Is Tata Digital India Fund Good for Long Term? Expert's Insights
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Introducing you to one of the best performers in the sectoral technology category, the Tata Digital India Fund, which has been around since 2015. Yet, in this short span, it has delivered 27.2% returns in the last 5 years.
But is investing in an IT sector fund good for the long term? Let's find out.
Did you know India is making long strides in the digital world? Yes, the IT sector is a major contributor to India's economy. Under the government of our honourable Prime Minister, Shri Narendra Modi, initiatives like "Digital Bharat" are helping new technologies reach every corner.
This reliability has made mutual funds that invest in top IT companies like Wipro and Tata Consultancy a hot pick to make high returns.
But, "How do you know which digital mutual fund is best for your portfolio?"
In this post, you will see whether it can be the best IT Sector Mutual Fund to be in your portfolio for 2025.
What is the 5 year Returns of Tata Digital India Fund?
Let's see compare the 3 and 5 year returns of this IT Sectoral Mutual Fund with the benchmark return:
In the above graph, the blue box shows the rolling returns achieved by this sectoral fund. Likewise, the yellow graph compares the fund’s returns with benchmark returns.
As you track the performances of past years, the Tata Digital India Fund has outperformed its benchmark with amazing margins.
In five years, it boasts an impressive 27.02% rolling return, beating its benchmark of 22.86%.
In recent affairs, the three-year returns of 24.32% have also outperformed its benchmark of 20.38%.
Must Learn: How To Calculate Rolling Returns In Mutual Funds?
Do you find it a little difficult to understand, right? Let’s take a simple example.
Imagine you started a SIP shorter for a systematic investment plan of Rs.3000 every month. Now you kept it for 5 years which means, you would have invested a total figure of Rs.1,80,000. Now as per the current value, you would have made a whopping wealth of Rs.3,55,099 as your total savings.
Pro Tip: Try out this amazing yet simple SIP Calculator tool to know your returns.
Now, this can pop a new question: “How do you know if it's a worthy investment?”
Let's grasp some insights by understanding the investment strategy on which Tata Digital India Fund is built.
Applied Tata Digital India Fund Investing Strategy
The Tata Digital India Fund has a well-rounded investment approach to take advantage of India's digital revolution. It has kept its focus on companies driving digital innovations in sectors like e-commerce, fintech, IT services and digital marketing.
Moreover, due to the growing demand and supply of technology, the IT sector and IT-related companies will experience huge growth and earnings margins.
That's exactly where this fund comes into play, using its bottom-up approach and finding the best IT companies with strong fundamentals and clear growth plans.
For example, it plans to invest in top-performing IT companies like Tata Consultancy, Infosys and Wipro Limited, which are at the forefront of making the highest revenue for the Indian economy.
Well, this leads you to question the expertise or who manages this fund. Let’s answer that.
Mastermind Behind Tata Digital India Fund's Success
Meet Ms Meeta Shetty, an intelligent and experienced Mutual Funds manager with 13+ years of knowledge. She follows a unique investment style, called GARP. It stands for growth at a reasonable price. You will see how smartly she has divided the Tata Digital India fund portfolio into two parts to maximize the overall returns.
Ms Shetty has focused on two important elements, stability and alpha generation. This means it majorly targets 82% of large cap stocks for stability and consistent growth. Likewise, investing 12% in mid cap and 6% in Small Cap Mutual Funds for higher growth potential.
To prove the facts, you can see the portfolio allocation of Tata Digital India Fund in the chart below:
Taking you a step closer, let’s see the distribution of assets in this fund.
What is the Sector Allocation of Tata Digital India Fund?
Let’s review the distribution of assets by this fund across various sectors with the help of a graph:
The above graph clearly shows it is a sector-specific fund. Amongst the top 5 sector holdings, the major investment lies in the technology sector at 89.68%.
This makes it quite a risky investment, which is why it must have quality stocks in its portfolio.
Also Read: 3 Best IT Sector Mutual Funds 2025: Is it a Good Investment?
You will find the stock quality in the next question.
What are the Holdings of Tata Digital India Fund?
The top 5 portfolio holdings of Tata Digital India Fund 2025 are as follows:
| Company | Holdings (%) |
|---|---|
| Infosys Limited | 19.83% |
| Tata Consultancy Services Limited | 13.57% |
| Tech Mahindra Limited | 9.22% |
| Wipro Limited | 7.82% |
| HCL Technologies Limited | 7.22% |
As shown in the above table, the Tata Digital India Fund has invested its money in India’s leading IT companies like Infosys, having 19.83% holdings in the portfolio.
Likewise, in the second position is a world-famous company known for its reputation, the Tata Consultancy Services, holding 13.57%. Similarly, Tech Mahindra Ltd has 9.22%, Wipro Ltd has 7.82%, and HCL Technologies Ltd has 7.22% holding shares in the fund.
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Is Investing in Tata Digital India Fund Good for Long-term?
One key factor that makes it the best IT Sector Mutual Funds for your portfolio is:
Stock Quality: It means investing in good quality companies and strong fundamentals, high growth margins, good cash flow and price-to-earnings (PE) ratios.
Coming back to Tata Digital India Fund, the current valuation stands very high at a 25.72% price-to-earnings ratio (PE ratio).
Luckily, it has good growth earnings of 16.4%, proving that with high risk comes high rewards as well. Likewise, the sales growth at 10.94% and cash flow at 10.25% draw a healthy picture to make steady returns.
You will find the valuations in the table below:
| Fundamental Ratios | Values |
|---|---|
| Sales Growth | 10.94% |
| Earnings Growth | 16.40% |
| Cash Flow | 10.25% |
| PE- Valuations | 25.72% |
The next section will tell you if Tata Digital India Fund suits your investment goals or not.
What Does Tata Digital India Fund Suitability Chart Show You?
It is clear that, the fund plans on making high returns from the quickly making growth of the IT sectors. Let’s see if it suits you:
- Now, if a high reward with a high-risk mindset suits your goals, this fund gives you the perfect opportunity.
- If diversification is what you seek, it will diversify your portfolio from regular equity funds to high-growth funds.
- Moreover, if you too had set your target for the long term, this fund totally supports it. The ideal investment duration for this fund is 5-7 years.
- Lastly, though this fund is volatile meaning risky, the Tata Mutual Fund has a reputation for handling market swings effectively.
Smart Investments, Bigger Returns
To Conclude Tata Digital India Fund Review
In short, this fund checks out every point that makes it a valuable addition to your portfolio. Nonetheless, investing via the SIP route is the best strategy to cancel out any major risk that may arise. Though it's a great opportunity, it also comes rarely, which is why it is necessary to know the right time for investment.
Luckily, this is your chance to take advantage of this growing IT Sector and make high returns with expert management every step of the way.
