Technology funds outsmart IT index and broader market
The landscape of what constitutes technology in the Indian markets has witnessed considerable change over the past 4-5 years. It is no longer synonymous with the top few IT companies or the odd telecom firm that mutual funds tracking the segment used to invest in.
At a time when Indian IT, especially the frontline top-tier ones, face the heat of weak client spends and AI-related business as well as workforce disruption, several other tech-related segments have fared reasonably well to lift the investment backet.
International equities (mostly the US) have added to the charm.
We now have specialised IT/KPO firms from the mid/small cap segments, quick commerce companies, online marketplaces, fintechs, aggregators and the like that have made the transition from being start-ups to marginally profitable listed entities.
In this regard, from a mutual fund angle, there are 12 schemes under technology/digital categories available to investors. However, only five of these funds have a track record of more than three years.
Aditya Birla Sun Life Digital India, Franklin India Technology, SBI Technology Opportunities and ICICI Prudential Technology have been around for more than 20 years (with different names in earlier avatars, but with the same theme). Tata Digital India is just a month shy of completing 10 years.
We track the performance of these funds to analyse what worked and what didn’t over the years.
Beating benchmarks comprehensively
Given that technology funds invest in a fairly varied basket, we have taken two benchmarks to gauge the performance of these funds. Apart from Nifty IT TRI, we have also considered the broader market Nifty 500 TRI for comparing the performance and measuring the consistency of technology schemes.
We considered the 5-year rolling returns from January 2013 to November 2025 for the direct plans of Aditya Birla Sun Life Digital India, Franklin India Technology, SBI Technology Opportunities and ICICI Prudential Technology. In the case of Tata Digital India, 5-year rolling data from December 2015 to November 2025 was analysed.
For benchmarking the performance of these schemes, we reviewed the 5-year rolling returns for the Nifty IT TRI and Nifty 500 TRI over the aforementioned periods.
Aditya Birla Sun Life Digital India fund outperformed the Nifty IT TRI all the time and the Nifty 500 TRI during 95 per cent of the time.
Franklin India Technology fund was ahead of the Nifty IT TRI for 53 per cent of the time and outperformed the Nifty 500 TRI for 84 per cent of the time.
ICICI Prudential Technology delivered higher returns than the Nifty IT TRI for 95 per cent of the time over January 2013 to November 2025, and surpassed the Nifty 500 TRI for 92 per cent of the time.
SBI Technology Opportunities fund outperformed the Nifty IT TRI for 78 per cent of the time and the Nifty 500 TRI for 89 per cent of the time.
Tata Digital India fund surpassed the Nifty IT TRI for 100 per cent of the time and the Nifty 500 TRI for 97 per cent of the time over December 2015-November 2025 on a 5-year rolling return basis.
When 10-year monthly SIPs returns (XIRR) are considered, SBI Technology has delivered 21.2 per cent, ICICI Prudential Technology 20.7 per cent, Aditya Birla Sun Life Digital India 20.1 per cent and Franklin India Technology 19.9 per cent.
The Nifty IT TRI and Nifty 500 TRI indices gave around 15 per cent return over this period.
Tata Digital India has given 20.7 per cent XIRR on monthly SIPs from the time of the commencement of its operations in December 2015.
A wider portfolio
In the last couple of years, there has been considerable action around AI and disruptions in client spends, especially on discretionary projects. Frontline IT companies such as TCS, Infosys, HCL Technologies, Wipro and Tech Mahindra haven’t found the going easy with many recording low single-digit revenue growth.
Technology funds that used to load up these stocks earlier have loosened up and sought to look for opportunities elsewhere. So much so, the weightage for some of these stocks is in low single digits for many funds.
The action on the mid-cap IT/KPO front has been quite healthy in recent years. Firms such as Persistent, Coforge, EClerx Services, Sagility India, Mastek, LTI Mindtree, Sonata Software and Cigniti Technologies have all recorded healthy growth in financials much ahead of the industry and stock prices too have risen sharply. Funds have taken stakes in some of these firms and even increased holdings in a few substantially.
Bharti Airtel/Bharti Hexacom are other common additions from the telecom stable.
Some firms that are into parts of data centre operations also have funds investing in them.
Ecommerce/quick commerce firms such as Swiggy and Eternal, too, add to the variety of stocks in these funds. Firms such as PB Fintech and Paytm are other examples.
Taking cue from the technology rally, especially in the US, many stocks from overseas have found their way into technology funds.
So, Microsoft, Nvidia, Amazon, Netflix, Cognizant, Alphabet and Meta are some holdings that have been in and out of these portfolios.
From an investor’s perspective, technology funds can be a diversifier outside their core portfolio. Only minor portions must be allocated to such sector/thematic funds.
Tata Digital India would be our first choice in the space, followed by Aditya Birla Sun Life Digital India and ICICI Prudential Technology.
Published on November 15, 2025