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Top mutual funds shift focus

by Thea Coates Finance Reporter
20th Feb 24 9:59 am

Trading.biz analyst Rahul Nambiampurath has his eyes set on the holding patterns of top mutual funds.

Even though the S&P 500 and NASDAQ are experiencing thematic surges in stock prices, Rahul believes the buy bets are best validated by tracking the recent buys made by the fund managers.

“Vanguard Mid-Cap Index Fund has increased its exposure to mid-cap shares, with a specific focus on healthcare and technology,” mentions Rahul.

According to him, delayed interest rate cuts are one of the reasons why core growth-focused sectors and essentials are making it to the portfolio of mutual fund managers.

Other top mutual fund players Rahul analyzed in this discussion include PMEGX, NEAGX, VEIPX, SWHFX, and FELAX.

Top tech firms continue to enjoy attention

Even though the top mutual fund houses focus on diversification, some of the top names are the market regulars and part of the “Magnificent 7” consortium. Here are the top picks with their month-on-month gains:

  • Microsoft (MSFT): Up by 1.35%
  • Nvidia (NVDA): Up by 22.06%
  • Meta (META): Up by 23.44%

Rahul also believes the MSFT could still have some strength to satiate the short-to-mid-term expectations of traders, as the stock hasn’t run wild like META and NVDA.

Each of the mentioned stock picks has seen at least $1 billion in inflows, led by top mutual funds. Besides that, other $1 billion players include:

  • UBER: Up by 20.43%
  • FICO: Up by 1.73% (Financial space)
  • ANET: Down by 0.67%
  • FI: Up by 6.49% (Financial space)

The stock-acquiring trends reveal that technology and the financial sector garner the most attention from credible mutual fund houses.

Which stocks can be worth entering?

Even though it is difficult and often risky to predict stock moves, Uber Technologies (UBER) can be a good bet in the mid-to-long term. Firstly, this tech stock has seen the most amount invested as of February 19, 2024, from mutual funds, at $12.3 billion.

According to Rahul, UBER’s growth trajectory looks robust, with the company’s EPS or Earnings per Share expected to improve considerably by 2032.

Underwhelming volume levels characterize UBER’s daily chart. Despite that, the stock is closing in on the upper trendline of the ascending channel pattern. A breakout above the trendline or $83.95 can propel the stock toward the $90 level.

Besides UBER, stocks like PLTR and cybersecurity picks like PANW and ZS also flash buy signals. But then, despite the stocks’ strength, building a balanced portfolio — 60% in stocks and 40% in bonds — might be back.

Todd Schlanger, Senior Investment Strategist at Vanguard, believes that “while 2022 may have been painful for investors, the result was that valuations for asset classes are now lower, and most are fairly valued. The notable exception: U.S. stocks, which are more reasonably priced now but still above what we consider to be the fair-value range.”

So, the theme, going into 2024, would be portfolio diversification.

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