There's no such thing as a risk-free technology mutual fund.

But Rahul Narang, manager of Columbia Global Technology Growth Fund (CMTFX), has mastered the art of delivering benchmark-beating returns while taking middle-of-the-road risk.

"We're not out over our skis on the risk curve," said Narang, who started his investing career more than 30 years ago analyzing computer hardware companies.

Narang says his views on risk were shaped during the 1999-2000 tech bubble working at a hedge fund as a short seller. Investing in value stocks at a later job broadened his skill set further. Thirteen years ago, he began managing Columbia Global Technology Growth, which he's grown from a $100 million fund to a $4 billion fund today.

Columbia Global Technology Growth's winning formula? Invest in both secular growth companies and tech stocks that offer attractive value opportunities.

The fund is a 2025 IBD Best Mutual Fund Awards winner, meaning it has topped the S&P 500 in the past one, three, five and 10 years. In 2025, this top mutual fund is up 11.33% through Aug. 1, besting the S&P 500's 6.75% gain. IBD caught up with Narang to learn more about his investment philosophy and the state of tech stocks.

Technology Mutual Fund Goes For Wins

IBD: What's the fund's main goal?

Rahul Narang: Consistently delivering strong, risk-adjusted returns over time.

IBD: The fund falls dead in the middle of Morningstar's risk spectrum. Explain.

Narang: Our philosophy is to build a global, diversified technology strategy, which offers a balance of secular growth opportunities and value opportunities.

IBD: What do you look for in a stock?

Narang: We try to own great businesses run by the best management teams regardless of market cap or geographic location. We're looking for sustainable competitive advantages, high barriers to entry, strong return on investment (ROE). We gravitate to moat-type businesses, which could come in the form of cost advantage, high switching cost, strong intellectual property, durable brand, global scale, pricing power or network effects on a durable platform. We really try to avoid businesses in secular decline.

Tech Fund Has Balanced Approach

IBD: How did you come by this balanced approach to tech investing?

Narang: In terms of portfolio construction, we've divided it into three buckets: moat-type businesses, secular growth themes and value opportunities. I spent seven years at a deep value shop. I wanted to come up with a unique technology strategy that will keep our clients in the game when there's a risk-off period.

IBD: Cite examples of moat stocks the fund owns?

Narang: These are names that we've owned for over a decade. That's really important. Our turnover is 7%, (which means the fund rarely sells stocks it owns). That's generated good tax-efficiency and compounding for our clients. The fund has posted compound returns of 20.5% over the past 10 years.

Names include Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN), Netflix (NFLX), Alphabet (GOOGL), Broadcom (AVGO), Visa (V), Mastercard (MA), Booking Holdings (BKNG) and, yes, Nvidia (NVDA). We've held Nvidia for 11 years. (It's the fund's top holding with a 15.2% weighting, according to Morningstar.) It gives you a sense of the type of businesses we gravitate to and the long duration we hold these stocks.

Guiding Moneymaking Factors

IBD: What else is key to your investment philosophy?

Narang: Identifying the correct theme and ride the curve over time. This can create tremendous shareholder value. Some of the themes we've been invested in over the years include cloud computing, cybersecurity, digital transformation, digital payments, autonomous driving, digital media and, of course, AI.

IBD: Is AI a big focus of the fund?

Narang: AI is now the largest theme in our strategy. We've been invested in this theme since 2016. AI names are sprinkled throughout the portfolio. And some of the emerging themes that we're doing work on currently include defense tech, quantum computing, and humanoid robots. In visual media we own (streaming service) Netflix (NFLX) and (music streaming platform) Spotify (SPOT). In cybersecurity we like CrowdStrike (CRWD). Names in digital payments would be Visa and Mastercard.

Keeping Turnover Down At Tech Fund

IBD: Why is your turnover so low?

Narang: We tend to take a very long-term lens and realize that things usually don't go up straight to the right. There may be periods of digestion. You don't want to get shaken out of a theme based upon short-term noise.

IBD: What's the final part of your investment strategy?

Narang: The last bucket is value opportunities, which brings balance into the portfolio. Here's where the valuations are much cheaper and where we believe the inherent value of the business should be higher than the current stock price. Some examples include NXP Semiconductors (NXPI), Cisco Systems (CSCO), Samsung and Western Digital (WDC). Look at a company like Western Digital; they just reported quarterly earnings on July 30, and revenues were up 30% versus a year ago. The stock is trading around 15 times forward earnings.

IBD: Why throw value stocks into a growth fund?

Narang: This is part of our secret sauce. When we were constructing this approach 13 years ago, we looked at a lot of data. What we found (looking at research) is that over the last 40 years in technology investing, stocks in the most expensive and least expensive quintiles of valuation metrics tend to outperform, and names in the middle get stuck in growth purgatory.

Tech Fund Focused On The U.S.

IBD: It's a global fund but U.S. tech stocks make up 91% of the fund. Why?

Narang: What I've noticed over time is that the best business models with leading innovation are based here in the U.S.

IBD: Talk about some foreign moat stocks.

Narang: One of the names we own outside of the U.S. that have moat characteristics is Taiwan Semiconductor (TSM). They're the largest semiconductor manufacturer tied to the AI theme. That's a top 10 position for us, and a name we've held for many years.

All the leading tech companies in the U.S., whether it's an Nvidia or an Apple (AAPL), have their chips typically manufactured by Taiwan Semiconductor. They have one of the best management teams I've met. Taiwan Semiconductor won the foundry game. Taiwan Semiconductor is a classic example of a great business with a strong moat. And the valuation is also not egregious, plus they have pricing power. Nvidia CEO Jensen Huang said it wouldn't surprise him if Taiwan Semiconductor were to raise prices because of the value that they add. They're also in the sweet spot of a big secular trend. They're right in the middle of this AI thing.

Other global names include Samsung, which is more in the value camp. The stock's done well this year. It's up 30%-plus on the resurgence of orders, like the big $16.5 billion deal for Samsung to make chips for Tesla (TSLA) recently. And RELX (RELX) out of London has a really interesting AI and legal angle coming together.

Safety With Moats

IBD: These moat companies are the real deal, aren't they?

Narang: Absolutely. When I look at AI, I divide them into pretenders versus contenders. My antenna goes off when I hear a lot of hype, and there's no real revenue. Those AI names I call pretenders. But then there's real companies that have real revenues and earnings. Obviously, Nvidia. Taiwan Semiconductor is right up there.

IBD: Is the AI trade still alive?

Narang: We've been invested in AI since 2016, so almost 10 years. But the inflection point, and this is really important, started to happen in late 2022 when companies finally had the computing power and data to harness more performance from these deep neural networks. And then OpenAI released ChatGPT in late November of 2022 for public use, which is (like) the iPhone moment for AI.

Mind The Downsides As A Tech Fund

IBD: What are some risks?

Narang: One needs to pay attention to the timeline of investments that companies are making around AI, as it may take time to see the ROI on these investments, or productivity improvements they were hoping for. We have seen a few 20% or so drawdowns in the AI complex over the last few years as they have proved to be excellent long-term buying opportunities. Other risks include government restrictions on chip sales to China, tariffs and geopolitics.

IBD: What makes Nvidia, your top holding, a good core holding?

Narang: We've held it for 11 years. If you want one AI name, Nvidia is it. They are very representative of what we call the picks and shovels of AI. Semiconductors provide the computing power for these cloud companies to harness the data that they have. That's key.

Plug Into AI

IBD: What other stocks are positioned to keep profiting from AI?

Narang: We still feel like we're very early in AI. We saw stellar earnings results (last week) from Meta (META) and Microsoft. Meta is seeing strong performance in advertising, largely thanks to AI unlocking greater efficiency and gains across their app system. AI is improving engagement for their users. It's also improving Meta's ability to show people more relevant targeted content.

Microsoft, obviously, with their Azure cloud business. That business grew 39% in their latest fiscal quarter, and is now a $75 billion business. What's driving that? It's continued adoption in the cloud, and some AI workloads are moving into the cloud. You've got Meta, Microsoft, Nvidia. Another name that's benefiting from the AI theme is Broadcom, a name we've held for over a decade and our third-biggest holding. They do custom AI chips. One of their customers is Alphabet (GOOGL). It's been a monster of a compounder for us. They are part of the AI picks and shovels stocks. They're a huge semiconductor supplier with a great balance sheet, strong free cash flow generator. Hock Tan, the CEO, is probably one of the best CEOs in semiconductors, right up there with Nvidia's Huang.

Tech Fund Mines Big Earnings Gains

IBD: What message does the blowout earnings from Meta and Microsoft send?

Narang: We're seeing growth at scale and the moat widening for these megacap companies. That's the message.

IBD: You're not worried about all the spending on AI?

Narang: Let me just give you some estimates I saw this morning of the AI capital spending from the Big Five: Alphabet, Oracle (ORCL), Amazon (AMZN), Meta and Microsoft. These are just rough numbers, $350 billion plus in 2025 going to $450 billion plus in 2026. The point is these businesses have required a tremendous amount of capital, but then you're seeing Meta say, "Oh, our revenue growth accelerated 22% from 16% in the first quarter."

Meta CEO Mark Zuckerberg says there's a very high chance the world is going to look pretty different a few years from now. So, this helps explain why we're seeing these strong capex numbers from the hyperscalers. The competitive landscape is changing so quickly, and they don't want to be left out.

So, in a nutshell, we're seeing growth and scale and moating. It's really remarkable.

Is $4 Trillion The Limit?

IBD: What do you say to investors who say, "Nvidia and Microsoft are $4 trillion companies. How high can they go?"

Narang: It's funny, I got asked that question the day they hit $1 trillion, $2 trillion, and then $3 trillion. It's a fair question. We try to step back and look at the total addressable market: is it expanding? Are the companies seeing a return on their investment (ROI)?

IBD: It's about sales and earnings, right?

Narang: I remember 1999 when tech stocks were trading at 100, 200, 300 times earnings. They were trading on price to eyeballs. But this go around, these companies are generating real cash flows, real earnings, real scale, and they're not trading at crazy valuations. As long as the earnings come through, growth will continue to accelerate.

IBD: To make money, do investors have to invest in these big trends like AI?

Narang: One of the mistakes people make is that they identify a big trend correctly. But then when there's a little bit of noise, they get scared out (of the market). And then they miss that long-term (compounding) over time.

Tech Fund Taps Into The Legal Market

IBD: Why are you bullish on RELX?

Narang: We bought RELX a year or two ago. So, it's a newer name. They own an asset called LexisNexis, a legal database that law firms use. They are starting to bring AI capabilities into some of their legal products. It's a steady grower with good valuation support. We just saw this as an interesting asset tied to legal AI, and they have a real moat around their business, because their product, LexisNexis, is highly regarded in the legal field.

IBD: What non-megacap companies are in the fund?

Narang: Robinhood (HOOD), the financial services platform that's now valued at nearly $90 billion. They reported second-quarter earnings July 30 (and revenue jumped 45%, driven by crypto.) The stock was up 125%. It's a name we added this year.

IBD: What do you like about Robinhood?

Narang: Growth is accelerating. We really like their focus on the younger demographic. The pace of innovation at the company has been spectacular. Their strong position in crypto trading, along with product innovation, were two of the main reasons we started a position. (Another plus) is we just saw a sea change in the regulatory environment with the new Trump administration.

Are We In A Tech Bubble?

IBD: There's been talk of a bubble. Is the stock market frothy?

Narang: In the bubble years of 1999-2000, Cisco was trading at 100 plus times earnings. Now Cisco trades at 16, 17 times earnings. Meta is trading around 27 times. The valuations are nowhere close to the 1999 bubble valuations. The other big difference is now the free cash flow characteristics of these tech companies are so much stronger than in prior years. Through the first quarter, tech free cash flow margins were 22%. That's three times the rest of the market. That points to the quality of the business.

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