Sectoral technology mutual funds are a type of equity mutual funds that focuses on investing in companies operating within the technology sector. These funds specifically target companies involved in areas such as information technology (IT), telecommunications, software development, hardware manufacturing, and other technology-related industries.
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AUM ₹1904 Cr •
Expense 1.06%
AUM ₹11835 Cr •
Expense 0.35%
AUM ₹4304 Cr •
Expense 0.82%
AUM ₹5046 Cr •
Expense 0.74%
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Expense 0.9%
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Expense 0.78%
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Expense 0.96%
AUM ₹558 Cr •
Expense 0.96%
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Expense 0.57%
AUM ₹276 Cr •
Expense 0.77%
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Sectoral technology mutual funds operate by pooling money from multiple investors and investing primarily in companies within the technology sector. Here's how they typically work
Investment Objective
Sectoral technology mutual funds have a specific investment objective focused solely on the technology sector. The fund aims to provide capital appreciation by investing in companies involved in various technology-related industries such as software, hardware, telecommunications, semiconductors, and internet services.
Portfolio Construction
Fund managers of sectoral technology mutual funds construct portfolios by selecting stocks or securities of companies operating within the technology sector. These companies are chosen based on factors such as their growth potential, financial performance, market position, competitive advantage, and technological innovation.
Sectoral Allocation
Sectoral technology mutual funds allocate a significant portion of their portfolio to stocks or securities of companies within the technology sector. The allocation may vary depending on the fund's investment strategy, market outlook, and risk management considerations. The fund manager may adjust the allocation based on changes in market conditions and sector dynamics.
Research and Analysis
Fund managers conduct in-depth research and analysis to identify promising investment opportunities within the technology sector. This includes analyzing company financials, growth prospects, product pipelines, market trends, competitive landscape, regulatory environment, and macroeconomic factors impacting the technology industry.
Sectoral technology mutual funds concentrate on investing in companies within the technology sector, offering several potential advantages:
High Growth Potential
The technology sector is known for innovation and disruption, which can lead to significant growth for companies within it. By investing in a sectoral technology fund, you gain exposure to this potential for high returns.
Focused Exposure
Unlike diversified equity funds, sectoral technology funds provide targeted investment in a specific industry. This allows you to capitalize on your belief in the technology sector's future prospects.
Expertise
These funds are managed by professionals who research and analyze technology companies. This can be helpful if you don't have the time or expertise to pick individual tech stocks yourself.
Some limitations of investing in sectoral technology mutual funds are
Lack of Diversification
Sectoral funds concentrate on a single industry, which means your portfolio is less diversified. If the technology sector experiences a downturn, your entire investment could be affected.
Higher Volatility
Technology stocks tend to be more volatile than the broader market. This means the value of your investment in a sectoral technology fund can fluctuate significantly.
Suitability
Sectoral technology funds are generally recommended for investors with a higher risk tolerance and a long-term investment horizon (at least 7 years). This allows you to ride out market fluctuations and potentially benefit from the long-term growth prospects of the technology sector.
Before investing in Sectoral Technology mutual funds, it's important to consider several key points to make informed investment decisions.
Sector Concentration Risk
Sectoral technology mutual funds concentrate their investments in the technology sector, making them susceptible to sector-specific risks. Understand that the performance of these funds may be heavily influenced by factors affecting the technology industry, such as technological innovation, regulatory changes, and market competition.
Volatility
The technology sector is known for its volatility, with stock prices often experiencing significant fluctuations. Be prepared for higher levels of volatility compared to diversified equity funds. Ensure that your risk tolerance aligns with the potential for fluctuations in the value of your investment.
Market Timing
Consider the timing of your investment in sectoral technology mutual funds. Investing during periods of rapid growth or innovation in the technology sector may offer opportunities for capital appreciation, but it also comes with higher valuation levels and increased risk. Be cautious about chasing short-term trends and consider your investment horizon.
Diversification
While sectoral technology mutual funds focus on a specific industry sector, they may still offer some degree of diversification by investing in a range of companies across different segments within the technology sector. However, be aware that diversification may not fully mitigate sector-specific risks.
Performance History
Review the fund's performance history, considering both returns and volatility. Past performance is not indicative of future results, but it can provide insights into how the fund has performed under different market conditions. Look for consistency in performance and consider the fund's performance relative to its benchmark and peers.
Now that you have understood what is Sectoral Technology Mutual Fund, you need to know how easily you can start your investment with INDmoney. Just follow these simple steps given below, to start your mutual fund investment journey with us.
Step 1
Download the INDmoney app and create your free investment account by completing your KYC ( Know Your Customer).
Step 2
Once your Free investment account is ready, you can either search for a Sectoral Technology Mutual Fund or go to the mutual fund section and tap on Sectoral Technology mutual funds.
Step 3
Choose a Sectoral Technology Mutual Fund by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.
Step 4
Step 5
Choose the amount that you want to invest as SIP or LumpSum.
Step 6
Set up payments. If you choose to set up SIP in Sectoral Technology mutual funds, you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.
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