Fund of Fortnight

Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.[EasyDNNnews:PaidContentStart]

Reason for recommendation
Indian IT is entering a stronger phase as artificial intelligence moves from pilot projects to enterprise deployment. As companies invest in data architecture, governance, cloud infrastructure and process redesign, Indian IT firms could benefit from deep client relationships and execution capabilities. The recovery may become more visible towards late FY27 or FY28, although markets could react earlier to stronger bookings and rising AI-led revenue. Considering all these, our MF Select for this time is SBI Technology Opportunities Fund. This fund has outperformed its category average across periods. In the last one month, the fund has generated a return of 10.61 per cent compared to 8.96 per cent by the category. Over one year, the fund returned -3.70 per cent versus -6.78 per cent, an outperformance of 3.08 percentage points. Over two years, it delivered 2.24 per cent against -4.65 per cent, a 6.89-point advantage. It also exceeded the category average by 4.75 points over three years, 4.50 points over four years and 4.37 points over five years.

Since the fund is sectoral, the portfolio is concentrated in Technology at 49.56 per cent, followed by Services at 27.98 per cent and Communication at 18.44 per cent. Healthcare accounts for 1.17 per cent. Among peers, SBI Technology Opportunities Fund has one of the lowest standard deviations at 17.76. Its beta of 0.76 is below some of its larger peers by assets under management. At the same time, it has an alpha of 7.75, which is ahead of the benchmark of 1.79.

Bharti Airtel is the largest holding at 18.44 per cent, followed by Infosys at 10.94 per cent, TCS at 7.18 per cent, Eternal at 6.98 per cent and Amagi Media Labs at 4.46 per cent. Overall, the fund offers focused exposure to a possible technology-sector recovery. However, as a sectoral fund, it remains a contrarian, high-risk allocation. Exposure should be limited and is more suitable for aggressive investors.

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