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3 Funds to Pick as Big Data Adoption Gains Traction

The expanding volume of data and the need to analyze it for business boost will spur a higher uptake of big data.

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This story originally appeared on Zacks

Per the International Data Corporation’s (IDC) new update in its  Global DataSphere study, 64.2 zettabytes (ZB) of data was created, captured, copied and consumed in the world during 2020. The pandemic skyrocketed the number of people working, learning, and entertaining themselves from home, leading to an accumulation of data in bulk. However, less than 2% of this newly-collected information was saved and retained so far in 2021.

- Zacks

As computing power continues to surge, the enormous pile of data from which valuable information can be filtered also continues to grow. Clearly, in the past years, the advancement in technology and an impressive amount of data generation has paved the path for concepts like big data. Volume, velocity and variety are the three cornerstones of big data. Volume depicts quantities of data, velocity is the measure of how fast the data is coming in and variety encompasses the data diversity.

Additionally, growth in 5G and IoT accelerated the mass of data being amassed every minute. IDC forecasts that global data creation and replication will see a CAGR of 23% during the 2020-2025 period. IoT data will lead to data generation (excluding video surveillance cameras) followed by social media.

Heaps of data prove to be useful for businesses and organizations, and big data tools help gain useful insights and increase efficiency. From retail to entertainment, big data found its application quite suitable. Coupled with machine learning and AI, big data aids businesses in improving customer experience, understanding choices, buying patterns and making more personalized recommendation. This, in turn, results in higher purchase rates. Similarly in streaming, applications often use big data analytics to sort out content based on consumers’ liking.

Big data plays a significant role in the fourth industrial revolution (4IR). As we know, in the 4IR concept, all types of machines and devices interact, and communicate and learn from one another, simplifying life and creating new business opportunities. Hence, AI, IoT and big data companies are poised to become leaders and innovators in this revolution. In the upcoming year, big data will play a more important role than just setting a target for advertising based on age, gender, shopping habits and location.

However, building a big data analysis infrastructure is not only costly but also difficult to maintain and operate, especially for small-scale businesses. Hence, several tech giants offer Big Data as a Service (BDaaS) solutions that assist companies in businesses data management and handling of analytics tools via cloud platforms. Per a Research and Markets report, the BDaaS market is expected to witness a CAGR of around 28% during the 2021-2026 forecast period.

3 Top Fund Picks

The increasing volume of data and the need to analyze the same for business development will encourage the adoption of big data. In the light of this, we shortlisted three mutual funds that currently have a Zacks Mutual Fund Rank #1 (Strong Buy) and a significant exposure to the big data companies.

These funds also have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.

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 Technology Portfolio  FSPTX fund aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using or developing products, processes or services that will provide or benefit significantly from technological advances and improvements.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. The non-diversified fund has returned 31.4% and 31.9% in the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and #2 (Buy) Ranked Mutual Funds,  please click here.

FSPTX has an annual expense ratio of 0.69%, below its category average of 1.05%. Some of the fund’s top big data players are Salesforce, Google and Microsoft.

Fidelity Select Software & IT Services Portfolio  FSCSX aims for capital appreciation. The non-diversified fund invests majority of its assets in the common stocks of companies engaged in research, design, production or distribution of products or processes that relate to software or information-based services.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. The fund has returned 27.8% and 28.1% over the past three and five-year period, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds,  please click here.

FSCSX has an annual expense ratio of 0.70% compared to the category average of 1.05%. Some of the fund’s top big data players are International Business Machines, Accenture, MongoDB and Elastic NV.

Franklin DynaTech Fund Class A FKDNX aims for capital appreciation. The fund invests primarily in common stocks and the fund manager focuses on companies that are leaders in innovation, take advantage of new technologies, have superior management and benefit from new-industry conditions.

This Sector-Tech product has a history of positive total returns for more than 10 years. FKDNX has returned 29.4% and nearly 28% over the past three and five-year period, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FKDNX has an annual expense ratio of 0.85% compared with the category average of 0.99%.  Some of the fund’s top big data players are Microsoft, Adobe, MongoDB and Salesforce.

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Tech IPOs With Massive Profit Potential

In the past few years, many popular platforms and like Uber and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.

For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…

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