Characteristics of IT Sector Funds
  • Industry focused
  • More volatile
  • Concentrated holdings
  • Scope for high returns
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Top funds 3Y Return 5Y Return
Aditya Birla Sun Life Digital India Fund (G) 5.81% 3.59% Invest
ICICI Prudential Technology Fund (G) 2.95% 1.34% Invest
Tata Digital India Fund (G) 7.16% - Invest
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Oct 04, 2018 12 min read

Top 3 IT Sector Funds to Invest in Right Now

Read this blog to know how beneficial it is to invest in the top IT sector funds

The mutual fund market is a boon for all those investors who wish to earn maximum returns by facing the risk involved. With time, the categories have only evolved and become better keeping in mind the welfare of investors. One of the many investment sectors, IT sector has shown a remarkable rise and is likely to generate great returns in the coming time as well. Investors interested in this sector may invest in the IT sector funds to avail the benefits. In the coming blog, you will get to read what these funds are and the best IT sector funds to invest in.

What Are IT Sector Funds?

According to SEBI, Sector or sectoral funds are the open-ended schemes that invest in a particular sector. The minimum investment made in equity and equity related instruments of a particular sector should be 80% of the total assets. Therefore, it can be said that funds investing 80% of their assets in IT segment are IT sector funds.

How Is IT Sector Performing?

Here is the list of points to illustrate how IT sector is performing and what has led to its exceptional performance recently.

  • It has been observed that India’s IT and ITeS industry has grown to US$ 167 billion in the year 2017-18. Exports from the industry and the domestic revenues have increased to US$ 126 billion and US$ 41 billion, respectively.
  • Indian IT sector has attracted investments from many countries and is expected to grow by the year 2025 to US$ 350 billion.
  • One of the reasons behind growth of this sector is the presence of cheap labour in India that helps in cost savings. With 75% of the global digital talent’s presence, India has become the digital capabilities hub in the world.
  • In terms of IT companies, the world has seen the on-shore and off-shore services that India has to offer. With the help of proper research and development, the business has expanded across the globe on the basis of a proper business model.
  • Top IT companies such as Infosys, TCS, Wipro, etc., have come up with new and innovative ways to simplify and standardize work. Ideas in terms of artificial intelligence, blockchain, centres for research and development have opened their way towards growth.


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This performance has led to a sudden increase in the revenues of IT sector by a good margin recently which indicates towards the good investment opportunities that it brings with it. Investing through mutual funds in the same can help investors earn well on their savings keeping in mind the current phase. It is this reason that fund managers are including this sector in the investment portfolio.

Top IT Funds to Invest In Right Now

Tata Digital India Fund (G)

The investment objective of Tata Digital India Fund is to generate long-term capital growth by investing a minimum of 80% of the total assets in equity and equity related instruments in the companies belonging to IT sector. It may invest 100% of the assets in equity or a maximum of 20% of the assets in debt instruments.

Basic Information
ParametersTata Digital India Fund
Category Sectoral - Technology
Benchmark S&P BSE IT TRI
Launch Date 12/28/2015
Asset Size Rs. 322 crore(As on Aug 31, 2018)
Fund Managers Danesh Mistry
Expense Ratio 2.68%(As on August 31, 2018)
Minimum Lumpsum Rs 5,000
Minimum SIP Rs 500
Exit Load 0.25% for redemption within 91 days
Tata Digital India Fund (G)
CompanySectorAssets (%)
Infosys Technology 26.38
Tata Consultancy Services Technology 14.71
HCL Technologies Technology 7.04
Tech Mahindra Technology 6.24
NIIT Technologies Technology 5.85
Tata Elxsi Technology 5.22
Wipro Technology 4.67
Cyient Technology 4.51
Persistent Systems Technology 4.39
L&T Technology Services Engineering 3.85
*As on August 31st, 2018
Trailing Returns (%)1-Year
Tata Digital India Fund (G) 60.31
NIFTY IT TRI 54.19
Category 47.23
*As on September 28th, 2018

This scheme by Tata Mutual Fund has yielded great returns of 60.31% in one year outperforming both its category and benchmark NIFTY IT TRI by a good margin.

Who Should Invest?

This scheme is for aggressive investors who are ready to take high risk on the principal amount invested to earn long-term capital growth.

ICICI Prudential Technology Fund (G)

The investment objective of this scheme by ICICI Prudential Mutual Fund is to help investors earn long-term capital appreciation by investing in equity and its related instruments of technology sector companies.

Basic Information
ParametersICICI Prudential Technology Fund
Category Sectoral - Technology
Benchmark S&P BSE IT TRI
Launch Date 3/3/2000
Asset Size Rs. 459 crore(As on Aug 31, 2018)
Fund Managers Ashwin Jain, Priyanka Khandelwal, Sankaran Naren
Expense Ratio 2.88%(As on August 31, 2018)
Minimum Lumpsum Rs 5,000
Minimum SIP Rs 1,000
Exit Load 1% for redemption within 15 days
ICICI Prudential Technology Fund (G)
CompanySectorAssets (%)
Infosys Technology 34.34
L&T Infotech Technology 12.92
Tech Mahindra Technology 10.34
HCL Technologies Technology 9.13
Wipro Technology 8.84
Oracle Fin Ser Software Technology 5.58
Cognizant Technology Solutions Corp. Technology 5.48
Nucleus Software Exports Technology 3.67
Cyient Technology 2.63
*As on August 31st, 2018
Trailing Returns (%)1-Year3-Year5-Year
ICICI Prudential Technology Fund (G) 51.42 12.84 19.69
NIFTY IT TRI 54.19 11.79 16.34
Category 47.23 12.21 17.26
*As on September 28th, 2018

The returns provided by ICICI Prudential Technology Fund are higher than both its category and benchmark in three and five years time period.

Risk Measures (%)SDBetaSharpe
ICICI Prudential Technology Fund (G) 14.36 0.77 0.47
NIFTY IT TRI 17.27 - 0.36
Category 14.49 0.77 0.42
*As on September 30th, 2018

Who Should Invest?

Investors who wish to add a scheme to their portfolio that is sector specific to earn high growth may invest in it. The risk involved in this scheme is high, and therefore only aggressive investors should invest in it.

Aditya Birla Sun Life Digital India Fund (G)

This scheme by Aditya Birla Sun Life Mutual Fund aims to generate long-term capital growth by investing in the equity and its related instruments of companies mainly belonging to technology and technology dependent companies. Earlier Aditya Birla Sun Life Digital India Fund was known as Aditya Birla Sun Life New Millennium Fund.

Basic Information
ParametersAditya Birla Sun Life Digital India Fund
Category Sectoral - Technology
Benchmark S&P BSE Teck TRI
Launch Date 1/15/2000
Asset Size Rs. 458 crore(As on Aug 31, 2018)
Fund Managers Kunal Sangoi
Expense Ratio 2.90%(As on August 31, 2018)
Minimum Lumpsum Rs. 1,000
Minimum SIP Rs. 1,000
Exit Load 1% for redemption within 365 days
Aditya Birla Sun Life Digital India Fund (G)
CompanySectorAssets (%)
Infosys Technology 25.1
Tech Mahindra Technology 10.07
HCL Technologies Technology 9.27
Tata Consultancy Services Technology 7.08
MindTree Technology 6.21
Sterlite Technologies Communication 5.94
Sun TV Network Services 4.35
Majesco Technology 3.42
Honeywell Automation Engineering 3.16
NIIT Technologies Technology 3.07
*As on August 31st, 2018
Trailing Returns (%)1-Year3-Year5-Year
Aditya Birla Sun Life Digital India Fund (G) 44.54 13.79 18.07
NIFTY IT TRI 54.19 11.79 16.34
Category 47.23 12.21 17.26
*As on September 28th, 2018

Although this fund has performed low in comparison to its benchmark and category in one-year returns, with time it has managed to generate better three and five year returns.

Risk Measures (%)SDBetaSharpe
Aditya Birla Sun Life Digital India Fund (G) 16.74 0.86 0.47
NIFTY IT TRI 17.27 - 0.36
Category 14.49 0.77 0.42
*As on September 30th, 2018

Who Should Invest?

Investors willing to invest in the equity and its related instruments of IT sector and related companies may invest in it. The overall risk involved in this scheme is moderately high on the principal amount invested.

Factors to Keep In Mind While Investing in IT Funds

There are a number of factors which an investor should keep in mind while investing in these funds. They are as follows:

  1. Sector’s Performance - A sector-focused scheme depends on the sector in which it invests to a large extent. Therefore, it is really important that while selecting such funds the sector’s performance is studied well in advance. While a high phase can help investor earn well, at the same time the low phase may turn out to be a risky one.
  2. Company’s Performance - If the functioning and the strategies followed by the companies are remarkable, then it may remain unaffected even by the sector’s performance. Therefore, focusing on the sector’s performance is simply not enough. You should know the companies’ basics and the principles that are being followed in addition to their market positions.
  3. Market Volatility - It is usually said that timing the market is important during investing in sector mutual funds. The reason behind the same is the market volatility and the fluctuations that take place in the market from time to time. Although in the long run their affect is nullified, still it is better to know the current market conditions at the time of investment.
  4. Fund Management - How a scheme functions depends on the investment selection made which further depends on the decisions taken by the fund managers. It is important that these people are qualified and experienced enough to direct the investment in the right manner. You should find out who is the manager of the scheme you are willing to invest in and the strategies that he is going to use.


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  • 100% Paperless
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  • Easy to Invest
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Conclusion

The above-mentioned top IT funds are recommended for investment, keeping an eye on the current rise in returns that it has yielded. Since, the investment in them is mainly inclined towards equity and equity related instruments, they are likely to perform well with the improvement in the correction phase. Whether or not this fund is right for your investment will depend entirely on your portfolio’s requirement. If you have any query that you wish to get answered, you can post the same here or can contact the financial experts of MySIPonline.

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