Technology Funds are a type of Sectoral Funds (invest in a specific sector as Pharma, Technology, etc.) that invest only in assets of technology-based companies that include data analytics, IT, digital technology,etc. Technology has been one promising sector for the past few years and hence mutual funds focusing on this sector have emerged.
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Top 5 Technology Funds to invest
Below are the funds that have been performing in the Technology Sector. Perhaps they are the only Technology Funds in the Indian market.
| Funds | AUM (Rs. – Cr) | 1 Year Returns (%) | 3 Year Returns (%) | 5 Year Returns (%) |
| ABSL Digital India Fund | 375 | -5.75 | 11.34 | 8.62 |
| Franklin India Technology Fund | 239 | -2.63 | 10.30 | 7.73 |
| SBI Technology Opportunities Fund | 157 | -4.46 | 12.14 | 7.29 |
| ICICI Pru Technology Fund | 349 | -15.45 | 7.07 | 5.15 |
| Tata Digital India Fund | 338 | -12.99 | 12.81 | – |
(Source: Value Research, as on May 18, 2020)
1. Aditya Birla Sun Life Digital India Fund
ABSL Digital India Fund is an Equity Fund that invests in technology enabled or dependent firms with an objective of capital growth and income generation. It invests mainly in digital technology varying from media, telecom, entertainment, etc. The scheme will follow a bottom-up approach to stock picking, adopting a blend of value and growth style of investing. Its top holdings comprises HCL, TCS, Bharti Airtel, Honeywell Automation, Apple inc. (USA) and others as such.
| Funds | 1 Year Returns (%) | 3 Year Returns (%) | 5 Year Returns (%) |
| ABSL Digital India Fund | -5.75 | 11.34 | 8.62 |
| Benchmark | -11.30 | 12.33 | 6.86 |
For instance, if you had invested Rs. 50,000 in the ABSL Digital India Fund 5 years ago, then at an expected Rate of Returns (ROI) i.e. around 8.62% as on May 18, the wealth created will be Rs. 75,599.51.
Know in detail: Technology Funds
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2. Franklin India Technology Fund
This scheme invests in technology based companies across all capitalization with an objective of attracting high returns from growing sector. Its top holdings include HCL, Bharti Airtel, Cognizant Technology Solutions Corporation, Cyient Limited, Tech Mahindra, etc. Suitable for high risk investors who are willing to stay invested for a long term.
| Funds | 1 Year Returns (%) | 3 Year Returns (%) | 5 Year Returns (%) |
| Franklin India Technology Fund | -2.63 | 10.30 | 7.73 |
| Benchmark | -11.30 | 12.33 | 6.86 |
For instance, if you had invested Rs. 50,000 in an arbitrage fund 5 years ago, then at an expected Rate of Returns (ROI) i.e. around 7.73% as on May 18, the wealth created will be Rs. 72,552.65.
3. SBI Technology Opportunities Fund
SBI Technology Opportunities Fund is an Equity Sectoral Fund that invests 80% of the corpus in technology & related companies. It aims for long term capital appreciation. It allows the flexibility to invest up to 20% in equities of companies other than the technology space and/or debt or money market instruments.The fund follows a bottom-up approach to stock-picking and select companies which are expected to derive benefit from development, use and advancement of technology. TCS, HCL, Oracle Financial services, Alphabet Inc., L & T Infotech are some of the prominent holdings of this fund.
| Funds | 1 Year Returns (%) | 3 Year Returns (%) | 5 Year Returns (%) |
| SBI Technology Opportunities Fund | -4.46 | 12.14 | 7.29 |
| Benchmark | -11.30 | 12.33 | 6.86 |
For instance, if you had invested Rs. 50,000 in the SBI Technology Opportunities Fund 5 years ago, then at an expected Rate of Returns (ROI) i.e. around 7.29% as on May 18 the wealth created will be Rs. 71,083.08.
4. Tata Digital India Fund
This fund scheme is involved with major IT players in the market. Seeking long term wealth creation, it has a narrowly defined mandate on investing in stocks of technology based firms that have high risk-return ratio but less diversification. It has invested its funds in stocks of HCL, TCS, Mind Tree, Wipro and so on.
| Funds | 1 Year Returns (%) | 3 Year Returns (%) | 5 Year Returns (%) |
| Tata Digital India Fund | -12.99 | 12.81 | – |
| Benchmark | -11.30 | 12.33 | – |
For instance, if you had invested Rs. 50,000 in the Tata Digital India Fund 3 years ago, then at an expected Rate of Returns (ROI) i.e. around 12.81% as on May 18, the wealth created will be Rs. 71,781.55.
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5. ICICI Prudential Technology Fund
An open ended equity scheme primarily investing in the technology sector with aim to provide capital generation in the long term. A large share of the AUM will be invested in the stocks under the Benchmark Index, however, the scheme may also invest in other companies which form a part of the Information Technology Services Industry. It allocates its assets to big players like Infosys, Tech Mahindra, Wipro, L & T Infotech, HCL among many others.
| Funds | 1 Year Returns (%) | 3 Year Returns (%) | 5 Year Returns (%) |
| ICICI Pru Technology Fund | -15.45 | 7.07 | 5.15 |
| Benchmark | -11.30 | 12.33 | 6.86 |
For instance, if you had invested Rs. 50,000 in the ICICI Prudential Technology Fund 5 years ago, then at an expected Rate of Returns (ROI) i.e. around 5.15% as on May 18, the wealth created will be Rs. 64,271.2.
How to Invest in Technology Funds
- Offline mode of investing– If you are not confident of your knowledge, you may choose to invest through a broker. However, investing in a fund through a broker will make you eligible for investments through regular plans that offer different returns and varied expenses in investment. If you wish to invest in the fund independently, you must visit the nearest branch of the AMC of your fund. Don’t forget to carry the following documents-
- Identity Proof (Aadhar Card)
- Canceled cheque
- Passport size photos (around 4-5)
- PAN Card
- KYC documents (for KYC verification)
- Online mode of investing– If you do not wish to add on to your expense of commissions or brokerage, you may visit online investment platforms such as Paisabazaar.com wherein you can choose from and compare more than 1,700 funds- all in one place, instead of following the long procedure of visiting the website of each AMC and then choosing from them. Here, you can select the fund in which you want to invest, look at the details and compare similar schemes as well as use SIP Calculator or Lumpsum Calculator to estimate the future value of your investment
For detailed information on how to invest in mutual funds, click here
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Frequently Asked Questions (FAQs)
Q. Is Technology Fund an Equity or Debt
A. It can be either of them depending upon its investment portfolio, whether it invests majorly in equities or debt of technology based firms. Usually, Technology Funds are mainly Equity Funds and are taxed the same.
Q. Are Technology Funds safe?
A. No Mutual Funds come without risk factor especially if they are Equity Mutual Funds. Technology Funds are a kind of focussed fund that focuses and invests in a specific sector. It has a high risk return ratio, because if it is speculated that it will perform in coming years, then such funds may beat the returns of diversified funds. In the alternative case, it will suffer negatively if the sector is not booming. Experts suggest going for diverse funds rather than a fund which has a narrow investment mandate. However, Technology has been a performing sector over the years for now.
Q. What does one mean by Technology Funds are Sectoral Funds?
A. Sectoral Funds invest in a specific sector or a particular industry. All Sectoral Funds have limitations to stick to a sector and offer less diversification. It can give high returns if the sector booms but suffer a heavy dent if it doesn’t. It is also different from a Thematic Fund.
Read more about : Sectoral Funds Vs Thematic Funds