Technology Funds are funds that invest money in IT-related businesses. This includes businesses like manufacturing of IT devices, development of software, IT outsourcing, digital services, could services, etc.
Despite economic stress due to the Covid-19 pandemic, Indian IT companies are showing massive rally. This is mainly due adoption of remote working, digital transformation, IoT, Digitalization & Artificial Intelligence by businesses. All these Industry 4.0 revolutions are taking charge of traditional technologies.
The current situation is in favor of IT companies. Indian IT service giants Tata Consultancy Services (TCS), Infosys, Wipro, HCL Technologies, and Mindtree have turned out to be top-performing companies.
The stocks of Wipro and Mindtree have generated multibagger returns for the investors in the last six months during the lockdown.
IT Stock Performance
| Stock | % Returns (April – Oct 2020) |
| TCS | 60% |
| Infosys | 74% |
| Wipro | 98% |
| HCL Technologies | 87% |
| Mindtree | 105% |
The massive rally in IT stocks is resulting in the magnificent returns in Technology Funds. The top-performing fund ICICI Prudential Technology Fund has generated 80% for the investors in the last six months.
It seems that technology funds are likely to give a similar performance in the days to come. Thus it is a very good idea to invest your money in the technology funds.
In this post, I will share a list of “Top-performing Technology Funds for Investment 2020-21”. These funds have generated up to 40% returns for the investors and likely to sparkle your portfolio in days to come.
Also Read – Best Multi-Cap Funds for Investment in 2020-21
What are Technology Funds?
Technology funds are sectorial mutual fund schemes that invest money in the leading IT sector companies & firms. They can invest in both debt and equities of IT companies.
The objective of a technology fund is to generate long term capital appreciation by creating a strong equity portfolio of technology & technology-dependent companies.
They usually invest money in companies working on emerging technologies & innovative products. Examples of technology funds are ICICI prudential technology fund, Aditya Birla sun life digital India fund, Franklin India technology fund, etc. Their portfolio consists of leading IT companies TCS, Infosys, Wipro, etc.
Top Technology Funds for Investment 2020-21
The returns detail given above is up to 10th Oct 2020. The returns are absolute return.
#1 ICICI Pru Technology Fund
ICICI Pru Technology Fund is a high performing technology fund. This fund has generated 81% returns for the investors in the past six months. Top portfolio stocks of this fund are Infosys, TCS, Tech Mahindra, Wipro, etc. It is a high-risk fund with 96% investment in the equities.
#2 Franklin India Technology Fund
Franklin India Technology Fund is next in the list of a top-performing technology fund. Franklin India Technology Fund has generated 58.33% returns for the investors in the last six months. This fund has invested money in Infosys, TCS, HCL, Cognizant Technology, etc. This fund is investing money in Indian as well as foreign equity holdings.
#3 SBI Technology Opportunities Fund
SBI Technology Opportunities Fund is a high-risk sectorial fund. This fund has generated 52% returns for the investors in the last six months. The expense ratio of this fund is slightly higher. Top stocks holding of this fund are Infosys, TCS, and Tech Mahindra.
#4 Aditya Birla Sun Life Digital India Fund
Aditya Birla Sun Life Digital India Fund is one of the top-performing technology funds. Aditya Birla Sun Life Digital Fund has generated 64.7% returns for the investors in the last six months. Aditya Birla Sun Life Digital India Fund also invests money in the leading foreign company Apple.
#5 Tata Digital India Fund
Tata Digital India Fund is next in the list of technology funds. Tata Digital India fund has generated 67.75% returns for the investors in the last six months. This fund is suitable for high-risk investors. The portfolio stocks of this fund are Infosys, TCS, Mindtree, Wipro, HCL, etc.
Things to consider before investing in Technology Funds
- Technology funds are sectorial funds and the risk associated with sectorial fund is high.
- Investors should remain cautious about concentration risk in these funds.
- You will not get the benefit of diversification by investing in these types of funds.
- Your portfolio exposure to technology funds should not be more than 5-10%.
- You should select a fund after doing proper research. The fund should have beaten the benchmark across market cycles.
- You should look at the fund portfolio before investing your money.
- It is a good idea to go through the objective of the fund and consult your financial planner before investing.
Over to you –
Have you invested your money in the Technology Fund?
Please share your favorite technology fund in the comment section given below.
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