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4 Funds to Play as Digital Lifestyle Changes Consumer Trends

While it is true that the pandemic has accelerated digitalization across business and homes, we cannot disagree with the fact that consumer trends had been a major driver to this change even before the outbreak. E-commerce, online gaming & gambling, live streaming and entertainment have become an integral part of our lifestyles. This digital lifestyle is pressurizing companies to evolve and adopt digital transformation to cater to their customers.

Even before the pandemic, people were gradually shifting to reading books on tablets or smartphones. Two major reasons behind this shift were lack of storage at home and maintenance cost. Companies like Amazon that started as an online bookseller, now offer Kindle eBooks that claim to have the biggest selection of eBooks and audiobooks. In fact, in the past few years, several companies have developed software or applications that can read out books to users, known as audiobooks. Hence, one can plug in headphones and enjoy novels while traveling or doing household chores.

Coming to e-commerce, the technology has narrowed international borders and consumers can receive products from other countries within a week or a fortnight. Online grocery stores help consumers add items to the cart anytime and avoid long lines at the billing counter and most importantly, receive discounts and redeem coupons with ease. Many consumers have also shifted permanently to buying clothing and accessories only, as companies offer try-and-buy options and easy return facilities.

Investing in technology trends has been fetching record revenues for years, now with the constant ramp-up in Internet (availability and deployment of 5G) and mobile penetration, this digital lifestyle change will boost retail spending on e-commerce, video gaming, e-sports and subscription-based video & music streaming.

4 Top Fund Picks

Given the digital lifestyle change that is constantly driving consumer trends, we have shortlisted four funds that have significant exposure to e-commerce, video gaming, e-sports and subscription-based video & music streaming. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) and have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.

The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Leisure Portfolio FDLSX aims for capital appreciation. This non-diversified fund normally invests majority of assets in common stocks of companies that are mostly engaged in the design, production, or distribution of goods or services in the leisure industries.

This Zacks Sector – Other has a history of positive total returns for more than 10 years. Specifically, FDLSX has returned 16.5% and 17.4% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FDLSX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.77%, which is below the category average of 0.79%. Some of the fund’s stock holdings that cater to digital lifestyle are Penn National Gaming, Domino’s Pizza and Boyd Gaming. 

Fidelity Select Technology Portfolio FSPTX aims for capital appreciation. This non-diversified fund invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSPTX has returned 31.3% and 32.7% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSPTX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.71%, which is below the category average of 1.05%. Some of the fund’s stock holdings that cater to digital lifestyle are Microsoft, Alibaba, PayPal and MakeMyTrip.

T. Rowe Price Global Technology Fund PRGTX aims for long-term capital growth. This non-diversified fund invests most of assets in the common stocks of companies that its managers expect will generate majority of their revenues from the development, advancement and use of technology.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, PRGTX has returned 30.4% and 29.6% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PRGTX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.86%, which is below the category average of 1.05%. Some of the fund’s stock holdings that cater to digital lifestyle are Amazon, Netflix, Alibaba, Zoom Video and Delivery Hero.

Fidelity Select Retailing Portfolio FSRPX fund aims for capital appreciation. This non-diversified fund invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.

This Sector - Other product has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned 25.2% and 22.2% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSRPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.73%, which is below the category average of 0.79%. Some of the fund’s stock holdings that cater to digital lifestyle are Amazon, Wayfair, Best Buy and Home Depot.

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