Monday, June 17, 2024

Experts offer insights on whether you should invest in US tech-focused equity mutual funds

Equity Mutual Funds Investing in US Technology Companies: A Closer Look at the Top Performers

Title: US Technology Stocks Propel Equity Mutual Funds to Strong Returns, But Risks Loom

In the past few months, equity mutual funds focusing on US technology companies have delivered impressive returns to investors, outperforming many other categories in the market. These funds have surged by over 40% in the last year, thanks to the stellar performance of tech giants like Meta, Nvidia, Microsoft, and Alphabet on the US stock exchanges.

With Nvidia soaring by 612%, Meta by 226.3%, Microsoft by 101.9%, Alphabet by 43.5%, and Apple by 14.7% in the last year, these funds have reaped substantial gains. One such standout performer, the Mirae Asset NYSE FANG+ETF, witnessed a solid return of approximately 59% by primarily investing in these tech behemoths.

Despite the success of funds like Mirae Asset NYSE FANG+ETF and Motilal Oswal NASDAQ 100 ETF, which surged by nearly 41%, financial experts caution that these investments come with risks. Focusing solely on the technology sector may expose investors to steep fluctuations, especially as the US market’s valuations remain high and a potential slowdown looms.

Experts like Anil Rego from Right Horizons and Suresh Parthasarathy from Fouress Finserv LLP suggest a staggered approach to investing in sector-specific funds like these, considering the uncertain landscape ahead. While the current technology boom has been lucrative, the longevity of this growth remains a concern amidst the possibility of a market correction in the near future.

As investors navigate through the allure of technology-driven mutual funds, prudent risk management and strategic investment planning are essential to capitalize on the potential gains while guarding against the inherent challenges of sector-focused investments.

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