Technology sector in the country is the backbone being not only an enabler across segments but also a major bread winner for millions of families in India. Not alone this, mutual funds revolving around the theme of technology focused funds have even shown in terms of performance over the last few years. In the last one-year when equities have boomed from multi-year lows to new highs now, IT sector has outperformed all other sectors.
So, as the sector is seen to yield multi-bagger returns for investors in future course as well, we shall list here some of the top performing technology focused funds which in the last one year have yielded returns of up to 108% as per data from Value Research.
What are Technology Focused Funds and how do these work?
Tech funds are predominantly invested into India and foreign tech companies and ever since the pandemic has struck, potential as well as the opportunities for IT domain as a whole covering various gamut such as cloud computing etc. has now turned multifold.
1. ICICI Prudential Technology Direct Plan:
Launched in January 2013, the fund of ICICI Prudential tech oriented fund manages a corpus of Rs. 3494 crore. Expense ratio is the lowest within the category of over 1%. Note the regular plan of the fund is also having a CRISIL 3-Star rating.
The fund has outperformed the benchmark Nifty with returns of 106% in the last one year.
SIP in the fund can be started for minimum Rs. 500 while for lump sum payment one needs to invest Rs. 5000. There applies a load of 1% in case the redemption is made within 15 days of investment.
Top 10 holdings of the fund are Infosys, HCL, Tech Mahindra, Persistent Systems, TCS, IRCTC, Coforge, Wipro,eClerx and Mindtree.
Notably Rs. 10000 SIP in 3 years time has been worth now Rs. 7.72 lakh i.e. the investment of Rs. 3.6 lakh has more than doubled during the timeframe.
2. ABSL Digital India Direct Plan:
The tech fund of Aditya Birla Mutual fund commanding an asset size of Rs. 1662 crore fund of can be invested in through a SIP starting at Rs. 1000. The direct plan of the fund carries an expense ratio of 1.15%. The scheme works to provide capital appreciation to investors by putting money in technology and tech-linked companies. The fund primarily uses the bottom up approach in the selection of stocks and uses a blend of both value and growth to provide growth in capital to investors.
The direct plan of ABSL Tech fund came into being in the year 2013 and since then has offered a return of over 25%.
Top holdings of the fund are Infosys, TCS, Tech Mahindra, HCL, Cyient, Persistent Systems, Just Dial, Bharti Airtel, First Source and Wipro.
SIP started with an amount of Rs. 10000 3 years hence is now valued at Rs. 7.35 lakh, likewise Rs. 1 lakh worth of investment is now worth Rs. 2.39 lakhs.
3. Tata Digital India Fund- Direct :
This tech fund of Tata Mutual fund came into existence in the year 2015 and since then has offered return of over 25%. The fund works to provide capital appreciation by investing atleast 80% of the corpus in listed IT companies in India.
The benchmark of the fund is Nifty and in a 1-year time frame it has beaten the index and provided return of over 90%.
SIP in the fund can be started for as less as Rs. 150 and the fund entails an exit load if the units are redeemed within 30 days of 0.25%.
In a 3-year time period, the investment of Rs. 3.6 lakh (through a SIP of Rs. 10000 per month is now valued at Rs. 7.21 lakh)
Top holdings of the fund are Infosys, Tech Mahindra, TCS, HCL, Persistent Systems, Wipro, Cyient, Birlasoft, Larsen and Toubro Infotech and InfoEdge.
Return of Best Tech funds
|Technology Focused funds||Annualised SIP 1-year return||SIP 3-year return||SIP 5-year return|
|ICICI Prudential Technology Direct Plan||97.13%||55.43%||39.27%|
|ABSL Digital India Direct Plan|
|Tata Digital Fund-Direct Plan||91.65%||48.81%||36.38%|
Why technology focused funds?
Technology is the foundation of all such advancements including cloud, analytics and blockchain and with time there shall be only advancement going ahead and through multitude deals and venture into various areas, prospects of these IT companies shall only augment. Further to take on international exposure you can take exposure in international fund of funds (FoFs).
Mutual fund investment is subject to risk and the technology sector fund being concentrated to tech funds is even more riskier and hence the investment options listed out here should not be taken for investment advice.