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2 mins Read | 5 Months Ago

The Best Technology Mutual Funds For you to invest

High dividend-paying stocks & Mutual Fund schemes

Investing in technology sector funds can be a lucrative venture, especially given the rapid growth and evolution of the Indian economy. With the increasing reliance on technology across industries, companies are allocating more resources to technological advancements. In this, the technology sector remains a high-income-yielding asset class. This article explores the top technology sector Mutual Funds for your investments in 2024.

Understanding Net Asset Value

  1. ICICI Prudential Technology Mutual Fund

ICICI Prudential Technology Mutual Fund is one of the oldest and most trusted technology sector funds in the market. This diversified fund aims to deliver long-term income and capital appreciation by investing in globally established technology companies.

 The fund's objective is to seek long-term capital appreciation by primarily investing in equity and equity-related securities of technology and technology-dependent companies. While a significant portion of the Assets under Management (AUM) is allocated to stocks in the Benchmark Index, the fund also has the flexibility to invest in other companies within the Information Technology Services Industry. The ICICI Prudential Technology Fund has consistently delivered results and remains a popular choice in this category.

  1. SBI Technology Opportunities Fund

The SBI Technology Opportunities Fund, managed by SBI Funds Management, emphasises leveraging impactful technologies for global business enhancement in processes, products, services and infrastructure. The fund zeroes in on four key technology sectors: Artificial Intelligence (AI), Robotics, Data Science and Block Chain.

 With a mission to achieve capital appreciation through investments in both new and established companies at various stages of development, this fund offers an opportunity to benefit from the growth potential of cutting-edge technologies. While it carries a degree of risk inherent to technology sector funds, its focus on transformative technologies sets it apart.

  1. Franklin India Technology Fund

Franklin India Technology Fund, managed by Franklin Templeton Mutual Fund House, is an open-ended sectoral-technology equity scheme. This fund follows a bottoms-up approach to stock picking and seeks above-normal capital appreciation by investing in high-quality, fast-growing companies in the information technology sector.

 As another prominent player in the technology sector fund category, Franklin India Technology Fund has a track record of delivering impressive returns. By targeting companies driving innovation and technological advancements, it aims to provide investors with opportunities for substantial capital growth.

Factors to consider before investing in Technology Sector Funds

While Technology Mutual Funds offer exciting growth potential, there are several key factors to consider before making an investment:

  1. Volatility and risk: Technology stocks can be volatile and unpredictable, making these funds riskier compared to some other fund categories.

  2. Diversification: Technology sector funds invest in various tech companies, which can result in higher volatility. Ensure your portfolio is well-diversified to manage risk effectively.

  3. Investment horizon: Technology sector funds are often used for long-term investment goals due to their volatility and risk. Ensure your investment horizon aligns with your financial objectives.

  4. Investment experience: These funds may not be suitable for novice investors due to their high-risk nature. Consider your experience and risk tolerance before investing.

  5. Expenses: Evaluate the expense ratio of the funds you are considering. A lower expense ratio can enhance your overall returns over time.

  6. Fund Manager expertise: Research the Fund Manager's track record and experience in managing technology sector funds. A skilled and experienced Fund Manager can make a significant difference in fund performance.

  7. Past performance: While past performance is not indicative of future results, it can provide insights into how the fund has historically performed relative to its benchmark.

Why invest in Technology Sector Mutual Funds?

Investing in Technology Mutual Funds offers several compelling reasons:

  1. Growth potential: The technology sector is known for its high growth potential. Companies in this sector are often at the forefront of innovation and can experience rapid expansion.

  2. Diversification: Technology sector funds provide diversification by investing in a basket of technology-related stocks. This diversification can help spread risk across various companies and sub-sectors within technology.

  3. Exposure to emerging trends: Technology sector funds offer exposure to emerging trends such as artificial intelligence, cloud computing, e-commerce and cybersecurity. These trends have the potential to reshape industries and drive long-term growth. 

  4. Government initiatives: The Indian government's initiatives to promote digitalisation and technology adoption provide a favourable environment for technology companies. Investments in this sector can benefit from government support and incentives. 

  5. Global opportunities: Many technology companies operate on a global scale, allowing investors to participate in international markets and potentially benefit from global tech trends.

  6. Portfolio diversification: Adding technology sector funds to your portfolio can enhance diversification, especially if your existing investments are concentrated in other sectors. This diversification can help mitigate risk.

  7. Long-term investment: Technology sector funds are well-suited for long-term investors who are willing to ride out market volatility. Over the long term, technology has demonstrated the potential for significant capital appreciation.

  8. Innovation and disruption: The technology sector is characterised by constant innovation and disruption. Investing in this sector can provide exposure to companies that are driving change and revolutionising industries.

How to invest in Technology Sector Mutual Funds?

Investing in technology sector Mutual Funds is straightforward and can be done through the following steps:

  1. Choose a fund: Select a technology sector Mutual Fund that aligns with your investment goals and risk tolerance. Consider factors such as fund performance, expense ratio and Fund Manager expertise.

  2. KYC compliance: Make sure you comply with KYC (Know Your Customer) requirements for the Mutual Fund company or investment platform you choose.

  3. Investment amount: Decide the amount you want to invest in the fund. Most funds have a minimum investment amount, so check the fund's requirements.

  4. Online or offline: You can invest in Mutual Funds online through fund house websites, mobile apps or online platforms. Alternatively, you can visit a branch or distributor for offline investments.

  5. Complete documentation: Provide the necessary documentation, including identity proof, address proof and bank account details to complete the investment process.

  6. SIP or lump sum: Choose between Systematic Investment Plan (SIP Investment) or a lump-sum investment based on your preferences and financial goals.

  7. Monitor your investment: Regularly monitor the performance of your investment and make adjustments, if needed. Consider reviewing your portfolio with a financial advisor

Investing in Technology Mutual Funds can be a strategic move for investors looking to capitalise on the growth potential of this dynamic sector. With the Indian government's digital initiatives and the continuous evolution of technology trends, the technology sector is poised for further expansion. However, it's essential to assess your risk tolerance and investment horizon before allocating funds to this sector. Consulting with a financial advisor can provide valuable insights and help you make informed investment decisions.

Remember that all investments carry risks, and past performance is not indicative of future results. Therefore, it's crucial to diversify your investment portfolio and align your investments with your financial goals. Technology Mutual Funds can be a valuable addition to a well-rounded and diversified investment strategy, potentially offering opportunities for long-term capital appreciation.

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