Tata Digital India Fund Review


What is Tata Digital India Fund?

Tata Digital India Fund is a sectoral mutual fund scheme that invests in IT and IT related companies.

It invests in both domestic and international markets with no restriction on market caps.


For taxation purposes it is considered an equity fund.




Tata Digital India Fund



AUM (Rs Cr)

4,900 cr (As on 31/12/2021)

Fund Manager

Ms Meeta Shetty

Mr Venkat Samala




best mutual funds

What is a Sectoral Mutual Fund? 

A Sectoral Mutual Fund as the name suggests invests only in one particular sector.


It is less diversified than a Thematic Mutual Fund since it is restricted to just one particular sector.


   Think of Sports as a theme and various disciplines like Football and Basketball like sectors. Sports constitute both Football and Basketball but Football does not constitute Basketball and Basketball does not constitute Football.


In the same manner a Thematic Mutual Fund constitute various sectors but it is not necessary that various sectors fall within the same theme.


Think of a Pharma mutual fund scheme, it can only invest in companies belonging to the pharmaceutical sector.


Additional reading: Click Here to read about Financial Habits to adopt for Financial Stability

Types of Sectoral Mutual Funds


This includes companies belonging to the popularly known as BFSI sector (Banking,Financial Services and Insurance companies).


This includes companies belonging to the Information Technology space.



This includes FMCG companies involved in products like foods, personal care, daily care, etc.


Pharma & Healthcare

Certain funds only invest in Pharmaceutical companies whereas certain funds are inclusive of allied healthcare companies too like hospitals, biotechnology, etc.


Are you investing in the right mutual funds?

Features of Tata Digital India Fund

Tata Digital India Fund looks for healthy opportunities in the IT and IT related spaces.

The fund applies a Growth at a Reasonable Price (GARP) approach.

The fund invests in both the domestic as well as international markets thereby being a diversified IT fund.

The fund has no market restrictions and can invest across all market caps.


Should you invest in Tata Digital India Fund?

If you do, consider the following points before diving in:

Minimal Exposure

A sectoral mutual fund should have limited exposure in your mutual fund portfolio.

It should be a part of your satellite portfolio and never be a part of your core portfolio.


Understanding the sector

Only invest if you do and can understand the sector well.

This involves being able to understand reasons behind past performances as well as the ability to forecast future prospects.

This does not involve investing blindly on past performances.


Long Duration

You should consider a sectoral mutual fund scheme only if you are ready to stay invested for the long haul.

This means staying invested for seven years or more.

This is important since sectors go through various phases and cycles.

You should be able to go through all phases and cycles to make meaningful returns.


Entering the fund

As previously mentioned, sectors go through various phases and cycles.

If you enter a thematic or sectoral mutual fund scheme during a peak, you may most likely be sitting on moderate returns for a considerable amount of time.


Additional reading: Click Here to read on how to invest in mutual funds

Tata Digital India Fund Portfolio

As expected the fund was heavily invested in Technology (75%) followed by communication and services (as on 31/12/21).

The COVID pandemic has affected the IT industry in new ways too.

It has led to positive demand growth due to digital transformation.

Work from home has meant a drop in travel expenses but supply has been on the rise.

There is fear of over burdening and deterioration in quality thereby leading to a fall in margins too.

Adaptability to the ever changing scenario will be the key to both survival as well as growth.



Are you investing in the right mutual funds?

When are Thematic and Sectoral Funds launched?

It is generally seen that a Fund House would launch a scheme if it does not currently have one in a category. With SEBI not permitting a Fund House to have more than two schemes in the same category, the timing of the launch becomes all the more important considering that major business is expected and driven during a NFO.


With Thematic and Sectoral Funds though, the timing of them is very much dependent on the narrative that is propounded.


For example look at the launch dates of these IT based Mutual Fund Schemes.



Launch Date

Aditya Birla Sun Life Digital Fund

Jan -00

Franklin India Technology Fund

Aug -98

ICICI Prudential Technology Fund

Mar -00

SBI Technology Opportunities Fund

July -99



The reason for all these Funds being launched between 1998 and 2000 is because this was supposed to be the time of the IT boom in India.


The IT sector in 1998 contributed 1.2% to India’s GDP. The TIDEL Park, the then largest IT park in Asia was opened in the year 2000.


The Information Technology Act was also passed in the year 2000 which paved the way for legal procedures for electronics transactions and e-commerce.


All of the above factors did help in creating a positive market environment for the IT sector to boom and various AMC’s were not going to be left behind to milk this.


This therefore led to the launch of several IT based Mutual Fund Schemes in the space of just 2 years.


We have thus seen how the positive scenario around one particular sector helped in driving investors towards a particular Mutual Fund Scheme.




Taxation on Tata Digital India Fund

For the purpose of taxation, Tata Digital India fund qualifies as an equity fund and the taxation charges applicable on it are as follows:


Long term capital gains tax better known as LTCG is applied on any equity mutual fund when the gains from an equity mutual fund which is held for more than a year is more than 1 lakh.

The LTCG rate is 10%.

Capital gains up to 1 lakh are exempt for taxes.

There is no indexation benefit when calculating LTCG.



Short term capital gains tax better known as STCG is applied on gains from an equity mutual fund which is held for 12 months or less.

The STCG rate is 15%.

There is no ceiling benefit in STCG like the 1 lakh ceiling in LTCG.

STCG is charged on from Re 1.


When should you Enter and Exit in Thematic and Sectoral Funds?

 When you enter and when you exit a thematic and sectoral mutual fund is extremely vital. This becomes all the more important when it comes to a lump sum amount (Which should be avoided in most cases).


The reason for this is that these funds invest in cyclical businesses and ergo they themselves are cyclical funds. Take the example of real estate, you must have often read or heard the real sector is down or the real sector is booming. 


This is not to say that other equity funds do not have their own volatility but with thematic and sectoral funds, volatility is more frequent and at a higher level.


If you enter a thematic fund at a high and exit at a low then the entire exercise was futile. This means you cannot have a strict timeline with these funds, you cannot pick a year when you enter and a year when you exit. You would need to be extremely flexible and clever with your timing of entry and exit in these funds.


Keep in mind that the fund manager has his/her own strategy in place for entry and exits, if your timing does not align with that of the fund manager then that is a cause for major worry. 


You cannot predict the actions of the fund manager, that is beyond your control but what is within your control is your actions. So the prudent thing would be to leave timing completely up to the manager when it comes to the fund portfolio, you would still need to take your own calls with your own portfolio.


One of the biggest blunders that investors commit with these funds is looking at past returns and investing blindly expecting the markets to continue with its upward trend. When the markets slide investors exit with a heavy loss since they entered at a market high and exit at a market low.


This process of entering with greed and exiting with regret is very common and will continue as long as investors look at their portfolio with goals and not desire.


For portfolio enquiriesemail us with your doubts at info@themutualfundguide.com

Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.  
Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing

Copyright © 2022  The Mutual Fund Guide, All rights reserved

My Instagram