5 Funds for a Diversified Approach to Tech Investing

Large-cap tech stocks continue to dominate the market, powering to higher price levels. They also have moved to excessively higher valuations, which may cause same risk-averse investors to take pause. Several leading MoneyShow.com experts suggest tech-related funds, including some with more defensive characteristics. Marty Fridson, Forbes/Fridson Income Securities Investor AllianzGI Artificial Intelligence & Technologies Opportunity Fund -- which has a yield of 4.9% -- focuses on leading ideas in artificial intelligence (AI) and other new technologies through the allocation of its investments to various parts of a company's capital structure. AIO is a relatively new closed-end fund with a 10/29/19 inception date. The fund seeks to provide total return through a combination of current income, current gains, and long-term capital appreciation. AIO typically employs little if any leverage. This fund offers investors the opportunity to gain exposure to public and private investments tied to the AI space, while achieving growth and a reasonable cash distribution. As of 09/30/20, the portfolio included Convertible Securities (52.6%), Common Equities (43.7%), and Cash & Equivalents (3.7%). The fund's cumulative performance has been solid, with a 14.06% market price total return since its inception. In 2020, cash distributions have consisted almost entirely of capital gains. This investment is most suitable for low- to medium-risk tax-deferred portfolios. Buy up to $30 for an annualized 4.32% yield. BlackRock Science and Technology Trust has a current annualized yield of 4.20%. The fund has an investment objective to provide income and total return through a combination of current income, current gains, and long-term capital appreciation. The trust typically invests at least 80% of its assets in equity securities issued by U.S. and non-U.S. science and technology companies. Additionally, the trust has a strategy of writing (selling) covered call options on a portion of the portfolio's equities to enhance return. The portfolio's top sectors are typically dominated by software and services; media and entertainment; and semiconductors and equipment. Top holdings as of 11/30/20 included Apple , at 3.91%; Microsoft at 3.51%; Amazon , at 2.92%; Square , at 2.56%; and Alibaba Group 2.47%. Performance in 2021 is likely to be solid, although it may prove difficult to match the 2019 and 2020 results. We initially recommended BST in March 2016 as a suitable investment for medium- to high-risk portfolios, with a $17 fair-value price. With this updated review, we are now recommending BST as a Buy for all risk portfolios, noting the trust's performance and growth potential. We are also raising BST's fair-value price to $60. John Persinos, Investing Daily Defiance Next Gen Connectivity ETF seeks to track the total return performance, before fees and expenses, of the Bluestar 5G Communications Index. This ETF uses a passive management approach to track the total return performance of the index. It is the first ETF focused on global companies whose products or services address the development of 5G networking and communication technologies. 5G is the fifth generation technology standard for broadband cellular networks, which cellular phone companies began deploying worldwide in 2019. As its name implies, 5G is the successor to the 4G networks which provide connectivity to most current cellphones. The companies developing and leveraging 5G wireless are huge money-making opportunities. 5G technology will provide faster and higher capacity transmissions to carry the massive amounts of data that will be generated by the Internet of Things (IoT). 5G will facilitate IoT by allowing several interconnected electronic devices and machines to communicate with each other instantaneously at ultra-fast speeds. IoT devices exchange information with each other via a central server, without a human being as intermediary. They use sensors to communicate actionable data, such as fuel levels, inventory capacities or room temperatures, through a wired or wireless network to a software application. FIVG is the best-of-breed benchmark for 5G, providing a pure-play investment into the leaders of this wireless revolution. The fund takes a multi-cap approach, focusing on growth-oriented firms involved in research, development and commercialization of new infrastructure that supports connective technology. The fund's biggest holding (6.85% of assets) is chipmaker Qualcomm . Qualcomm will be one of the biggest beneficiaries of 5G growth. The company owns intellectual property tied to code division multiple access (CDMA), a vital technology that underpins all 4G and 5G standards. The fund's number eight holding is Verizon , at 2.85% of assets. Verizon is pushing forward with improving its telecom business, developing 5G technology and expanding its fiber optics network. 5G's inexorable momentum spells opportunity for the shareholders of the chipmakers, telecoms, systems builders, and device makers that benefit from lightning quick connectivity. These 5G players are well represented in FIVG's portfolio. Experts estimate that 5G will eventually add $3.5 trillion to the U.S. economy. Smart homes, smart cars, smart offices...the dreams of science fiction are becoming daily reality. That's what makes 5G-related companies particularly appealing: an investment in 5G is an investment in the future. 5G plays should be resistant to economic ups and downs and headline risk. When the pandemic eventually wanes, consumers will be clamoring more than ever for these conveniences in their personal and professional lives. 5G makes work-at-home devices run faster and better. I expect the start of a secular bull market in 2021, fertile ground for FIVG to outperform. Michael Foster, CEF Insider Eaton Vance Tax-Managed Global Dividend Income Fund -- payer of a 7% dividend today -- is a technology fund in all but name. Its top holdings include Amazon , Alphabet , Microsoft Apple , and Facebook . Companies, no matter where they are in the world, must pay to use American platforms like YouTube (owned by Google), Twitter, Facebook and Instagram (owned by Facebook) to market their products. Add to that an appetite for American goods that will likely jump as the global economy recovers and -- in a post-Trump world -- lower trade barriers, and there's reason to believe U.S. export growth will take off, even after the hit it took in 2020. That growing global demand is great for ETG's main American holdings and for the fund's few European holdings -- Adidas (ADDYY), Mondelez , Unilever . As a result, ETG is in a win-win situation with a selection of companies that collect this American tax, grow their revenue alongside American exports and stand to profit from the overall recovery in the global economy as vaccines roll out. The best part? The market hasn't priced in this fund's strong track record and bright prospects. With more growth opportunities ahead, ETG's discount to NAV should be smaller than it was when I suggested moving money into the fund last March; yet its discount is in the same territory it was back then, at a ridiculous 9.2%! In other words, the discount has gone totally the wrong way, positioning us for some nice snap back price upside when closed-end fund buyers come to their senses. That will pair nicely with ETG's reliable 6.8% dividend. Buy up to $22. Kelly Green, Weiss Ratings Cloud platforms and cloud computing capabilities are becoming increasingly important for technology developments. But instead of trying to pick the next great up and coming cloud-computing stock, I decided to take a look at potential ETFs that would give me exposure to these companies while limiting my downside risk. Of the top-four top-performing cloud computing ETFs over the past two years, one earns our Buy-rating, First Trust Cloud Computing ETF has $4.5 billion in net. This cloud-computing ETF is one that you might just want to put into the technology section of your personal portfolio sooner rather than later. It breaks its holdings down into three categories. These are pure plays, non-pure plays and broad technology conglomerates. Since it doesn't filter for revenue, any stock with involvement in cloud computing is eligible no matter how small it is. It is the largest out of the four top-performing cloud computing ETFs, and with its broad requirements, it allows for broad exposure to the industry. Shares are up 54.6% over the past year. And as the only ETF to generate a Buy rating, it's the one I would most highly recommend out of the four mentioned above. I also have one honorable mention in a related technology area. ARK Next Generation Internet ETF , also rated a Buy right now, looks for companies under the theme of next-generation internet. So, it's not a pure cloud-computing play, but it does include cloud-computing companies as part of its selection universe.

5 Funds for a Diversified Approach to Tech Investing

Thes tech-related funds offer diversified exposure to high growth markets including AI, cloud computing and 5G.

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