Outlook is bright for top U.S. tech stocks

Many U.S. corporations have cut their spending on information technology while they wait for the economy to start growing again. At the same time, U.S. consumers are buying less computer equipment as job losses push up the unemployment rate and erode confidence.

International markets have also slowed for many U.S. technology companies, and the higher U.S. dollar is hurting foreign profit contributions.

Still, high-quality tech stocks have a bright long-term outlook. Despite the recession, the best of them remain profitable, and they’ll benefit further from pent-up demand as the economy recovers. However, if you want to invest in tech funds, we recommend that you limit yourself to modest sums. And these funds should only make up a portion of your portfolio’s manufacturing-sector holdings.

Above all, invest only in funds, like these two, that focus on established businesses rather than start-ups.

ALTAMIRA SCIENCE & TECHNOLOGY FUND $6.68 (CWA Rating: Aggressive) (Altamira Investment Services, The Exchange Tower, 130 King Street West, Suite 900, Toronto, Ont. M5X 1K9. 1-800-263-2824; Web site: www.altamira.com. No load — deal directly with the company) invests mostly in U.S. companies in the telecommunications, biotechnology, environmental-technology, health-care and computer industries.

Altamira Science & Technology’s top holdings include: Apple, Microsoft, Nokia, Hewlett-Packard Co., Oracle Corporation, Nvidia Corp., Micron Technology, Google, Research in Motion, Qualcomm, Baidu, First Solar, Broadcom and Juniper Networks.

The $41.7-million fund lost 14.3% (in Canadian dollars) in the year ended April 30, 2009. The Nasdaq index lost 15.8% (also in Canadian funds). The fund’s MER is 2.65%.

Altamira Science & Technology Fund is a buy for highly aggressive investors only.

TD SCIENCE & TECHNOLOGY FUND $12.23 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ont. M5W1P9. 1-800-386-3757; Web site: www.tdcanadatrust.com. No load — deal directly with the bank) invests mostly in U.S. firms that research, develop and produce products or services related to science and technology.

TD Science & Technology’s top holdings include: Microsoft Corporation, Google, Cisco Systems, Taiwan Semiconductor, McAfee Inc., Qualcomm, IBM, Palm, Research in Motion, Nintendo, Juniper Networks, Electronic Arts, Accenture and Apple Inc.

The fund fell 11.6% (in Canadian dollars) over the last year. The Nasdaq index lost 15.8% (also in Canadian funds). The $76.6-million fund is managed by T. Rowe Price Associates, a well-respected U.S. mutual-fund manager. Its MER is 2.68%.

TD Science & Technology Fund is a buy, but for aggressive investors only.