Technology funds top October returns with gains of up to 10%. Is it the right time to invest?

Technology sector mutual funds dominated the October return charts, with the top nine funds delivering returns of up to 10% during the month, an analysis by ETMutualFunds showed. Of the nearly 626 funds analysed for the period, the top nine performers were all from the technology sector.

HDFC Technology Fund topped the list with a return of 9.78% in October. Kotak Technology Fund and Tata Digital India Fund followed, delivering returns of 7.91% and 7.62%, respectively.

Four other technology funds also delivered returns of over 7% during the month. These included SBI Technology Opportunities Fund, ICICI Prudential Technology Fund, Franklin India Technology Fund and WOC Digital Bharat Fund, which posted returns of 7.52%, 7.48%, 7.24% and 7.20%, respectively, in October 2026.


Invesco India Technology Fund and Aditya Birla Sun Life Digital India Fund delivered returns of 6.57% and 6.11%, respectively.

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Time to choose technology sector?

Shivam Pathak, CFP and founder of Asset Elixir, told ETMutualFunds that technology funds have seen a good recovery and valuations are now relatively attractive following the correction.

Pathak said this could present an opportunity for long-term investors to gradually build exposure. However, given the changes taking place in the IT sector, he advised against making a large lump-sum investment.

How other funds fared in October

Two funds from ICICI Prudential Mutual Fund — ICICI Prudential US Bluechip Equity Fund and ICICI Prudential Global Stable Equity Fund (FOF) — delivered returns of 5.85% and 5.08%, respectively. The next two funds in the list were also from the technology sector. Edelweiss Technology Fund and LIC MF Technology Fund delivered returns of 4.77% and 4.55%, respectively.

HDFC ELSS Tax Saver Fund delivered a return of 2.05% during the month, while Parag Parikh Large Cap Fund posted a return of 1.94%. HDFC Flexi Cap Fund, the second-largest flexi-cap fund by assets under management, delivered a return of 1.70% in October.

Three funds from Invesco India Mutual Fund — Invesco India Largecap Fund, Invesco India ESG Integration Strategy Fund and Invesco India Business Cycle Fund — delivered returns of 1.57%, 1.54% and 1.54%, respectively.

Parag Parikh ELSS Tax Saver Fund posted a return of 1.28%, while WOC Pharma and Healthcare Fund gained 1.14%. Parag Parikh Flexi Cap Fund delivered a return of 1.06% during the same period.

DSP Value Fund was the last fund to post a positive return, gaining just 0.01% in October.

Negative performers

The 11 worst-performing funds during the month were international funds. Nippon India Taiwan Equity Fund recorded the steepest decline, losing 16.71% in October. Invesco India - Invesco Global Consumer Trends FoF fell 15.44% during the same period.

PGIM India Emerging Markets Equity FoF and HSBC Brazil Fund posted losses of 13.90% and 13.52%, respectively. Axis Greater China Equity FoF declined 11.56% in October.

Edelweiss Greater China Equity Offshore Fund and Kotak Global Emerging Market Overseas Equity Active FoF lost 10.92% and 10.51%, respectively. Tata Small Cap Fund followed with a decline of 10.47% during the month.

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The next 13 funds were international funds. HSBC Global Emerging Markets Fund lost 10.34%, followed by PGIM India Global Equity Opportunities FoF, which declined 10.11% in October. Mirae Asset Hang Seng TECH ETF FoF delivered a negative return of 7.80% during the month.

Aditya Birla Sun Life US Equity Passive FoF and Invesco India - Invesco EQQQ NASDAQ-100 ETF FoF lost 7.43% each in October.

Two small-cap funds — ICICI Prudential Smallcap Fund and Groww Small Cap Fund — declined 6.32% and 6.30%, respectively, during the period. Bandhan Small Cap Fund lost 5.18%, followed by Quant Small Cap Fund, which also declined 5.18%.

HDFC Defence Fund, the only actively managed fund focused on the defence sector, lost 4.60% in October. Capitalmind Flexi Cap Fund, ICICI Prudential Flexi Cap Fund and ICICI Prudential Quant Fund recorded the smallest declines of around 0.05% each.

International MFs lose most: Should investors hold on or shift to domestic funds?

Rajesh Minocha, a Certified Financial Planner and founder of Financial Radiance, told ETMutualFunds that international funds should always have a place in an investor's portfolio for diversification, with an allocation of around 7-8%. He said investors should not evaluate these funds solely from the perspective of short-term returns.

However, he noted that not many investment options are currently available. Investors can start investing through GIFT City with a minimum lump-sum investment of $500.

Minocha further said that SIPs are not available through this route. If investors are unable to make a lump-sum investment, they have little choice but to continue investing in domestic diversified funds and consider international funds later, depending on their cash flow availability.

(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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