Higher PC Shipment Amid Pandemic Set to Drive These 3 Funds

In second-quarter 2020, sales of personal computers rebounded rather strongly thanks to the overwhelming number of students studying online and the vast number of employees working from home. After offices and schools across the United States were forced to close because of the pandemic, employees and students rushed to equip themselves with the right electronic gears to continue their work and studies from home seamlessly.

This uptick in demand for personal computers has clearly boosted some information technology equities. This is why one may invest in mutual funds that invest in IT and related services to gain from this strong demand.

Surge in PC Sales in the Quarter Ended June

According to Gartner Inc. and International Data Corp., two leading industry-research firms in the United States, personal computer shipments rose considerably during second-quarter 2020.

According to a Gartner report, global PC shipments were 64.8 million units during the said quarter, which were 28% higher year over year. The demand was mostly driven by sales in Europe, Africa and the Middle East. Another report by IDC also reported a surge, although the firm reported different numbers. According to IDC, shipments of personal computers increased 11.2% to reach 72.3 million shipments for second-quarter 2020.

The difference in the figures by Gartner and International Data Corp, is in the manner they define the PC market. Gartner counts shipments of desktop PCs, notebooks and ultramobile devices, such as the Microsoft Surface, within the brackets of its PC market but does not consider sales of Chromebook or iPads.

IDC, on the other hand, defines personal computers as desktops, notebooks, Chromebooks and workstations. However, the firm does not consider tablets or Intel x86 servers as part of its PC market.

Both firms cited that HP Inc. and Lenovo were the top sellers of personal computers in the quarter ended June. Lenovo had a 25% market share, while HP was responsible for 24.9%, according to Gartner. However, IDC put HP on the forefront with a 25% market share, followed by a 24.1% market share of Lenovo.

In addition to the aforementioned players, Dell Technologies Inc. Apple Inc. and Acer Inc. were among the top five companies that gained from notable sales of personal computers in the said quarter, according to both Gartner and International Data Corp.

3 Funds to Buy

We have, therefore, selected three mutual funds that stand to gain from the surge in PC shipments. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). In addition, the minimum initial investment for these funds is within $5,000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

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 Semiconductors Portfolio FSELX aims for capital growth. The fund invests the majority of its assets in securities of companies that are engaged in the design, manufacture, or sale of semiconductors and semiconductor equipment. The non-diversified fund mostly invests in common stocks of companies. The fund invests in U.S. and non-U.S. issuers alike.

This Zacks sector – Tech has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSELX has an annual expense ratio of 0.72%, which is below the category average of 1.29%. It has returned 43.2% over the past year. The fund has no minimum initial investment.

Fidelity Select Communication Services Portfolio FBMPX aims for capital appreciation. The fund invests the majority of its assets in securities of companies that are engaged in the development, production or distribution of communication services. The non-diversified fund mostly invests in common stocks of companies. It invests in U.S. and non-U.S. issuers alike.

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