Technology funds dominate market returns in past one week!

It is difficult to predict whether IT sectoral funds will outperform or not

Active portfolio management is all about beating the benchmark and to some extent, even the frontline indices. If we go by the past one week’s performance of several mutual fund schemes, one cannot ignore the performance of IT sector funds with Aditya Birla Sun Life Digital India Fund leading the way by recording gains of 4.11 per cent, as per the data published on BSE Star Morningstar website. Tata Digital India Fund was up by 3.8 per cent while ICICI Prudential Technology fund gained 3.6 per cent in the past one week. 

Sensex in the meantime is up by nearly 2 per cent in past one week. Clearly, the IT sector funds dominated the frontline indices in the ultra short term. The question is -will the trend continue, leading to an outperformance of IT funds?  

It is difficult to predict whether IT sectoral funds will outperform or not; however, funds like Aditya Birla Sun Life Digital India Fund and ICICI Prudential Technology funds have been performing exceedingly well if we consider a five-year view. Both the funds have delivered returns in the excess of 23 per cent CAGR over a five-year period; thus, creating wealth for the investors in the long run.  

Sectoral funds are considered risky and are meant for investors with a higher risk appetite. The investment horizon while investing in MFs should be at least more than five years.