Technology Funds are sectoral mutual fund schemes that invest in companies’ assets in the technology sector. This mutual fund primarily invests in the stocks and debt securities of companies that provide technology-based products or services. Due to the higher asset allocation to equities, it is typically an Equity Fund.
This post lists out the 5 best technology mutual funds you can invest in, why invest in this type of sectoral mutual fund, who can invest, how and when to invest, and taxation. Read on!
|S No.||Funds||AUM (Rs. – Cr)||1 Year Returns (%)||3 Year Returns (%)||5 Year Returns (%)|
|1.||ABSL Digital India Fund||428||12.22||21.24||11.53|
|2.||Franklin India Technology Fund||246||10.95||17.92||9.55|
|3.||SBI Technology Opportunities Fund||155||9.01||18.61||8.43|
|4.||Tata Digital India Fund||390||3.45||22.23||–|
|5.||ICICI Pru Technology Fund||409||-0.98||17.46||8.49|
The market for PCs and smartphones is already saturated, growth is expected to be slow. However, newly evolving sectors such as cloud computing and AI (Artificial Intelligence), which are disrupting traditional technologies, are taking over and will be the future golden geese.
Gordon E. Moore, the co-founder of Intel, predicted the technology sector’s growth in 1965. According to his ‘Moore’s Law,’ we will have the ability to double the number of transistors on a single chip every two years. And while a single chip may not appear to be much, the potential for growth and disruption is mind-boggling when applied to the technology sector as a whole! And, as any good investor knows, disruption creates new investment opportunities, which is why technology mutual funds are in such high demand right now.
Also Read: What Are Focused Equity Funds?
According to Value Research, a mutual fund tracking firm, technology, or IT sector funds provided an average return of 67 percent in 2021. These funds have returned a whopping 67 percent (YTD). This year, IT funds topped the performance chart.
This year, the ICICI Prudential Technology Fund returned 77 percent. Seven of the eight IT schemes that have completed a year of operation provided more than 60% returns in 2021. Franklin India Technology Fund has one scheme. So the straightforward answer is if you want to invest in a Technology mutual fund, the time is now!
Technology Funds invest heavily in Equities, and if 65% of the corpus is allocated to equities, the fund is treated and taxed as an Equity Fund. If debt securities constitute 65% of the portfolio, they are debt-oriented and taxed.
If these funds are held for more than a year, their long-term capital gains are taxed at 10% if the revenues exceed Rs. 1 lakh (as per the latest budget of 2018). They are classified as debt funds if their portfolio is debt-oriented and contains at least 65 percent debt securities. It means that if the fund is held for 36 months or more, the long-term capital gains tax will apply. However, the majority of technology funds are equity-focused.
Because the technology sector is constantly expanding, some of your investments may face some short-term headwinds. However, experts believe that technology mutual funds will outperform global equity funds shortly. As a result, if there is one sector you should watch, this is it! If you are ready to invest in mutual funds, go to Navi Mutual Funds and get started!
Disclaimer: Mutual Fund investments are subject to market risks; read all scheme-related documents carefully before investing.
Answer: There is no such thing as the best time to invest in mutual funds. Individuals can invest in mutual funds whenever they want. However, it is always preferable to purchase the funds at a lower NAV rather than a higher price. It will not only maximize your returns but will also result in more significant wealth accumulation.
Answer: PPFAS MF is India’s fastest-growing major mutual fund house. PPFAS had the highest AUM growth among the top 30 AMCs in FY 2021, at 178 percent. Its AUM increased from Rs 3,138 crore to Rs 8,720 crore during the fiscal year.
Answer: Many debt mutual fund managers are concerned about the Union Budget 2022. They believe that a larger-than-expected fiscal deficit and increased borrowing will pressure the bond market and shortly reduce the returns from debt mutual funds.
Answer: The 9:30 a.m. to 10:30 a.m. Eastern time (ET) period is frequently one of the best hours of the day for day trading, with the most significant moves occurring in the shortest amount of time.
Answer: The vast majority of mutual funds are liquid investments, which can be withdrawn at any time.
Disclaimer- Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.