India’s mutual fund industry continues to stay strong in 2026, and if you’re looking at sectoral mutual funds, you’re already exploring a high-growth space.
As of 2025, the industry’s total Assets Under Management (AUM) crossed ₹72 lakh crore, reflecting solid year-on-year growth, as highlighted by AMFI. A large part of this momentum is being driven by retail investors, with SIP contributions consistently hitting record levels and becoming a key pillar of market stability.
So, what’s driving this momentum?
A big factor is the rising interest in sectoral funds, especially technology-focused ones. As India’s digital transformation deepens, technology is no longer just another sector. It’s becoming central to how the economy functions. Fintech, edtech, cloud computing, and generative AI are now part of everyday business and consumer ecosystems.
There’s also a global angle to this trend. Indian mutual funds have been gradually increasing their exposure to international tech companies, reflecting confidence in long-term global innovation themes.
In this blog, we’ll break down how sectoral tech funds work, why they’re gaining traction, and how to evaluate and approach them smartly without getting carried away by short-term trends.
Let’s get started.
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 made it this far, one thing is obvious, you’re seriously thinking about tapping into India’s booming tech story. And honestly, that makes sense. From UPI becoming second nature to AI popping up in everyday conversations, technology isn’t a niche anymore. It’s the core theme driving change as we head into 2025.
This is exactly where sectoral mutual funds, especially tech-focused funds, come into the picture. They allow investors to go beyond basic diversification and directly back the trends shaping India’s digital future. You’re not just investing in companies – you’re investing in innovation, automation, and scale.
Of course, tech sector funds come with higher volatility. But higher risk also brings the potential for higher rewards, provided you have patience, a long-term view, and the right mindset. The top sectoral mutual funds discussed earlier have delivered strong performance over time, but returns alone shouldn’t drive decisions.
Timing, personal risk appetite, and clear financial goals matter just as much.
Think of this blog as a starting point, not a final answer. Use it to evaluate what fits your portfolio best. Whether you’re excited about AI, betting on India’s digital revolution, or simply looking to add a growth-oriented theme to your investments, tech sector funds can be a powerful way in.
Just remember: trends attract attention, but discipline builds wealth.
Disclaimer: Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. The securities are quoted as an example and not as a recommendation.
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 2026 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.