Revealing the top technology sector funds in India

Summary:

Investors, both new and old, have shown faith in the technology sector of India because of its consistent growth trajectory. With a little patience and research, this blog will get you on the right path to investing in the leading technology sector funds.

The Indian technology sector has instilled faith in investors, both old and new, and continues to do so because of its consistent growth trajectory. Even the COVID-19 pandemic and its related lockdowns could not thwart its expansion. This has been possible because of investors’ confidence along with factors such as:

• The global technology boom
• Widespread digital transformation
• Growing outsourcing and IT services
• An ecosystem that promotes start-ups
• Government initiatives such as ‘Digital India’ and ‘Make in India'
• Improved investor awareness

Despite the risks, the resilience and potential of this sector is what draws investors. But with so many to choose from, how do you narrow down on those that suit your objectives? The following breakdown will help you get a head-start.

Parameters for evaluation

The following are some of the parameters that determine how some of the leading technology funds are performing:

• Net assets: Net assets of a mutual fund, also referred to as "net asset value" or NAV, represent the total value of all the investments held by the mutual fund, including stocks, bonds, cash and other securities, after subtracting any outstanding debts or expenses.
• Category: This refers to the specific classification or group that the fund falls into based on its investment objectives, asset allocation and the types of securities it invests in.
• Risk: These funds offer a range of risk-return profiles based on where the money is being invested, which investors assess to forecast the anticipated returns.
• Expense ratio: The expense ratio represents the percentage of a fund's total assets that are used to cover its operating expenses, including the various costs associated with managing the fund.
• Sharpe ratio: This is used to assess the risk-adjusted return of an investment or portfolio. It helps investors evaluate the potential return they could receive for the level of risk they are taking.
• Information ratio: This is used to evaluate the skill or value added by an investment manager in relation to a benchmark index.
• Alpha ratio: This quantifies an investment's performance relative to a benchmark index, considering the risk taken.
• Minimum investment: This is the minimum amount an investor must put in.
• Exit load: An exit load, also known as an exit fee or redemption fee, is a fee that investors pay when they redeem or sell the shares of a mutual fund.

With that said, let’s dive in and identify some of the leading technology sector funds.

1.  Franklin India Technology Fund

By investing in equities and the related securities of companies that operate in the technology domain, Franklin India Technology Fund’s primary aim for the long term is the appreciation of capital. Since its launch on August 28, 1998, the fund has provided an average return of 18.6%.

Net Assets	Rupees 874 crore, as on July 31, 2023
Category	Equity – Sectoral
Risk	High
Expense ratio	2.42
Sharpe ratio	0.92
Information ratio	0.26
Alpha ratio	15.77
Minimum investment	Rupees 5,000
Minimum SIP investment	Rupees 500
Exit load	0-1 year (1%); 1 year and above (NIL)

2.  ICICI Prudential Technology Fund

ICICI Prudential Technology Fund’s primary goal is capital appreciation through investments in technology-intensive companies’ equities and their securities. It has provided an average return of 12.1% since it was launched on March 3, 2000.

Net Assets	Rupees 10,722 crore, as on July 31, 2023
Category	Equity – Sectoral
Risk	High
Expense ratio	1.96
Sharpe ratio	0.11
Information ratio	1.33
Alpha ratio	3.12
Minimum investment	Rupees 5,000
Minimum SIP investment	Rupees 100
Exit load	0-1 year (1%); 1 year and above (NIL)

3.  Aditya Birla Sun Life Digital India Fund

Aditya Birla Sun Life Digital India Fund is an open-ended, multi-sector growth scheme. Its aim is to generate capital growth through a 100% equity portfolio that invests mainly in companies dealing in technology, or those reliant on it. These include those who deal in peripherals, components, hardware, e-commerce, software, media, telecom and the internet. Its other objective is to generate income and distribute dividends.

Net Assets	Rupees 3,718 crore, as on July 31, 2023
Category	Equity – Sectoral
Risk	High
Expense ratio	2.08
Sharpe ratio	0.48
Information ratio	1.52
Alpha ratio	8.27
Minimum investment	Rupees 1,000
Minimum SIP investment	Rupees 100
Exit load	0-365 days (1%); 365 days and above (NIL)

4.  SBI Technology Opportunities Fund

Known previously as SBI IT Fund, it invests in the equities of technology domains that will aid its objective of maximising growth. Since its launch on January 9, 2013, it has generated an average return of 19.7%.

Net Assets	Rupees 3,081 crore, as on July 31, 2023
Category	Equity – Sectoral
Risk	High
Expense ratio	2.06
Sharpe ratio	0.43
Information ratio	1.34
Alpha ratio	7.06
Minimum investment	Rupees 5,000
Minimum SIP investment	Rupees 500
Exit load	0-15 days (0.5%);15 days and above (NIL)

Summing up

Lucrative as they may be, the tech funds too, have an element of risk, just like any other trade. With a little patience and thorough research, the pointers in this blog should get you on the right path to investing in the leading Indian technology sector funds.

Disclaimer

The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.