The tata digital india fund is a thematic small-cap fund offered by Tata Mutual Fund. This fund aims to invest in technology and internet-based companies that are expected to benefit from Digital India initiatives and increase internet penetration in the country. Some key benefits of investing in the Tata Digital India Fund are:
Exposure to High-Growth Sectors
The fund provides exposure to high-growth sectors like information technology, the internet, e-commerce, fintech, education technology, and healthcare technology, among others. With the Digital India campaign accelerating internet and smartphone adoption, these sectors have significant growth runways. The fund allocates 70–100% of the corpus to equity and equity-related instruments of such companies.
Potential for Higher Returns
Being a thematic fund focused on new-age digital economy companies, Tata Digital India Fund has the potential to generate higher returns over a long-term investment horizon of 5 years or more compared to diversified large-cap equity funds. However, investors should note that the fund, by investing predominantly in high-growth technology stocks, is also likely to be much more volatile, especially in the short term, due to concentration risk arising from new-age sector bias.
Aligns with the India Growth Story
India is witnessing rapid internet and smartphone penetration with cheaper data plans and affordable devices. The Tata Digital India Fund presents an opportunity to participate in this India growth story around digitization.
Tax Savings with the Equity-Linked Savings Scheme
The fund offers the Equity Linked Savings Scheme (ELSS), which provides tax benefits under Section 80C up to ₹1.5 lakh along with the potential for capital appreciation. So it serves both tax-saving and long-term investment objectives.
Strong Parentage
The fund is from Tata Mutual Fund, which is one of the most trusted Indian mutual fund houses known for its robust investment processes. The Tata Digital India Fund is managed by Meeta Shetty, who has over 16 years of experience in equity research and fund management.
Access to a Wider Range of Companies
As a thematic fund, the Tata Digital India Fund can invest across a wider range of sub-themes and companies compared to narrowly focused sectoral funds. This allows for more diversification within new-age companies.
Lower Investment Amount
The fund has a relatively lower minimum investment amount, starting at ₹5,000, compared to an average of ₹10,000–25,000 for most equity funds. This allows small investors to also take exposure.
Systematic Investment Plan Option
Investors can start investing in the Tata Digital India Fund for as little as ₹500 per month through a systematic investment plan (SIP). This allows rupee cost averaging and disciplined investing without needing a large lump sum.
Conclusion
In conclusion, the Tata Digital India Fund offers exposure to structural opportunities arising from digital India and internet growth in the country. It provides avenues for long-term wealth creation while also serving tax-saving needs. However, tata small cap fund tends to be more volatile compared to large-cap funds, and thematic funds carry concentration risk due to their narrow focus. Hence, investors should carefully assess their risk appetite, investment horizon, and portfolio allocation before investing in the Tata Digital India Fund or consult an experienced investment advisor on 5paisa to understand if the fund aligns with their financial goals.
