Top 5 IT Mutual Funds of 2021 to Make the Most of the Tech Boom!
"Use technology or invest in technology; in either of the way, you will accumulate good wealth for yourself. Using technology, on the one hand, will open doors to digitalization which is the need of the hour; and on the other hand, investing in top technology (IT) sector mutual funds via SIP will help you multiply your wealth in the long term."
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Among all the sectors, the IT sector has emerged as the winner in the first half of 2021. The technology equity funds managed to give good returns to the investors who were looking for a high risk-high return investment. Moreover, the experts believe that the technology sector will continue its winning streak, which makes it a good pick to start monthly SIP in 2021.
Hello, investors! Welcome to the new blog, which lists the top 5 best performing technology funds in India. But before that, let us discuss why you should invest in IT mutual funds in 2021.
Why Should You Begin SIP Investment in Technology Sector Funds?
Sector Overview:
The Indian IT sector majorly consists of 3 industry groups. They are:
- Software And Services: It includes companies that provide its services by designing software, such as programming software, enterprise solutions, product engineering software, etc. Also, the internet services providing online database and interactive service comes under this industry. If we further classify this genre, then IT consultancy and data processing services like system integration, information management also contribute to this sector.
- Technology Hardware And Equipment: As the name suggests, communication devices (LAN, Routers), technology hardware (Laptop, PC), storage (servers), and electronic equipment (POS machines, ATMs) constitute the major portion of this sector.
- Semi-conductors And Equipment: Although this is a vast sector, the exposure is limited in India. Semi-conductors are substances that are used in all types of electric circuits. They also find their usage in solar cells and auto-industries as well.
So, this was the complete sector overview. Now, let us flash light on the upcoming trends and growth in the technology sector.
Top Trends in IT Sector:
- Digitalization
- Automation Through AI & Machine Learning
- 5G
- Cloud Computing
- Emerging Digital Products
- Internet of Things
- Intelligence Analytics
- Engineering Research & Developments
- Cybersecurity
Future Growth Aspect:
- Digitalization is taking over small-scale and medium-scale businesses.
- Transfer of business from traditional mode to automation and cloud environment.
- Hardware and semi-conductor manufacturing rate expansion.
- Global growth and high dollar valuation will boost IT export.
- Relaxation in FDA rules.
Reading so far, you must have understood that the current trends and future growth aspects clearly indicate that the IT sector has a huge scope in the future; as a result, the investors should park their cash in the best 5 technology equity funds for SIP investment.
Which Are the Trending Technology Investment Funds in 2021?
Here is the list consisting of the 5-star rated tech funds.
| 5 Best IT Sector Funds of 2021 |
| ICICI Pru Technology Fund |
| ABSL Digital India Fund |
| TATA Digital India Fund |
| SBI Technology Opportunities Fund |
| Franklin India Technology Fund |
| Sectoral-Technology |
The best picks are shortlisted after analyzing the past returns and risks associated with the funds, along with portfolio and investing style. Furthermore, below are the performance sheet indicating returns in the short and long term.
| Annualized Returns | 1-Year | 3-Year | 5-Year |
| ICIC Pru Technology Fund | 102.25 | 33.56 | 27.78 |
| Benchmark | 70.47 | 30.52 | 25.44 |
| Category's Average | 80.08 | 29.91 | 25.41 |
*as on July 29, 2021
| Annualized Returns | 1-Year | 3-Year | 5-Year |
| ABSL Digital India Fund | 89.06 | 32.07 | 27.39 |
| Benchmark | 70.47 | 30.52 | 25.44 |
| Category's Average | 80.08 | 29.91 | 25.41 |
*as on July 29, 2021
| Annualized Returns | 1-Year | 3-Year | 5-Year |
| TATA Digital India Fund | 86.10 | 29.13 | 26.31 |
| Benchmark | 70.47 | 30.52 | 25.44 |
| Category's Average | 80.08 | 29.91 | 25.41 |
*as on July 29, 2021
| Annualized Returns | 1-Year | 3-Year | 5-Year |
| SBI Technology Opportunities Fund | 78.34 | 28.85 | 23.41 |
| Benchmark | 70.47 | 30.52 | 25.44 |
| Category's Average | 80.08 | 29.91 | 25.41 |
*as on July 29, 2021
| Annualized Returns | 1-Year | 3-Year | 5-Year |
| Franklin India Technology Fund | 56.14 | 25.91 | 22.13 |
| Benchmark | 70.47 | 30.52 | 25.44 |
| Category's Average | 80.08 | 29.91 | 25.41 |
*as on July 29, 2021
The performance report clearly indicates that ICICI Pru Technology Fund & ABSL Digital India Fund are topping the charts when it comes to returns. However, if we evaluate the risk analysis, then TATA Digital India Fund and SBI Technology Opportunities Fund are clear winners.
Now, let’s have a look at the portfolio analysis of the top 5 technology equity funds of 2021.
Portfolio Analysis:
- ICICI Pru Technology Fund:
Investment Strategy: Growth Style (i.e., it invests in companies having sustainable growth).
Sector Wise Allocation: Invests majorly in IT sectors stocks, tech-based online platforms, and fintech companies.
Market Cap Wise Allocation: Parks the assets largely in large-cap and small-cap companies.
Portfolio Management: Passive and focused on long-term returns.
- ABSL Digital India Fund:
Investment Strategy: Mixed Style (i.e., a combination of growth style & value style).
Sector Wise Allocation: Diversify the assets in sectors related to the IT sector, digital world, and technology-dependent sector.
Market Cap Wise Allocation: Dispense the assets in large and small-cap companies.
Portfolio Management: Active
- TATA Digital India Fund:
Investment Strategy: Growth Style
Sector Wise Allocation: Focuses intensively in companies related to software, technology hardware, IT infrastructure, fintech, IT-enabled services like IoT, and e-commerce.
Market Cap Wise Allocation: Invests in large-cap companies followed by mid-cap and small-cap.
Portfolio Management: Active
- SBI Technology Opportunities Fund:
Investment Strategy: Growth Style
Sector Wise Allocation: The fund managers diversify the assets well in IT software services, IT infrastructure services like cloud computing, Internet-enabled services, IoT, IT hardware, and electronic equipment.
Market Cap Wise Allocation: Invests majorly in focused stocks of large-cap companies followed by mid-cap & small-cap. Also, it invests a decent portion in cash & cash equivalents to beat market volatility.
Portfolio Management: Active
- Franklin Technology Fund:
Investment Strategy: Growth Style
Sector Wise Allocation: Diversify the assets in the technology, fintech companies, IT, and communication services.
Market Cap Wise Allocation: In equities, it invests primarily in large-cap companies. Some portion of assets is also parked in cash & cash equivalents.
Portfolio Management: Passive
So, this was the portfolio analysis of the best-performing tech mutual funds in India. Now comes the time for the experts’ suggestions.
Who Should Begin Monthly SIP in IT Mutual Funds?
According to the experts of MySIPonline, technology sector mutual fund should be a good investment for the investors who:
- Believes in long term wealth creation (> 5 years)
- Invests as per market timings and trending themes
- Have high-risk appetite and don’t believe in fundamental based or consistent returns
Coming to a conclusion, ICICI Pru Technology Fund should be preferred by the investors having high risk; whereas, the investors having moderate risk appetite can start their SIP in SBI Technology Opportunities Fund and TATA Digital India Fund.
So, this brings us to the end of the blog. If you have come this far, then you must have known the top-performing IT sector mutual funds of 2021. So, without much ado, quickly start your SIP and enjoy healthy returns. For more information about mutual funds, contact: 9660032889.
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