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.
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.