The rate of returns delivered by mutual funds in the recent past is one of the key factors that help determine their past performance. There are a number of factors which collectively help investors evaluate the scheme’s performance, which — among other things — include reputation of fund houses, fund manager’s past performance and category of fund.
Here we shed light on two of the top-performing sectoral mutual funds. At the outset, however, we describe sectoral mutual funds.
Sectoral mutual funds:
These mutual funds invest in specific sectors such as pharma, digital, finance and FMCG to reap the benefits relating to these sectors are known as sectoral funds.
Investing in sectoral funds can be seen as riddled with higher risk, allows investing across market capitalisation and is research-oriented.
It is recommended to keep in mind certain things before investing in a sectoral fund. These include limiting your exposure, analysing past performance and understanding the sector.
There are two sectoral funds which have given a high return of more than 20 percent in the past five years. These include Aditya Birla Sun Life Digital India Fund and ICICI Prudential Technology Fund. It is vital to note that the returns of benchmark index (S&P BSE Teck Total Return Index) are not too far behind at 20.28 percent.
| Mutual fund scheme | 5-year returns (%) | Benchmark index returns* (%) |
| ABSL Digital India Fund | 24.72 | 20.28 |
| ICICI Prudential Technology Fund | 25.85 | 20.28 |
(Source: AMFI data; Regular returns as on October 10, 2022)
Aditya Birla Sun Life Digital India Fund: This mutual fund was launched in January 2000 and has given a compounded return of 11.18 percent. If someone had been investing ₹10,000 every month in form of SIP during these 22 years and nine months (273 months), the sum would have accumulated to ₹1,25,39,233.
The top holdings in the fund scheme are Infosys, TCS, Tech Mahindra, HCL Technologies, Clearing Corporation of India, Bharti Airtel, Mindtree, Cyient, Coforge and Wipro.
In the past five years, the fund scheme gave a CAGR (compound annual growth rate) return of 24.72 percent, as the table above shows. In other words, if someone had invested ₹one lakh five years ago, the investment would have grown to ₹3,01,773.
ICICI Prudential Technology Fund: This mutual fund was launched on March, 2000 and has given a compounded return of 12.03 percent since its inception. In other words, if someone had invested ₹10,000 every month since then, the accumulated savings would have grown to ₹1,40,32,680 in these 22 years and seven months (271 months).
The top holdings in the fund scheme are Infosys, TCS, HCL Technologies, Bharti Airtel, Wipro, Tech Mahindra, Mphasis, Zee Entertainment, Mindtree and Accenture.
In the past five years, this scheme delivered a return of 25.85 percent. In other words, if someone had invested ₹one lakh five years ago, it would have swelled to ₹3,15,694.
