The Vanguard Information Technology Index Fund was ranked highest by Standard & Poor's among technology mutual funds.
In a ranking of five-star funds rated by S&P with more than 70% invested in technology for the first half of 2009, the Vanguard fund was the only one with positive ratings in three of S&P's primary assessment categories — performance analytics, risk considerations and cost factors, according to an S&P news release.
The other funds in the top ranking were Fidelity Select Computers Portfolio, Seligman Communications & Information and Firsthand e-Commerce funds.
“Even though the four funds highlighted here are all five-star-ranked science and technology mutual funds with an emphasis on the technology sector, they are quite different,” Scott Kessler, senior equity analyst and head of the technology sector team at S&P Equity Research, said in the release.
The Vanguard fund offers exposure to large-cap bellwethers, he said, while the Fidelity fund focuses on larger-cap stocks but holds some more volatile securities. The Seligman fund owns a number of small-cap and midcap companies, focusing on software, but could charge a large fee to initially invest in the fund. The Firsthand fund, which focuses on more than domestic large-caps, seems not to be concerned about a focus on Internet stocks, and charges an expense ratio higher than the other funds, according to the release.
“Despite our neutral fundamental outlook on the sector, we believe a number of technology stocks are attractively valued, especially given what we consider strong brands, businesses and balance sheets,” Mr. Kessler said in the release. “It would stand to reason that some mutual funds focused on the sector would have notable appeal.”