3 Best IT Sector Funds to Invest in Now
There is no doubt in saying that the Indian equity market is undergoing rapid evolution and is giving a new shape to Indian business standards. The global outsourcing market in the country is growing by leaps and bounds with each passing year. The top Indian IT firms including Infosys, Wipro, Tech Mahindra, TCS, etc., have created a special mark in this segment.
With the persisting market volatility, rupee depreciation plays an important role in the growth of the IT sector. Let’s find out the best performing IT funds to invest in 2019 with a hope of higher returns in the future.
Why Invest in Technology Sector Funds?
Technology mutual funds in India are a great option to invest for investors seeking diversification and have a high-risk appetite. On average, the technology sector funds have provided an annualized returns of 15 to 19 percent over a period of five years. With such a decent historical performance record and high growth prospects of the segment, these funds are believed to deliver exceptional growth to the investors.
However, considering the past returns solely and depending on the IT fund for wealth creation is not a wise reason for investment. To invest in such funds, you must closely watch the past 3 years’ returns of the scheme and have an in-depth knowledge of the technology segment and its future market.
Who Should Invest in IT and Technology Sector Funds?
As the technology fund belongs to the sector/thematic category of Equity Funds, they carry high-risk with them. Thus, investors who have the ability to tolerate such a risk in their investment should only plan to invest in these funds. He/she should have a good knowledge of the segment. Also, it is suggested that one should invest for a longer tenure of more than five years to attain long-term benefits of the market.
- 100% Paperless
- No Transaction Charges
- Easy to Invest
- Safe & Secure
Top IT Sector Funds for 2019
Tata Digital India Fund
An exceptional scheme of Tata Mutual Fund, Tata Digital India Fund aims long term capital growth for the investors with an investment of at least 80% of its assets in instruments related to IT and associated companies. It is a recently launched fund which hasn’t been tested in the different market cycles. However, the strong fund management has led it to be in our list of top sector funds for 2019.Tata Digital India Fund is currently investing in 14 stocks following a highly focused style of investment.
| Basic Information- Tata Digital India Fund (G) | |
|---|---|
| Category | Equity: Sectoral-Technology |
| Benchmark | S&P BSE IT TRI |
| Launch Date | 28-Dec-2015 |
| Asset Size | Rs. 410 crore (As on Jan 31, 2019) |
| Expense Ratio | 2.64% (As on Dec 31, 2018) |
| Minimum SIP Investment | Rs. 150 |
| Minimum Lumpsum Investment | Rs. 5000 |
| Return Since Inception | 14.73% |
| Exit Load | 0.25% for redemption within 91 days |
In the list of its top 5 holdings, Infosys, Tata Consultancy Services, Tech Mahindra, Wipro, and NIIT Technologies have made their mark, where Infosys holds the highest percentage of assets with 33.01% in total as of Jan 31, 2019.
| Name | Returns (As on February 11, 2019) | |||
|---|---|---|---|---|
| 3 Years | 5 Years | 7 Years | 10 Years | |
| Tata Digital India Fund (G) | 17.02% | NA | NA | NA |
| Benchmark | 18.32% | NA | NA | NA |
| Category | 16.81% | NA | NA | NA |
In the three years’ tenure, it has been able to deliver a whopping return of 17.02% beating its category’s average with a considerable margin.
ICICI Prudential Technology Fund
ICICI Pru Technology Fund seeks long term capital appreciation by investing in equity and its related securities of technology and technology dependent companies. A big share of the fund’s AUM is invested in the stocks under the Benchmark Index, however, the scheme may also invest in other companies which form a part of Information Technology Services Industry. It is currently being managed by two of the most experienced fund managers of ICICI Pru Mutual Fund who are Mr. Ashwin Jain and Mr. Sankaran Naren.
| Basic Information- ICICI Prudential Technology Fund (G) | |
|---|---|
| Category | Equity: Sectoral-Technology |
| Benchmark | S&P BSE IT TRI |
| Launch Date | 3-Mar-2000 |
| Asset Size | Rs. 484 crore (As on Jan 31, 2019) |
| Expense Ratio | 2.79% (As on Dec 31, 2018) |
| Minimum SIP Investment | Rs. 100 |
| Minimum Lumpsum Investment | Rs. 5000 |
| Return Since Inception | 10.07% |
| Exit Load | 1% for redemption within 15 days |
The portfolio of ICICI Pru Technology Growth Plan held just 8 stocks in total as on Jan 31, 2019. The highest percentage of assets are in Infosys, and the number being 37.47%.
| Name | Returns (As on February 11, 2019) | |||
|---|---|---|---|---|
| 3 Years | 5 Years | 7 Years | 10 Years | |
| ICICI Prudential Technology Fund (G) | 17.27% | 13.85% | 19.25% | 25.87% |
| Benchmark | 18.32% | 12.78% | 15.94% | 23.95% |
| Category | 16.81% | 13% | 16.33% | 22.28% |
It has delivered exceptional returns to the investors in all 5, 7, 10 years’ time period with 13.85%, 19.25%, 25.87%, resp., outperforming both its benchmark and category’s average in every year as on Feb 11, 2019. This is why investing in this IT sector fund can be a win-win for you as well if you have strong bet for the segment and are willing to stow your money for a long run.
ABSL Digital India Fund.
Aditya Birla Sun Life Digital India Fund erstwhile known as Aditya Birla Sun Life New Millennium Fund. It is a technology sector open-ended growth scheme with the objective of providing long term capital appreciation through a portfolio with a target allocation of 100% equity, focusing on technology and technology dependent companies. The secondary objective of the fund is income generation and distribution of dividend.
| Basic Information- Aditya Birla Sun Life Digital India Fund (G) | |
|---|---|
| Category | Equity: Sectoral-Technology |
| Benchmark | S&P BSE Teck TRI |
| Launch Date | 15-Jan-2000 |
| Asset Size | Rs. 471 crore (As on Jan 31, 2019) |
| Expense Ratio | 2.53% (As on Dec 31, 2018) |
| Minimum SIP Investment | Rs. 1000 |
| Minimum Lumpsum Investment | Rs. 1000 |
| Return Since Inception | 9.17% |
| Exit Load | 1% for redemption within 365 days |
Aditya Birla Sun Life Digital India Growth Plan was launched on January 15, 2000. It is a highly risky fund and has given an average return since its launch of 9.17%. It is currently investing in 27 stocks, thus following a focused investment approach towards stock picking. It holds highest investment in the three IT giants of India, i.e., Infosys, HCL Technologies, and Tech Mahindra where Infosys currently has the highest percentage of assets, i.e., 29.77% as on Jan 31, 2019.
| Name | Returns (As on February 11, 2019) | |||
|---|---|---|---|---|
| 3 Years | 5 Years | 7 Years | 10 Years | |
| Aditya Birla Sun Life Digital India Fund (G) | 18.49% | 14.36% | 16.22% | 18.76% |
| Benchmark | 18.32% | 12.78% | 15.94% | 23.95% |
| Category | 16.81% | 13% | 16.33% | 22.28% |
The past 3, 5, 7, and 10 years’ trailing returns of the scheme are exceptional which have led it to earn one of the top 5 ranks in the category as on Feb 11, 2019 in every period.
- 100% Paperless
- No Transaction Charges
- Easy to Invest
- Safe & Secure
Summing it Up
Investors who have stomach for high risk and are willing to attain healthy returns over a fairly long term investment tenure should definitely go for technology mutual funds. These sector offered the highest of all mutual fund returns in the past year. It is believed that the segment is poised for a better earnings than other segments due to greater demand for technological improvements and innovations globally.
The Information and Technology segment has been coming up with improving fundamentals and emerging technologies such as wearables, drones, virtual reality headphones and other devices, and artificial intelligence which will work as the key catalysts to the sector growth.
If you have any confusion regarding the suggestion or want to seek more recommendations, then consult the experts at MySIPonline. In case you have an query concerning regular mutual funds, write it down in the form provided below and get your answer asap.
