Invest In Icici Prudential Technology Fund: A Smart Guide

ICICI Prudential Technology Fund is an open-ended sectoral-technology equity scheme that falls under the ICICI Prudential Mutual Fund House. The fund was launched on 3 March 2000 and has a suggested investment horizon of more than 3 years. The current fund managers are Atul Patel, Priyanka Khandelwal, and Vaibhav Dusad. The fund's objective is to seek long-term capital appreciation by investing in equity and equity-related securities of technology and technology-dependent companies. While the top 10 equity holdings constitute around 69.4% of the assets, the top 3 sectors constitute around 93.03% of the assets. The fund has an expense ratio of 0.9%, with a minimum SIP investment of Rs. 100. The latest NAV available is Rs. 236.56 as of 11 October 2024.

Investment Objective

ICICI Prudential Technology Fund is an open-ended sectoral-technology equity scheme that falls under the ICICI Prudential Mutual Fund House. The fund was launched on 3 March 2000 and has been in existence for over 11 years.

The investment objective of the fund is to seek long-term capital appreciation by investing in equity and equity-related securities of technology and technology-dependent companies. The fund will invest a large share of its Assets Under Management (AUM) in the stocks under the Benchmark Index, which is the BSE Teck Total Return Index. However, the scheme may also invest in other companies within the Information Technology Services Industry.

The asset allocation of the fund comprises around 96.41% in equities, 0.31% in debts, and 3.28% in cash and cash equivalents. While the top 10 equity holdings constitute around 69.4% of the assets, the top three sectors constitute around 93.03% of the assets. The fund largely follows a growth-oriented style of investing and allocates its investments across market capitalisations.

Returns

ICICI Prudential Technology Fund has delivered average annual returns of 23.6% since its inception 11 years ago. The fund has doubled the money invested in it every four years. The trailing returns over different time periods are: 39.29% (1yr), 11.62% (3yr), 29.15% (5yr) and 13.35% (since launch). The fund's returns are currently better than the category average.

ICICI Prudential Technology Direct Plan-Growth scheme's 1-year returns are 36.41%, 37.12% in the last 3 years, and 1102.93% since the scheme's launch. The scheme's ability to deliver returns consistently is lower than most funds in its category, and its ability to control losses in a falling market is low.

ICICI Prudential Technology Direct Plan Growth has generated the highest return among Sectoral-Technology funds in the last 10 years. For every unit of risk, this fund produces 20% more returns.

ICICI Prudential Technology Fund is rated as 'Very High' risk.

Risk

Risk Level:

The ICICI Prudential Technology Fund is rated as a "Very High" risk investment option. This indicates that investors could lose a significant portion of their principal amount if the fund performs poorly.

Investment Mandate:

The fund has a narrowly defined investment mandate, focusing specifically on the technology sector. Investing in sector-specific funds carries higher risk than more diversified funds.

Volatility and Returns:

The fund's returns have been volatile, and its ability to control losses in a falling market is low. This means that the fund may experience significant price swings and may not provide a stable investment option.

Investment Horizon:

It is recommended to invest in this fund only if you have a long-term investment horizon. Avoid investing in this fund if you need to redeem your investment in less than seven years, as short-term investments carry higher risk.

Exit Load:

The fund has an exit load of 1% if redeemed within 15 days of investment. This means that there is a penalty for early withdrawal, which can impact the overall returns of your investment.

Market and Sector Risk:

The fund primarily invests in the technology and technology-dependent sectors. The performance of these sectors can be highly dependent on market conditions and technological advancements. Any negative developments or downturns in these sectors could significantly impact the fund's performance.

Before investing in the ICICI Prudential Technology Fund, it is essential to carefully consider your risk tolerance, investment goals, and time horizon. Diversification and long-term investment horizons can help mitigate some of the risks associated with this fund.

Asset Allocation

As of 31 July 2023, the ICICI Prudential Technology Fund had invested 98.86% in equity, 0.67% in cash and cash equivalents, and 0.47% in debt. This allocation is reflected in the fund's portfolio, which primarily consists of large-cap stocks and debt instruments, indicating a conservative investment strategy.

The fund's asset allocation can also be examined through its market cap weightage and equity investment split. As of 30 September 2024, the fund had the following distribution: 69.58% in large-cap, 10.64% in mid-cap, and 15.25% in small-cap.

In terms of equity investment, the fund focuses on the technology and communication sectors, with 69.40% and 12.39%, respectively. The remaining allocations are in the services sector (9.96%), capital goods (3.46%), and consumer discretionary (3.39%).

The ICICI Prudential Technology Fund's top holdings include well-known technology companies such as Tata Consultancy Services, HCL Technologies, Bharti Airtel, and LTIMindtree.

It is important to note that the fund's asset allocation may change over time as the fund managers adjust the portfolio based on market conditions and investment objectives. Therefore, investors should regularly review the fund's asset allocation and performance to ensure it aligns with their investment goals and risk tolerance.

Investment Details

ICICI Prudential Technology Fund is an open-ended sectoral-technology equity scheme that falls under the ICICI Prudential Mutual Fund House. The fund was launched on 3 March 2000 and has been in existence for over 11 years. The investment objective of the fund is to seek long-term capital appreciation by investing in equity and equity-related securities of technology and technology-dependent companies. The fund has a suggested investment horizon of >3 years.

The current fund managers are Atul Patel, Priyanka Khandelwal, and Vaibhav Dusad. The fund has an expense ratio of 0.9%, which is close to the average for sectoral-technology funds. The minimum investment required is ₹5,000, with a minimum additional investment of ₹1,000 and a minimum SIP investment of ₹100. The latest NAV or Net Asset Value is ₹236.56 as of 11 October 2024.

The fund has delivered average annual returns of 23.6% since its inception and has doubled the money invested every four years. The trailing returns over different time periods are: 39.29% (1yr), 11.62% (3yr), 29.15% (5yr), and 13.35% (since launch). The fund has generated the highest return among sectoral-technology funds in the last 10 years.

ICICI Prudential Technology Fund has an AUM or Asset Under Management worth ₹14,211.98 Crore as of 31 August 2024. The fund's top holdings include companies such as Tata Consultancy Services Ltd., HCL Technologies Ltd., Bharti Airtel Ltd., and Persistent Systems Ltd. The fund has invested across market capitalisations, including giant, large, mid, and small-cap companies.

The fund's asset allocation comprises around 96.41% in equities, 0.31% in debts, and 3.28% in cash and cash equivalents. The top 10 equity holdings constitute around 69.4% of the assets, while the top three sectors constitute around 93.03% of the assets. The fund has a Riskometer level of "Very High" and there is no lock-in period.

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