Technology funds typically invest in equities of technology companies. They try to bet on new emerging technologies which are likely to disrupt the tech world with new innovations. ICICI Prudential Technology Fund, SBI IT Funds and Aditya Birla Sun Life New Millennium Fund are examples of some prominent Indian technology funds. Their portfolio consists of tech companies like Infosys, HCL Technologies, Tech Mahindra, Mind Tree etc. Most of the companies in these funds operate in the domain of solving complex business challenges with breakthrough technical innovations. These include IT, digital transformation, data analytics, Artificial Intelligence and Machine Learning.

Since the last few years, technology funds become quite popular in terms of investment opportunities. This is owing to a constant increase in the IT sector in the GDP share and continuously increasing exports of IT products and services. As per NASSCOM report the domestic revenue of the IT was pegged at US$ 38 billion while the revenue from export was estimated at US$ 117 billion in FY17.

Technology funds in India have consistently provided an annualized return of 14% to 19% over a five year period. With such a decent return, these can serve as a good diversification option for investors looking to cash in on the ever-growing Technology sector in the country.

In June of 2017, the S&P 500 Index (Standard & Poorʼs 500) was up by 8%, while the FANG stocks (Facebook, Amazon, Netflix, Google) were up 25-30%. Technology is the way forward and the trends are very promising.

The growth in the PC and smartphone market is expected to be slow since the market has already been saturated. However, newly evolving sectors like cloud computing and AI (Artificial Intelligence) which are disrupting traditional technologies are taking over and will be the golden geese of the future.

The technology sector is continuously growing, so itʼs true that some of your investments may face some near-term headwinds. However, experts project that in the coming days,technology mutual funds will have the capacity to outperform global equity funds. Hence, if there is one sector you need to keep your eyes peeled for, then this is it.