LIC Mutual Fund’s latest offering LIC MF Technology Fund is open for subscription and will close on March 6. This is an open-ended equity scheme investing in technology and technology-related companies.
Investment approach
Over the past decade, technology and digital platforms have evolved from being support functions to becoming core drivers of growth and businesses are leveraging data, artificial intelligence, and automation to enhance productivity and customer experience. Consumers, on the other hand, are embracing digital services for shopping, payments, entertainment, and communication. This structural shift is creating long-term opportunities for companies that build, enable, or benefit from technology and digitisation.
This investment strategy aims to capture these opportunities by investing predominantly in equity and equity-related securities of companies which are a part of Technology, Internet and Digital, Data Centers and ancillary and E-commerce/Q-commerce (T.I.D.E.).
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What the fund house say on launch
R.K. Jha, Managing Director & Chief Executive Officer : The Union Budget 2026–27 has reaffirmed the government’s strong commitment to semiconductor development and digital infrastructure. As India’s technology ecosystem advances from semiconductor fabrication to AI adoption, we anticipate a multi year structural opportunity across listed equities.
Yogesh Patil, Chief Investment Officer – Equity: Our investment strategy focuses on identifying businesses with sustainable growth drivers, healthy cash flows and scalable operating models across the technology value chain. The objective is to construct a diversified technology portfolio rather than a concentrated one.
What experts say
Experts typically ask investors to avoid investing in NFOs unless they offer something unique. The uniqueness could be that the scheme is offering an investment option that is not available in the market or offering something extra to an existing option. Otherwise, the experts believe investors are better off with an existing scheme with a long performance record. This is because you have some historical data to base your investment decision. You don’t have any data when it comes to new offerings.
Subhendu Harichandan, Executive Director, Anand Rathi Wealth Limited shared with ETMutualFunds that the recent correction in IT may look attractive, but sector investing requires getting both entry and exit timing right, which is very difficult and the current weakness in IT is driven by global demand slowdown and uncertainty around AI led changes, and these phases can last longer than expected.
Harichandan further said that for most investors, a better approach is to stay diversified through diversified equity funds, where fund managers can allocate to IT when the outlook improves and if someone still wants exposure to a sector fund, SIP is a more sensible route than lumpsum because it helps manage volatility but overall, diversification remains the more reliable long term strategy.
Nilesh D Naik, Head of Investment Products, Share.Market told ETMutualFunds that while the earnings of IT firms have been resilient in recent quarters, their margins have come under pressure and from an investor’s perspective, however, it’s important to focus on the future growth prospects of the business rather than historical trends, especially given recent developments that could significantly impact the sector.
According to a report by Motilal Oswal Financial Services on Earnings review 3QFY26, while the earnings of IT firms have been resilient in recent quarters, their margins have come under pressure. From an investor’s perspective, however, it’s important to focus on the future growth prospects of the business rather than historical trends, especially given recent developments that could significantly impact the sector.
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So, do recent earnings trends in tech companies justify fresh investments in tech-oriented funds? Naik said that the Indian IT sector has been going through a period of turmoil in recent weeks, as artificial intelligence threatens to disrupt the business models of some Indian IT services companies and the industry is likely to go through a transformation phase where businesses will attempt to quickly adapt to the changing circumstances.
Harichandan said Recent earnings in the IT sector have been somewhat mixed, global discretionary spending is still weak, deal conversions are slower, and companies are adjusting to AI driven changes and new pricing models and this has affected near term growth visibility.
That said, the long term story remains strong, supported by cloud, cybersecurity, digital transformation and enterprise AI adoption, the current slowdown looks more cyclical than structural. However, this uncertainty also shows how difficult it is to time sector cycles and instead of taking fresh exposure through tech focused funds, investors can participate in the sector through diversified equity funds that already hold leading IT companies.
Why this fund now?
India is undergoing a rapid digital transformation, driven by technology adoption across businesses and consumers. Factors such as increasing internet penetration, smartphone usage, cloud migration, automation, and the rise of e-commerce and fintech are reshaping the economic landscape. Technology is no longer a standalone sector; it is becoming the backbone of every industry, enabling efficiency, scalability, and innovation
So are there any risks of investing in a technology focused mutual fund at this stage of the cycle?
Harichandan said that the biggest risk is concentration of a single sector in the overall portfolio, the technology funds depend heavily on one sector and are closely linked to global economic conditions, especially demand from developed markets and any slowdown in global tech spending can directly impact returns.
There is also uncertainty around how AI and automation will reshape business models and margins over time, most importantly, sector cycles are hard to predict, and investors often enter at the wrong time and this makes sectoral funds risky for long term wealth creation, which is why diversified funds are a better approach.
Naik said that such sectoral funds are not suitable for most investors, especially those who are in the initial years of their investment journey as such funds are typically meant for seasoned investors who have their core portfolio in place and who want to take a tactical bet based on their views on a specific sector or theme and most investors will be better off avoiding thematic and sectoral funds in their portfolios.
The minimum subscription amount is Rs 1,000 and in multiples of Re 1 thereafter. For monthly SIP, the minimum amount is Rs 200 and in multiples of Re 1 thereafter.
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Asset allocation
The fund will allocate 80-100% in equity and equity related instruments of technology and technology related companies, 0-20% in equity and equity related instruments of other than technology and technology related companies, 0-20% in debt and money market instruments, and 0-10% in units issued by InvITs.
The fund will be suitable for investors who are seeking capital appreciation over the long term and want investment in equity and equity related instruments of technology and technology related companies.
Others in tech sector basket
There are 12 other funds who have completed around nine months of existence in the market of which Quant Teck Fund lost the most of around 24.31% in the last nine months. Edelweiss Technology Fund was the only positive performer who gave 0.80% return in the same period.
What should investors expect going forward?
Nair said while equity as an asset class tends to be highly volatile, historical data suggests that broad-based equity portfolios or indices typically tend to recover within 2–3 years after a market fall. In contrast, sectoral or thematic portfolios may often take several years or even over a decade to recover. Therefore, it may be advisable for most investors to invest in well-diversified funds and let the fund managers make sectoral allocation decisions.
Harichandan said the near term outlook for the IT sector remains cautious due to slower global spending and the ongoing transition toward AI driven business models, which may keep earnings growth volatile in the short term.
“However, the long term outlook remains positive. India’s technology sector continues to benefit from global digital transformation, cloud adoption and rising enterprise technology spending. The sector has shown strong resilience in the past, and the current correction appears cyclical.”
From an investment perspective, while the sector’s fundamentals are strong over the long run, IT sector funds can be volatile and can create sector concentration in the portfolio and a more balanced way to participate in this growth is through diversified equity funds that provide exposure to multiple sectors, he further said.
One should always consider their risk appetite, investment horizon and goals before making any investment decision.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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