As per the latest AMFI data for December month, after multicap funds- sectoral funds and flexicap funds netted in most inflows. So if you are confident in the country’s economy and see sectoral growth as in infra, technology which though will be the case going forward given the large scale intertwining of businesses with technology and need for digitalisation. Furthermore, the government’s efforts are also boosting sectors like infra, energy etc.
So, in a case if you have a higher risk appetite and look to diversify your mutual fund allocation for higher returns, here are the top 5 performing sectoral funds:
1. Aditya Birla Sun Life Digital India Fund-Direct Fund:
This fund typically invests in securities in the technology sector. Launched in the year 2013, the fund’s return since launch has been at 27%. The fund’s benchmark is S&P BSE Teck TRI and in a 1-year the fund has outperformed the benchmark delivering return over 60 percent. AUM of the fund as on December 31, 2021 has been at Rs. 3176 crore as on December 31, 2021. Expense ratio of the fund is 0.88 percent.
The main stock holdings of the fund are Infosys, TCS, Tech Mahindra, HCL, Persistent Systems among others. SIP in the fund can be initiated with a sum of barely Rs. 100.
2. ICICI Prudential Technology fund- Direct Plan-G:
The fund commands a 5% investment into the category with fund size of Rs. 7909 crore as on December 31, 2021. The fund’s performance is tracked against S&P BSE Teck TRI and its expense ratio is at 0.76%. The fund’s 1-year return is at 65.84%.
The fund is suitable for those with advanced knowledge on the macros and with a higher risk bearing appetite for higher returns. Top holdings of the fund include Infosys, TCS, Tech Mahindra, Persistent, Wipro, Mphasis etc.
3. SBI Technology Opportunities Fund-Direct Plan:
The fund is again a technology fund with 1-year returns at 56.66 percent. The fund’s AUM is at Rs. 2302 crore and expense ratio is 0.95 percent. With major exposure to Indian large caps, the fund also has international stocks in its kitty including Alphabet, Microsoft, Netflix.
The other top holdings include Infosys, HCL, Tech Mahindra, Bharti Airtel, TCS among others.
4. Tata Digital India Fund-Direct Plan:
The fund aims to capture opportunities in the technology sector. For the stock selection, the fund employs GARP technique. The investment objective of the scheme is to seek long term capital appreciation by investing at least 80% of its net assets in equity/equity related instruments of the companies in Information Technology Sector. Top holdings of the fund include Infosys, TCS, HCL, Tech Mahindra, Bharti, Wipro among others.
5. Quant Infrastructure Fund:
This is a Value Research 5-Star rated fund investing mainly in infra related companies or entities expected to benefit from it. The fund against the benchmark Nifty Infra TRI has outperformed with returns to the tune of 81 percent.
The fund size of the Quant sectoral fund is Rs. 239 crore as on November 30, 2021. The expense ratio has been at 0.58%. Top stock holdings of the fund are Adani Enterprises, Vedanta, ITC, Adani Ports, SBI, Bharti Airtel etc.
5. Top Sectoral Funds Based On 5-Year Returns
|Sectoral fund||5-year annualised Return||Minimum SIP amount||Rs. 10,000 monthly SIP has grown in 5 years to|
|Aditya Birla Sun Life Digital India Fund-Direct Fund||34.75%||Rs. 100||Rs. 16.53 lakh|
|ICICI Prudential Technology fund- Direct Plan-G||35.61%||Rs. 100||Rs. 17.39 lakh|
|SBI Technology Opportunities Fund-Direct Plan||30.75%||Rs. 500||Rs. 14.99 lakh|
|Tata Digital India Fund-Direct Plan||36.68%||Rs. 150||Rs. 17.03 lakh|
|Quant Infrastructure Fund:||28.00%||Rs. 1000||Rs. 14.32 lakh|
So, targeting a sectoral fund will be important when the cycle upstart is beginning for optimal returns. And also even if you are highly optimistic on any one sector for that matter be it infra, technology, banking or energy or anything apart from this, higher allocation is never a good idea. At max the best allocation to this highly risky sector shall be 10-15% of your total mutual fund allocation.