Technology based mutual funds lose 4% in March. What should investors do?

Apr 06, 2024, 01:31:52 PM IST1/6

Laggard category

Technology funds have lost around 3.96% in one month, an analysis of performance by ETMutualFunds showed. There were around seven active schemes in the category during the said horizon.

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Negative performers

Aditya Birla Sun Life Digital India Fund lost the most at around 5.52% in one month. ICICI Prudential Technology Fund, the largest scheme in the category based on assets managed, lost 4.62%.SBI Technology Opportunities Fund lost 4.35%

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Oldest scheme

Franklin India Technology Fund, the oldest scheme in the technology based sector category, lost 1.03% in March.

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Reason for this performance?

When Accenture reduced its FY24 revenue growth guidance to 1-3% year-on-year on delayed decision-making and weak discretionary spends. This led to correction in IT stocks such as TCS (-5.20%), Infosys (-10.67%), Wipro (-7.44%), and Tech Mahindra (-2.11%).

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How long will this performance continue?

“Worst may not be over. The IT sector is under pressure. Diversified funds have reasonably good allocation in the IT sector and hence investors may avoid investing in IT sector specific funds,” recommends Pankaj Mathpal, MD, Optima Money Managers.

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Should you invest in these schemes?

Technology funds are sectoral funds which invest most of their corpus in a particular sector, and the performance of schemes is based on performance of the sector. That is why thematic or sector funds are recommended only to investors with thorough knowledge about the sector. You should invest in these schemes only if you have a long investment horizon or have intimate knowledge about the sector to time the entry and exit in these schemes.

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