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Tech Mutual Funds That Were Better Off In Q3

The technology sector has impressed with the third-quarter earnings numbers. The encouraging quarterly results have come at a time when the overall growth picture remains challenged. In such a backdrop, tech bellwethers such as Google’s parent Alphabet (NASDAQ: GOOG ), Facebook (NASDAQ: FB ), Apple (NASDAQ: AAPL ) and Microsoft (NASDAQ: MSFT ) have came up with impressive results, raising hopes of a sustainable momentum in this key sector. The tech sector’s stock-price performance reflects strength as tech stocks in the S&P 500 have outperformed the index over the trailing 4-week period. We at Zacks had predicted the momentum the tech sector should enjoy, as there were many key tech companies with positive Earnings ESP. However, the sector’s mutual funds were far from enjoying such encouraging trends. In a tough third quarter, Morningstar data reveled that the Technology fund category lost 7.7%. This dismal return is in line with the broader trends as benchmarks suffered their worst quarterly performance in four years. The Dow, S&P 500 and Nasdaq declined 7.6%, 7% and 7.4%, respectively. Just 17% of the mutual funds managed to finish in the green. This was a slump from 41% in the second quarter, which was again a sharp fall from 87% of the funds ending in the positive territory in the first quarter. However, the tech sector’s 7.7% loss was narrower than Healthcare’s loss of 13.7% and much narrower than the Energy sector’s 22.1% slump. Nonetheless, much like these two sectors, none of the technology mutual funds could finish in the positive territory in the third quarter. While the smallest loss from the tech sector came from the ICON Information Technology S Fund (MUTF: ICTEX ) that lost 1.4%, the biggest loser was the Matthews Asia Science & Tech Fund (MUTF: MATFX ) that lost 16.7%. Keep reading our Mutual Fund Commentary section, where we are reporting on performances and best picks from fund families and varied categories. Comparative Study: Technology Funds in Q3 As mentioned, much like the healthcare and energy fund categories, none of the technology mutual funds could finish in the green. However, technology was better off than the two sectors. In fact, the biggest loss among technology mutual funds was narrower than the smallest loser in the energy category. For the energy sector, the minimum loss was 16.9% posted by the Calvert Global Energy Solutions Y Fund (MUTF: CGAYX ). The ProFunds Oil Eqpmt Svc & Distr Svc Fund (MUTF: OEPSX ) was the biggest loser in third quarter with a 33.6% slump. As for the healthcare category, the smallest loser was the Turner Medical Science Lng/Srt Fund (MUTF: TMSFX ), which lost 5.4%. As for the biggest loser, the ProFunds Biotech Ultra Sector Svc Fund (MUTF: BIPSX ) lost 24.3% in the quarter. (Please Note: Two energy funds (same fund with different asset classes) ended in the green, but they were Trading Inverse or Bear funds that bet against the energy sector.) All the 199 technology funds we studied ended up in the red. The average loss for these 199 funds was 8%. This too compares favorably with the average losses recorded by the energy and healthcare categories. As for the energy sector, the average loss for the 103 funds was a staggering 23%. The average loss for the 115 healthcare funds was 13.4%. However, the technology mutual funds’ third-quarter performance lags the second-quarter performance. In the second quarter, 126 funds out of the 201 funds we studied had finished in the positive territory. The average gain for these 126 funds was 2.4%. While one fund had break even return, the remaining 74 posted an average loss of 1.2%. Coming back to the third-quarter performance, only 30 out of the 199 tech funds posted less than 5% loss. Meanwhile, 33 funds posted above 10% loss. Note: The above mentioned numbers include the same funds with varied asset classes. 15 Technology Funds with Least Losses Below we present the top 15 Technology mutual funds with best returns in Q3 2015: Fund Name Family Name Q3 Total Return YTD Total Return Average EPS Growth Expense Ratio Beta vs S&P 500 ICON Information Technology A (MUTF: ICTTX ) ICON Funds -1.41 1.94 21.7 1.75 1.19 MFS Technology Fund A (MUTF: MTCAX ) MFS -2.36 0 13.49 1.3 1.05 Fidelity Select Sftwr & Comp Svcs (MUTF: FSCSX ) Fidelity -2.43 -1.92 23.49 0.77 1 Saratoga Technology & Comm A (MUTF: STPAX ) Saratoga Adv -2.46 -2.28 15.21 2.27 0.99 T. Rowe Price Global Technology (MUTF: PRGTX ) T. Rowe Price -3.14 4.87 16 0.91 0.98 Goldman Sachs Tech Tollkeeper A (MUTF: GITAX ) Goldman Sachs -4.34 -1.06 20.63 1.49 0.91 Dreyfus Tech Growth A (MUTF: DTGRX ) Dreyfus Prem -4.45 -0.65 18.88 1.29 0.89 Red Oak Technology Select (MUTF: ROGSX ) Oak Associates -4.46 -7.18 13.92 1.11 1.14 Columbia Global Technology Growth A (MUTF: CTCAX ) Columbia -4.98 0.61 14.06 1.4 0.93 T. Rowe Price Media & Telecom (MUTF: PRMTX ) T. Rowe Price -5.24 1.09 9.77 0.79 0.6 Putnam Global Technology A (MUTF: PGTAX ) Putnam Funds -5.37 -2.44 15.57 1.26 0.91 Wasatch World Innovators (MUTF: WAGTX ) Wasatch -5.92 0 23.77 1.77 0.74 Deutsche Science and Technology A (MUTF: KTCAX ) Deutsche AWM -6.08 -3.25 15.45 0.98 1.21 Henderson Global Technology A (MUTF: HFGAX ) Henderson -6.25 -1.73 8.24 1.36 0.85 Victory Munder Growth Opport Fd A (MUTF: MNNAX ) Victory -6.39 -1.4 16.97 1.49 1.02 The list of 15 smallest losers in the third quarter is spread across diverse fund families, with key names like Fidelity, T. Rowe Price, Goldman Sachs and Putnam Funds. Except for two funds from the T. Rowe Price, T. Rowe Price Global Technology Fund and the T. Rowe Price Media & Telecom Fund, all fund families have only one fund featuring in this list. However, among the fund families we mentioned, Fidelity’s Fidelity Select Sftwr & Comp Svcs Fund lost the least and was followed by T. Rowe Price, Goldman Sachs and Putnam Funds. Meanwhile, seven of these mutual funds carry a favorable Zacks Mutual Fund Rank. Funds such as the MFS Technology Fund A, the Fidelity Select Sftwr & Comp Svcs, the Dreyfus Tech Growth A Fund, the T. Rowe Price Media & Telecomm and Putnam Global Technology A Fund sport a Zacks Mutual Fund Rank #1 (Strong Buy). Separately, the Columbia Global Technology Growth A Fund, the Wasatch World Innovators Fund and the Deutsche Science and Technology A Fund hold a Zacks Mutual Fund Rank #2 (Buy). Only three funds carry a Sell rating. These are the Saratoga Technology & Comm A Fund, the T. Rowe Price Global Technology Fund and the Goldman Sachs Tech Tollkeeper A Fund. They presently carry a Zacks Mutual Fund Rank #4 (Sell). Notably, 13 out of these 15 funds boast an average EPS growth over 10%. This is encouraging and compliments the positive earnings season the sector enjoyed. Among the 52 of the 64 tech companies in the S&P 500 that have reported results, total earnings jumped 7% year on year on 4.8% higher revenues. While 69.2% beat EPS estimates, 57.7% beat revenue estimates. Investors will thus hope to see a rebound in the fourth quarter. Link to the original post on Zacks.com

Hands-On With the New Apple iPad Pro

With its iPad Pro, Apple has created a large version of its tablet with an optional, not very good keyboard. It’s an intriguing device that fills no real market need and serves no real audience.

Otter Tail Corporation: Reaffirmed Guidance Leading To Next Dividend Bump

Otter Tail Corporation reported 2015 third quarter earnings on November 2, 2015. Guidance for the full year was reaffirmed. Recent events introduce both support and uncertainty for Otter Tail’s near-term future earnings. Otter Tail’s dividend growth history points to another increase in February 2016. Otter Tail Corporation (NASDAQ: OTTR ), a diversified electric utility, started the year a tad slow. In the first quarter, the company lowered its full-year guidance. The second quarter brought an unofficial bump in the full-year projections. On November 2nd, the company reported 2015 third quarter earnings and officially confirmed its unofficial guidance bump. Full-year earnings per share is still expected to be in the middle to upper half of the $1.50 to $1.65 range. In other words, EPS for 2015 is expected to be $1.57 to $1.65. The company’s overall target is for the utility segment to deliver 75% to 85% of total earnings while the manufacturing segment delivers 15% to 25%. Like many utility companies, Otter Tail pays an attractive dividend – $1.23 annually. Its strategy is to allocate the utility segment’s earnings in support of the dividend. Its manufacturing segment’s earnings are intended to cover corporate costs and drive share price appreciation. For the third quarter, the utility segment earned $0.34 per share exceeding the dividend payment of $0.3075. The manufacturing segment earned $0.15 per share exceeding the corporate costs of $0.07. Year-to-date, the utility segment has earned $0.91 per share trailing the year-to-date dividends of $0.9225. The manufacturing segment has earned $0.40 which is $0.24 ahead of corporate costs of $0.16. Third quarter results revealed both support and uncertainty for full-year projections and Otter Tail’s near-term future. In support of its long-term goals, on September 1st, Otter Tail acquired Impulse Manufacturing. Impulse is located in Dawsonville, Georgia. The metal fabricator will join Otter Tail’s BTD Manufacturing segment. The acquisition is expected to be accretive to earnings in 2016. In 2014, Impulse generated $27 million in revenue compared to BTD’s $219.6 million. On August 3rd, the EPA (Environmental Protection Agency) published its final Clean Power Plan. The fully-implemented plan is designed to reduce carbon dioxide in machines from power plants by 30% of 2005 levels. Otter Tail believes the final Section 111(d) rule was a major change from the proposed rule. Its initial analysis showed the impacts to Otter Tail were improved under the final rule as compared to the proposed rule. Compliance begins in 2022 and must be complete before 2030. States must submit plans for approval by September 2016 and must receive approval by September 2018. Otter Tail is working with South Dakota, North Dakota and Minnesota to determine a framework and plan for each state’s compliance. At this point, Otter Tail is encouraged regarding its plant in South Dakota, concerned regarding the required addition of renewable energy in North Dakota and expecting its planned retirement of a plant in Minnesota to aid in compliance. Overall, the company expects the legislation to create increases in the costs of generation for its customers. Regarding renewable energy, the plan establishes eligibility dates: “Incremental emission reduction measures, such as RE and demand-side EE, can be recognized as part of state plans, but only for the emission reductions they provide during a plan performance period. Specifically, this means that measures installed in any year after 2012 are considered eligible measures under this final rule, but only the quantified and verified MWh of electricity generation or electricity savings that they produce in 2022 and future years, may be applied toward adjusting a CO2 emission rate.” In North Dakota, Otter Tail expects the state to have to add a substantial amount of wind power. In 2013, South Dakota was producing more than 25% of its electricity from wind. Minnesota will require 25% of its electricity to be generated from wind by 2025. Finally, Otter Tail’s third quarter information mentions a potential impact to earnings before year-end. “Should the federal government change current tax law before the end of 2015, the corporation’s consolidated earnings guidance could be negatively impacted in the range of $0.02 to $0.04 per share.” Considering there are $0.08 in the range of $1.57 to $1.65, the potential negative impact could be absorbed and Otter Tail would still meet its own projections. The company has earned $1.15 per share in the first nine months of 2015. Therefore, Otter Tail’s fourth quarter must deliver $0.42 to $0.50 in EPS. Since Otter Tail is a “winter-peaking” utility, achieving full-year guidance should not be a problem. The company’s dividend yield is healthier than other diversified utility companies. With full-year guidance reaffirmed, the stability of Otter Tail’s dividend is also presumed. Prior to 2009, the company increased its dividend for 33 consecutive years. In February of both 2014 and 2015, Otter Tail reestablished the tradition. February, 2016 should yield yet another increase.