India’s mutual fund industry is on fire right now, and if you’re eyeing the top sectoral mutual funds, you’re on the right track.
As of May 2025, the industry’s total Assets Under Management (AUM) crossed ₹72.2 lakh crore, marking a solid 22.5 percent year-on-year jump, as per AMFI.
A huge chunk of this growth is being driven by retail investors, with SIP contributions hitting an all-time high of ₹26,688 crore.
What’s fueling this energy?
A surge in demand for sectoral mutual funds, especially tech-focused ones. As India continues its digital transformation, technology has become more than just another sector. It’s now the backbone of the economy. Fintech, edtech, cloud computing, and generative AI are becoming part of everyday life.
Interestingly, Indian mutual funds also increased their exposure to US tech giants by 10 percent in May 2025. This shows strong confidence in global tech themes.
In this blog, we’ll dive into what makes sectoral tech funds tick, why they matter in 2025, and how to evaluate, select, and time your investments smartly.
Let’s dive right-in!
What Are Sectoral Tech Funds?
Sectoral tech mutual funds invest primarily in technology-related sectors, like IT, electronics, software services, semiconductors, cloud computing, cybersecurity, and artificial intelligence (AI).
These funds usually invest at least 80% in just one sector, which means they’re more focused, but also come with higher risk compared to regular diversified equity funds.
They can invest in big Indian tech names like Infosys, TCS, HCL, and Coforge; global giants like Alphabet, Microsoft, and Nvidia; or even new-age startups like Zomato, Nykaa, Paytm, and Swiggy (if they’re listed or through overseas exposure).
Advantages
- Higher Return Potential: During tech upcycles, sectoral funds often outperform diversified funds. For example, tech funds delivered up to 29% CAGR between 2020-2022.
- Thematic Exposure: Investors can align portfolios with global megatrends like AI, cloud, and digital payments.
- Global Diversification: Some Indian tech funds offer foreign stock exposure, especially U.S. tech leaders.
Risks
- High Volatility: In 2025 alone, tech funds saw drops of up to 18% amid global correction and interest rate uncertainty (Economic Times, Mint).
- Cyclical Nature: These funds are highly sensitive to market cycles, policy shifts, and global tech trends.
- Concentration Risk: Heavily exposed to few sectors or stocks, any regulatory or earnings hit can cause outsized losses.
Who Should Invest in Sectoral Mutual Funds
These funds are ideal for:
- Long-term investors (5+ years horizon)
- High-risk takers
- Those with conviction in India’s tech evolution
- Investors with a diversified base looking to add thematic growth
Top 5 Sectoral Mutual Funds in Last 5 Years in Tech
Here’s all the details of the best performing sectoral funds in last 5 years for your quick reference:
| Sectoral Mutual Funds | 5 Year Returns (%) | Expense Ratio | Net Asset (In Cr) |
| ICICI Pru Technology Fund | 31.80 | 0.97 | 13,900 |
| Tata Digital India Fund | 30.56 | 0.43 | 11,688 |
| SBI Technology Opportunities Fund | 29.01 | 0.88 | 4,530 |
| ABSL Digital India Fund | 28.93 | 0.85 | 4,776 |
| Franklin India Technology Fund | 26.35 | 1.05 | 1,862 |
Data available is updated as of 18.06.26.
Top 5 Sectoral Mutual Funds in Last 10 Years in Tech
Here’s all the details of the best performing sectoral funds in last 10 years for your quick reference:
| Sectoral Mutual Funds | 10 Year Returns (%) | Expense Ratio | Net Asset (In Cr) |
| ABSL Digital India Fund | 19.19 | 0.85 | 4,776 |
| ICICI Pru Technology Fund | 18.97 | 0.97 | 13,900 |
| SBI Technology Opportunities Fund | 18.42 | 0.88 | 4,530 |
| Franklin India Technology Fund | 17.61 | 1.05 | 1,862 |
Data available is updated as of 18.06.26.
Top 5 Sectoral Mutual Funds YTD in Tech
Here’s all the details of the best performing sectoral funds YTD for your quick reference:
| Sectoral Mutual Funds | YTD (%) | Expense Ratio | Net Asset (In Cr) |
| SBI Technology Opportunities Fund | -2.73 | 0.88 | 4,530 |
| WhiteOak Capital Digital Bharat Fund | -2.86 | 0.66 | 338 |
| Motilal Oswal Digital India Fund | -3.64 | 0.79 | 796 |
| Quant Teck Fund | -3.97 | 0.82 | 395 |
| HDFC Technology Fund | -4.09 | 0.94 | 1,403 |
| ICICI Pru Technology Fund | -4.31 | 0.97 | 13,900 |
| Edelweiss Technology Fund | -4.58 | 0.62 | 652 |
| Franklin India Technology Fund | -4.84 | 1.05 | 1,862 |
| Kotak Technology Fund | -5.88 | 0.96 | 581 |
| HDFC Nifty India Digital Index Fund | -6.06 | 0.40 | 211 |
Data available is updated as of 18.06.26.
Suggested Read: How to Plan Your ELSS Investment for Financial Year 2025-2026
What’s Going On in the Market? Let’s Break It Down
India’s Big Digital Moment
Right now, India is going all-in on tech and digital growth.
- UPI is handling over 10 billion transactions every month. That’s huge!
- Apps like ONDC (for shopping) and DigiLocker (for documents) are making life easier and more digital.
- The government is backing cool stuff like AI, chip-making (semiconductors), and electric vehicle tech with full power and foreign investment.
People Are Investing Like Never Before
- Mutual fund investments touched ₹72.2 lakh crore in May 2025 (that’s a record!).
- SIPs (monthly investments) also hit ₹26,688 crore.
- Tech-focused funds saw a 23% rise in money coming in, showing investors are super interested in this space.
Global Markets? A Little Shaky. India? Doing Just Fine.
While the world is facing ups and downs (thanks to U.S. interest rates, inflation, and Middle East tensions), India is staying strong. Even though tech stocks dipped a bit, they bounced back fast after good Q1 results.
Indian Funds Are Eyeing Global Tech Too
Indian mutual funds increased their investment in companies like Nvidia, Meta, Amazon, and Microsoft by over 10% in May 2025. That’s a sign they believe AI and global tech growth are real game-changers.
What Fund Managers Are Looking At
- Swiggy’s IPO is getting a lot of attention.
- Nykaa is turning profitable.
- Coforge and Persistent are doing interesting stuff with AI.
- Some are preferring mid-size tech companies over the big IT players.
How To Chose the Top 5 Tech Funds
Returns
We checked how well the funds have performed over 5 years and during good and bad markets.
Size of the Fund
Bigger fund = more trust + easy to buy/sell
Cost
Lower expenses mean you get to keep more of your returns.
Which Companies the Fund Invests In
We looked for funds holding fast-growing names like Hexaware, LTTS, Nvidia, or even Swiggy.
Who’s Managing It
A good, experienced fund manager makes a big difference. We also checked how often they change the stocks and how risky the fund is.
Bottom Line
If you’ve read this far, one thing’s clear, that is, you’re seriously considering tapping into India’s booming tech story. And rightly so. From skyrocketing UPI usage to AI becoming dinner-table talk, tech is no longer a niche; it’s the theme driving change in 2025.
We’re in a moment where sectoral mutual funds, especially tech-focused ones, are letting investors go beyond basic diversification and actually back the trends shaping our future.
Yes, they come with more risk, but with that also comes the potential for higher rewards, if you have the patience and the right mindset.
The top sectoral mutual funds we discussed have shown strong long-term performance, but don’t forget: timing, your own risk appetite, and clear goals matter.
Use this blog as a launchpad to evaluate what fits you best. Whether you’re chasing innovation, riding the AI wave, or just want a piece of India’s digital revolution, sectoral tech funds could be your way in.
Just remember, invest smart. Trends can be flashy, but discipline is what makes your money grow.
FAQs
Which mutual fund is best in technology sector?
Some of the best-performing tech mutual funds include ICICI Pru Technology Fund, Tata Digital India Fund, and SBI Technology Opportunities Fund, known for consistent long-term returns, strong portfolios, and investor trust.
Which is the best sectoral mutual fund?
Top sectoral mutual funds in 2025 include technology-focused options like Tata Digital India Fund and ABSL Digital India Fund, as well as infrastructure and pharma funds depending on the theme and market cycle.
What are the top 5 performing mutual funds?
In the technology sector, the top 5 mutual funds based on 5-year returns and consistency include ICICI Prudential Technology Fund, Tata Digital India Fund, SBI Technology Opportunities Fund, ABSL Digital India Fund, and Franklin India Technology Fund. These funds have delivered strong performance thanks to solid stock selection and exposure to both Indian and global tech leaders.
What is the 7 5 3 1 rule in SIP?
The 7-5-3-1 rule is a simple way to set expectations for SIP returns. It suggests you might earn around 7% in 1 year, 5% in 3 years, 3% in 5 years, and 1% in 7 or more years. While not a guaranteed formula, it helps investors think long-term and stay grounded during market ups and downs.
