Top holdings in this sector fund include Alphabet (GOOGL, 8.60% of assets); Facebook (FB, 6.26%); Microsoft (MSFT, 5.89%); Amazon (4.43%) and Visa (V, 3.87%).
USAA Science & Technology (USSCX)
From Dow Theory Forecasts
Fund investors should look for opportunities in all sectors, not just the ones performing well. With that in mind, we looked for rebound picks among the worst-performing sector categories this year, according to Morningstar: Health care (-10.9% average return), technology (-4.1%), financial (-2.6%), and consumer discretionary (+1.5%).
These four sectors are the largest in the S&P 500 Index, representing roughly 63% of its total market value.
To flush out high-potential picks, we looked for standouts with above-average scores in our ranking system, which grades some 5,600 mutual funds and exchange traded funds (ETFs), including more than 500 sector funds. We also focused on low-cost funds.
Because of their narrow focus, sector funds tend to be volatile and should represent only a small portion of a diversified portfolio. Most are concentrated in just a few stocks. Sector funds can boost returns and enhance the diversification of a portfolio.
USAA Science & Technology (USSCX) ranks among the top 19% of its peer group for three-, five-, and 10-year return. The fund has 165 holdings, with Alphabet (GOOGL) its largest position at 8.7% of assets. The expense ratio of 1.18% is below the category average of 1.31%.
Richard J. Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233- 5922, May 16, 2016