Digital transformation has been a leading theme in the global economy. Digitalisation, artificial intelligence, and other tech-based technologies have seen rapid development recently. The Indian information technology (IT) sector is at the forefront of this trend, with several companies having a large global presence. The best IT mutual funds allow investors to gain exposure to the IT sector and capture its growth. Read on to learn who should invest in an IT mutual fund and factors to consider before investing in one.
IT mutual funds are sector-focused, typically equity-oriented, and invest in the shares of companies operating in the IT sector. IT mutual funds invest in large-cap, mid-cap, and small-cap IT companies. IT mutual funds aim to capture the growth in the IT sector and offer investors exposure to several IT companies.
An IT mutual fund invests in businesses involved in software development, communication, hardware, cloud computing, artificial intelligence, and other emerging technologies. The IT sector in India has been a key driver of the economy, and IT funds aim to generate long-term capital appreciation by tapping the growth potential of solid companies.
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| Fund Name | Category | Risk | NAV | Expense Ratio | 1Y Returns | 3Y Returns | 5Y Returns | Rating | Fund Size (in Cr) | Exit Load |
|---|---|---|---|---|---|---|---|---|---|---|
Franklin India Technology Fund | Equity | Very High | 591.78 | 1.07 | -0.0% | 23.9% | 15.1% | -- | ₹1,995 | Exit load of 1% if redeemed within 1 year |
Tata Nifty India Digital ETF FoF Direct - Growth | Equity | Very High | 15.24 | 0.11 | 2.5% | 20.4% | NA | -- | ₹134 | Exit Load for units in excess of 12% of the investment,1% will be charged for redemption within 365 days. See more |
SBI Technology Opportunities Fund | Equity | Very High | 258.97 | 0.9 | 4.0% | 17.9% | 18.4% | -- | ₹5,229 | Exit load of 0.50% if redeemed within 15 days |
ICICI Prudential Technology Direct Plan-Growth | Equity | Very High | 235.63 | 0.99 | 0.1% | 16.9% | 16.3% | -- | ₹15,892 | Exit load of 1% if redeemed within 15 days |
Tata Digital India Fund | Equity | Very High | 57.26 | 0.51 | -5.0% | 16.6% | 16.2% | -- | ₹12,255 | Exit load of 0.25% if redeemed within 30 days. |
Aditya Birla Sun Life Digital India Fund | Equity | Very High | 201.91 | 0.79 | -2.0% | 16.2% | 15.5% | -- | ₹4,836 | Exit load of 1% if redeemed within 30 days. |
ICICI Prudential Nifty IT Index Fund | Equity | Very High | 13.72 | 0.37 | -5.5% | 11.4% | NA | -- | ₹619 | - |
Kotak Technology Fund | Equity | Very High | 12.21 | 0.88 | -2.0% | NA | NA | -- | ₹662 | 0.5% for redemption within 30 Days |
SBI Nifty IT Index Fund | Equity | Very High | 9.79 | 0.31 | NA | NA | NA | -- | ₹76 | Exit load of 0.25%, if redeemed within 15 days. |
Nippon India Nifty IT Index Fund | Equity | Very High | 10.60 | 0.25 | -5.5% | NA | NA | -- | ₹208 | - |
Motilal Oswal Digital India Fund | Equity | Very High | 10.34 | 0.85 | 3.6% | NA | NA | -- | ₹906 | Exit load of 1%, if redeemed within 90 days. |
Axis Nifty IT Index Fund | Equity | Very High | 13.59 | 0.32 | -5.6% | NA | NA | -- | ₹139 | Exit load of 0.25%, if redeemed within 7 days. |
HDFC Technology Fund | Equity | Very High | 14.20 | 0.93 | -1.6% | NA | NA | -- | ₹1,624 | Exit load of 1%, if redeemed within 30 days. |
Navi Nifty IT Index Fund | Equity | Very High | 11.53 | 0.36 | -5.5% | NA | NA | -- | ₹26 | - |
Invesco India Technology Fund | Equity | Very High | 9.95 | 0.82 | 0.4% | NA | NA | -- | ₹330 | Exit load of 0.50%, if redeemed within 3 months. |
Before investing in an IT mutual fund, investors need to know key factors such as their investment goals, investment horizon, and risk appetite. IT funds can be highly volatile and perform better in the long run. It may not be suitable for investors seeking a low-risk option or those with a short-term investment horizon.
The Indian IT sector operates on a global scale, with a major presence in markets such as the U.S. and Europe. As a result, the IT sector is sensitive to changes in the foreign exchange rate. Investors should keep track of the current and future outlook of currency rates.
Investors should conduct research about the fund’s past performance and the fund manager’s track record. Additionally, studying the fund’s asset allocation strategy, concentration, and investment approach can help investors assess if the fund is the right fit for them.
When investing in a mutual fund, it is important to keep track of the costs and fees associated with the investment. Failing to account for costs such as the expense ratio, exit load, or transaction charges can impact your returns. Keeping these costs in mind while comparing mutual funds can also help in picking the most cost-effective option.
Investing in an IT mutual fund is beneficial as it allows investors to capture long-term tech trends. Investors can invest in technological innovations that shape the world through an IT fund. Since these trends persist for an extended period, they are advantageous for investors looking to stay invested over a longer horizon.
Indian IT companies are among the most prominent players in the global market. The presence across international markets helps spread risk. Moreover, this provides the sector with more opportunities to scale and generate steady cash flows.
Investors can benefit by investing in an IT mutual fund, as it can support and enhance diversification. Including exposure to the IT sector alongside other sectors can not only increase potential returns but also help spread risk across multiple sectors.
Exports contribute a major share of the IT sector's revenue. Fluctuations in the currency rate can impact the performance of the companies and the fund. If the rupee strengthens against the dollar, exports may become less profitable.
A rise in interest rates can negatively impact the IT sector. Increasing interest rates can lead to reduced IT budgets, a slowdown in revenue, and lower valuations.
An IT mutual fund is a sector fund that invests solely in technology companies. The lack of diversity makes the fund more vulnerable. The underperformance of the IT sector directly impacts the fund’s performance.
Market risks and unfavourable economic conditions make equity-focused funds, such as IT mutual funds, highly volatile and risky.
IT mutual funds are equity-oriented sectoral funds. Gains on units sold are subject to capital gains tax depending on the investment's holding period.
Short-term capital gains tax (STCG) of 20% is applicable on gains on units sold for less than 12 months.
Long-term capital gains tax (LTCG) of 12.5% is levied if the units are sold after 12 months and gains exceed the threshold limit of ₹1.25 lakh.
An IT fund is a sectoral mutual fund that invests in companies operating in the IT and technological sector.
Investing in an IT fund can be advantageous, as it allows investors to tap into the growth of the IT sector. It is beneficial for investors looking to generate long-term wealth.
IT funds are sensitive to currency rate fluctuations, interest rates, and broader market risks. This makes IT funds a high-risk and volatile option.
IT funds are a viable option for beginners looking to gain exposure to the IT sector.
The ideal investment horizon for IT funds is a long-term horizon of 5 years or more.
IT mutual funds are taxed similarly to other equity funds. The gains are subject to capital gains tax depending on the holding period. Units sold before 12 months attract STCG of 20% while units sold after 12 months attract LTCG of 12.5%.
Now let us jump and check about these top 15 mutual fund schemes.
Fund Performance: The Franklin India Technology Fund has given 23.95% annualized returns in the past three years and 15.14% in the last 5 years. The Franklin India Technology Fund comes under the Equity category of Franklin Templeton Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Franklin India Technology Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹1,995Cr |
| 1Y Returns | -0.0% |
Fund Performance: The Tata Nifty India Digital ETF FoF Direct - Growth comes under the Equity category of Tata Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Tata Nifty India Digital ETF FoF Direct - Growth via lump sum is ₹5,000 and via SIP is ₹150.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹134Cr |
| 1Y Returns | 2.5% |
Fund Performance: The SBI Technology Opportunities Fund has given 17.89% annualized returns in the past three years and 18.37% in the last 5 years. The SBI Technology Opportunities Fund comes under the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Technology Opportunities Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹5,229Cr |
| 1Y Returns | 4.0% |
Fund Performance: The ICICI Prudential Technology Direct Plan-Growth has given 16.86% annualized returns in the past three years and 16.3% in the last 5 years. The ICICI Prudential Technology Direct Plan-Growth comes under the Equity category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Technology Direct Plan-Growth via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹15,892Cr |
| 1Y Returns | 0.1% |
Fund Performance: The Tata Digital India Fund has given 16.61% annualized returns in the past three years and 16.23% in the last 5 years. The Tata Digital India Fund comes under the Equity category of Tata Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Tata Digital India Fund via lump sum is ₹5,000 and via SIP is ₹100.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹12,255Cr |
| 1Y Returns | -5.0% |
Fund Performance: The Aditya Birla Sun Life Digital India Fund has given 16.2% annualized returns in the past three years and 15.47% in the last 5 years. The Aditya Birla Sun Life Digital India Fund comes under the Equity category of Aditya Birla Sun Life Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Digital India Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹4,836Cr |
| 1Y Returns | -2.0% |
Fund Performance: The ICICI Prudential Nifty IT Index Fund comes under the Equity category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Nifty IT Index Fund via lump sum is ₹1,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹619Cr |
| 1Y Returns | -5.5% |
Fund Performance: The Kotak Technology Fund comes under the Equity category of Kotak Mahindra Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Kotak Technology Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹662Cr |
| 1Y Returns | -2.0% |
Fund Performance: The SBI Nifty IT Index Fund comes under the Equity category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Nifty IT Index Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹76Cr |
| 1Y Returns | NA |
Fund Performance: The Nippon India Nifty IT Index Fund comes under the Equity category of Nippon India Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Nippon India Nifty IT Index Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹208Cr |
| 1Y Returns | -5.5% |
Fund Performance: The Motilal Oswal Digital India Fund comes under the Equity category of Motilal Oswal Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Motilal Oswal Digital India Fund via lump sum is ₹500 and via SIP is ₹500.
| Min Investment Amt | ₹500 |
|---|---|
| AUM | ₹906Cr |
| 1Y Returns | 3.6% |
Fund Performance: The Axis Nifty IT Index Fund comes under the Equity category of Axis Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Axis Nifty IT Index Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹139Cr |
| 1Y Returns | -5.6% |
Fund Performance: The HDFC Technology Fund comes under the Equity category of HDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in HDFC Technology Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹1,624Cr |
| 1Y Returns | -1.6% |
Fund Performance: The Navi Nifty IT Index Fund comes under the Equity category of Navi Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Navi Nifty IT Index Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹26Cr |
| 1Y Returns | -5.5% |
Fund Performance: The Invesco India Technology Fund comes under the Equity category of Invesco Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Invesco India Technology Fund via lump sum is ₹1,000 and via SIP is ₹500.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹330Cr |
| 1Y Returns | 0.4% |
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