Tech Mutual Funds Fall Hard In 2026, Lag Broad Equity Indices

Technology-oriented mutual funds have seen more severe falls than broad-based equity indices in 2026, affecting individual investors who had made investments heavily in the tech segment.

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According to the ACE MF database, a few technology-themed plans have experienced drops of as much as 21% year-to-date as of May 6. In comparison, the BSE Sensex has declined around 9.41% during the same period. The benchmark index was trading near 77,175 during morning trade on May 6.

Among the worst-performing schemes this year, HDFC Technology Fund, Tata Digital India Fund, and ICICI Prudential Technology Fund have each declined nearly 20%, according to ACE MF data.

Franklin India Technology Fund, Aditya Birla Sun Life Digital India Fund, SBI Technology Opportunities Fund, and Kotak Technology Fund have also recorded losses of around 18% so far in 2026.

Sectoral Funds Trail Broader Categories

Even technology funds with relatively lower declines remained in negative territory during the year. According to ACE MF data, Quant Teck Fund, Invesco India Technology Fund and Edelweiss Technology Fund have fallen between 7% and 12% year-to-date.

Technology-focused schemes have also underperformed several other thematic and sectoral mutual fund categories. Value Research data showed that pharmaceutical sector funds gained around 3.66% during the same period, while energy-themed funds advanced about 10.54%. Infrastructure-linked schemes rose nearly 4.92%.

Other thematic categories also witnessed comparatively lower declines. ESG funds were down around 6.5%, consumption-oriented funds slipped 6.34%, while business cycle funds declined 2.54%, according to Value Research data as of May 6.

Global IT Weakness Impacts Returns

The fall in technology mutual funds is consistent with the weakening performance of domestic and international information technology stocks. Technology mutual funds generally invest significantly in IT and tech-related firms, thereby exposing them to sector-level corrections more than diversified equity funds.

Since the Sensex comprises several sectors, the index managed to cushion against losses better than technology funds. Additionally, according to Value Research data, flexi-cap mutual funds have suffered relatively smaller losses for the year 2026.

Flexi-cap scheme returns fell by up to 4.19% while rising by 7.69%. Losses for flexi-cap mutual funds averaged about 3.21%.

Indian Stock Markets Maintain Volatility

There has been volatility in Indian stock markets recently due to the global economic situation, changes in oil prices, and geopolitics. During the trading session on May 6, benchmark indices closed in positive territory. The Sensex ended the day 1.22% up at 77,958.52, whereas the Nifty 50 index closed 1.24% up at 24,330.95.

Despite the recovery in benchmark indices during recent sessions, technology-oriented mutual funds continue to remain under pressure due to weakness in information technology stocks and sector-specific declines.

Mutual fund performance in the technology category will continue to depend on earnings trends in IT companies and broader movements in global technology markets.