To invest in the growing semiconductor ecosystem, investors have several alternatives to choose from, such as sectoral funds, index funds, and even equity-linked savings schemes
As the India-Singapore Semiconductor Ecosystem Partnership wound up three days back, there is now a newly-found enthusiasm among investors towards the semiconductor ecosystem. Semiconductors, which are the essential chips that control the flow of electricity, is gaining more significance in modern electronics, including computers, mobile phones, and even automobiles.
Giving this context and the expected boom in the sector in the future, it’s would be worth taking note of mutual funds that invest in the semiconductor ecosystem. Here’s a list of such mutual funds that investors could consider.
Nippon India Taiwan Equity Fund
As a sectoral fund, this is uniquely positioned to benefit from advancements in the semiconductor space because it has heavily invested (9.4 per cent weightage) in Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest independent semiconductor foundry. This fund is frequently included in international mutual funds and exchange-traded funds (ETFs) focusing on the semiconductor sector.
Index Funds
Navi Nifty IT Index Fund has one of the highest weightages in HCL Technologies, which is a top IT servicing industry, with 9.9 per cent holdings in the scrip. This fund invests mainly in shares of companies in the information technology sector.
ICICI Prudential Nifty IT Index Fund holds 9.6 per cent in this scrip, followed by Axis Nifty IT Index Fund. ICICI Prudential Nifty IT Index Fund has generated 32.81 per cent return in one year.
ELSS Funds
Taurus ELSS Tax Saver Fund holds 9 per cent in HCL Technologies as of July 31, 2024. HDFC ELSS Tax saver, Parag Parikh ELSS Tax Saver Fund and Franklin India ELSS Tax Saver Fund are other mutual funds that have substantial holdings in this scrip. Equity-linked saving schemes (ELSS) or tax-saver funds have a three-year lock in period.
Sectoral Funds
HDFC Technology Fund, Tata Digital India Fund, Aditya Birla Sun Life Digital India Fund hold 8.7 per cent, 7 per cent and 6 per cent, respectively in HCL Technologies. Considering their reliance on small-cap stocks, which are considered very risky, and their lack of sectoral diversification, consider your risk appetite and your investment tenure before deciding on your investment.