mutual funds

Funds That Focus on Innovators

Invest in a collection of groundbreaking companies via these actively managed funds and ETFs.

Given the difficulties in determining whether a company can translate innovation into profits, you may prefer professional help in spotting the next big thing. Two mutual funds, Fidelity New Millennium (symbol FMILX) and Baron Opportunity (BIOPX), are worth a look. New Millennium manager John Roth holds a mix of sometimes-volatile, high-growth companies balanced with steadier, bargain-priced fare. Among his holdings: Tesla Motors (TSLA), Google (GOOG) and Illumina (ILMN). He also owns KEYW Holding (KEYW), a cyber-security play. Roth keeps his stakes in the most speculative com­panies small at the outset, increasing his investment only as a company proves itself. “The more long term the bet, the smaller the position,” he says. From the time Roth became New Millennium’s manager in July 2006 through December 31, the fund returned 9.6% annualized, compared with 7.4% for Standard & Poor’s 500-stock index.

Baron Opportunity manager Mike Lippert invests thematically. Current themes include DNA sequencing (Illumina is a top holding) and Big Data, a catchall phrase that refers to collecting and applying advanced analytics to massive quantities of fast-moving data. Lippert owns Acxiom Corp. (ACXM), a marketing company at the forefront of behavioral, or targeted, advertising, which harnesses information about consumers to serve up ads that are relevant to their interests. Other themes Lippert likes include mobile technology, cloud computing and electric cars. “You have to go where the growth is,” says Lippert, “but you have to be patient for some of these things to play out.”

A host of exchange-traded funds allow you to sample up-and-coming themes while diversifying your investment among several holdings. You can invest in cloud computing—external data storage that’s accessible from anywhere through the Internet—via First Trust ISE Cloud Computing Index (SKYY). The Robo-Stox Global Robotics & Automation ETF (ROBO) includes companies in such businesses as unmanned vehicles, 3D printers and medical robots.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
4 Strategies to Reduce Taxes in Retirement
retirement planning

4 Strategies to Reduce Taxes in Retirement

Don’t let the possibility of higher taxes in the future sink your retirement income plan. Consider these four ways to help manage your taxes, keeping …
May 31, 2021
12 Housing Stocks to Ride the Red-Hot Market
investing

12 Housing Stocks to Ride the Red-Hot Market

The U.S. has a housing shortage and a love affair with home improvement, both of which could create tailwinds for this group of housing stocks.
June 8, 2021

Recommended

Bonds: 10 Things You Need to Know
Investing for Income

Bonds: 10 Things You Need to Know

Bonds can be more complex than stocks, but it's not hard to become a knowledgeable fixed-income investor.
July 22, 2020
Vanguard Money Market Funds: What You Need to Know
investing

Vanguard Money Market Funds: What You Need to Know

Vanguard money market funds are a notable asset storage tool. Here, we break down what you need to know about the firm's six offerings.
June 9, 2021
Is the Stock Market Closed on Memorial Day 2021?
Markets

Is the Stock Market Closed on Memorial Day 2021?

The stock market gets a full day off for Memorial Day. The bond market gets Monday off too, not to mention an early close ahead of the holiday weekend…
May 30, 2021
What Time Is the Stock Market Open Today?
Markets

What Time Is the Stock Market Open Today?

When does the stock market open? While the market does have regular hours, trading doesn't stop when the major exchanges close.
May 28, 2021