Updated on: Jan 4th, 2023
7 min read
Technology is a booming industry in India, and this sector is one of the highest income-yielding classes. Moreover, the Indian Government has been spending a lot of money in the technology sector in order to digitise the nation, and both old and new tech companies are reaping the benefits.
So, if you want to invest in these exponentially growing companies, you can consider adding technology mutual funds to your portfolios. To know about the best technology mutual funds, read on.
These are the top 5 technology mutual funds that you can invest in 2022:
1.SBI Technology Opportunities Fund- Direct Fund Growth
SBI Technology Opportunities Fund primarily focuses on blockchain, data science, robotics and Artificial Intelligence (AI). This mutual fund invests in the development of such technologies that help companies all around the globe to enhance their infrastructure, business processes, products and services.
This fund is under the management of SBI Funds Management Inc and aims to appreciate its invested capital by investing in both well-established as well as new tech companies that are in different stages of progress. It has delivered over 20% annualised returns since its inception.
Furthermore, it has also successfully doubled the money invested every three years. In addition, as of 30 September 2022, this mutual fund had assets under management (AUM) worth approximately Rs.2,500 crore.
In its category, SBI Technology Opportunities Fund is medium-sized and has an expense ratio of 0.92%. It is also well-known in the market for delivering returns consistently.
This mutual fund’s top five holdings are Microsoft Corporation (USA), Netflix Inc. (USA), Bharti Airtel Ltd., Infosys Ltd. and Tata Consultancy Services Ltd. In the last five years, this mutual fund has grown by 179.50%.
2. ICICI Prudential Technology Fund
Started on 3 March 2000, this is a diversified equity fund whose aim is to create income in the long term and appreciation of capital. This mutual fund aims to do so by holding equity and equity-related securities of international technology and technology-dependent companies.
ICICI Prudential Technology Fund invests the lion’s share of its assets under management (AUM) in stocks that are under the Benchmark Index. However, depending on its strategy, this mutual fund may also purchase stocks from other firms that form a part of the IT Services Industry.
Currently, this mutual fund has an approximate Rs.8,693 crore worth of AUM and has an expense ratio of 0.79%. Moreover, its average annual returns stand at 22.28% and in the last five years, this fund has experienced a growth of 209.38%.
Furthermore, Infosys Ltd., Tata Consultancy Services Ltd., HCL Technologies Ltd., Wipro Ltd. and Tech Mahindra Ltd. are its largest holdings.
3. Franklin India Technology Fund
Franklin India Technology Fund is managed by Franklin Templeton Mutual Fund House. It purchases stocks of high-range, rapidly developing firms in the information technology sector to achieve the above-normal appreciation of capital. Furthermore, this mutual fund follows a bottom-up approach to stock pricing and is famous in its category for providing consistent returns to its investors.
This mutual fund has currently assets under management worth Rs.686.39 crore and a 3-year compound annual growth of 19.25%. Its expense ratio is 1.41%, and the average annual returns stand at 17.23%. In addition, the 3-year returns of this firm have grown by 69.56%.
The top five holdings of this fund house are Infosys Ltd, Tata Consultancy Services Ltd, HCL Technologies Ltd, Tech Mahindra Ltd and Cyient Ltd.
4. Tata Digital India Fund
The Tata Digital India Fund is suitable for you if long-term capital appreciation and investing in equity or equity-related companies of the IT sector are your forte. This mutual fund’s strategy is to increase its capital in the long term by investing at least 80% of its funds in equity stocks of Information Technology companies that deal in hardware, software and ITeS.
This mutual fund began its journey on 4 December 2015 and currently has assets under management worth Rs.5,981 crore. Its 3-year compound annual growth rate stands at 26.64%, and it has an expense ratio of 0.34%. The average annual return of this mutual fund is 19.75%. Furthermore, its three-year returns have increased by 103.12%.
Infosys Ltd., Tata consultancy services Ltd., Tech Mahindra Ltd., HCL Technologies Ltd. and Wipro Ltd. are its top five holdings.
5. Aditya Birla Sun Life Digital India Fund
Aditya Birla Sun Life Digital India Fund is an open-ended equity investment scheme. It mainly invests in technology, entertainment, media and other similar ancillary sectors. This mutual fund has a multi-sector investment scheme targeting long-term capital growth. Its portfolio consists of 100% equity purchases in technology-dependent/enabled companies.
It came into existence on 15 January 2000 and currently has Rs.3,134 crore worth of assets under management. Its compound annual growth rate is 27.32%, and it has an expense ratio of 0.85%. Moreover, this mutual fund has given 21.51% average annual returns. Its three-year return currently stands at 106.41%.
The top five holdings of this mutual fund are Infosys Ltd., Tata Consultancy Services Ltd., Tech Mahindra Ltd., HCL Technologies Ltd. and MindTree Ltd.
Now that you know the best technology mutual funds, you can invest in one that suits your preference. However, do keep in mind that technology stocks can be unpredictable and volatile. This is because they invest in a variety of tech firms and, therefore, can have more volatility than other types of mutual funds.
Furthermore, these mutual funds are often used as long-term investments or hedge funds. So, it is not for beginner investors who have a low-risk appetite.
*All data as of 14 October 2022.