to market gyrations due to the sector’s exposure to mid-caps and foreign securities, the space has done well so far this year.
Thus, investing in communications mutual funds seems prudent as of now. However, choosing the right mutual funds for your portfolio can become cumbersome. To that end, let us find out which of the two funds discussed below is better.
Fidelity Select Wireless Portfolio (FWRLX - Free Report)
The fund aims for capital appreciation. The fund invests the majority of its assets in securities of companies that are engaged in activities relating to wireless communications services or products.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 13.6% over the 3-year and 8.9% over the 5-year period. To see how this fund performed compared with its category, and other #1 and #2 Ranked Mutual Funds, please click here.
The Fidelity Select Wireless Portfolio Fund, as of the last filing, allocates their assets in the top two major groups; Large Growth and Emerging Market. Further, as of the last filing, Apple and AT&T were the top holdings in FWRLX.
This Zacks Mutual Fund Rank #1 (Strong Buy) was incepted in September2000 and is managed by Fidelity. FWRLX carries an expense ratio of 0.83% and requires a minimal initial investment of $0.
T. Rowe Price Communications & Technology Fund (PRMTX - Free Report)
The fund invests heavily in securities of communications and technology companies. PRMTX may invest in securities of U.S. as well as non-U.S. companies. These companies can be involved in a variety of Internet-related industries such as e-commerce and digital products, and services firms, media, including publishing, advertising, broadcasting, and cable and satellite TV companies among others.
This Sector-Tech product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 17.6% over the 3-year and 14.2% over the 5-year period. To see how this fund performed compared with its category, and other #1 and #2 Ranked Mutual Funds, please click here.
T. Rowe Price Communications & Technology fund, as of the last filing, allocates its assets in the large growth companies. Further, as of the last filing, Amazon and American Tower were the top holdings for PRMTX.
This Zacks Rank #1 (Strong Buy) was incepted in July 1997 and is managed by T. Rowe Price. PRMTX carries an expense ratio of 0.78% and requires a minimal initial investment of $2,500.
While both FWRLX and PRMTX are buy-rated funds, upon having a closer look, we find that the former is a clear winner. FWRLX is dirt cheap as it has no minimum initial investment compared with PRMTX’s $2,500. However, its administrative and other operating expenses are slightly higher than PRMTX.
But FWRLX offers lower risk and higher risk-adjusted return compared with PRMTX (FWRLX has a 3-year beta of 0.78 compared with PRMTX’s 1.00). So, one should clearly bet on FWRLX for higher returns on low investments.
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