What are Innovation Funds? List of Top Innovation Mutual Funds in India
Innovation funds have been gaining traction as an investment option in India. These funds focus on sectors that thrive on technological advancements, such as AI, biotechnology, and renewable energy. As of 2025, the innovation sector has witnessed significant growth, with major companies in these fields driving the market forward. Investors are increasingly drawn to innovation funds for their potential to offer high returns, though it comes with its own set of risks. This article provides an overview of innovation funds, their benefits, risks, and factors to consider before investing.
Top Innovation Funds in India for 2025
| Fund Name | AUM (Rs. in cr.) | Expense Ratio (%) | 3Y CAGR (%) |
|---|---|---|---|
| SBI Innovative Opportunities Fund | 7,237.14 | 0.64 | 0.0 |
| ICICI Pru Innovation Fund | 7,125.32 | 0.68 | 0.0 |
| Nippon India Innovation Fund | 2,767.43 | 0.62 | 0.0 |
| HDFC Innovation Fund | 2,517.67 | 0.68 | 0.0 |
| Tata India Innovation Fund | 1,725.76 | 0.54 | 0.0 |
| Bandhan Innovation Fund | 1,714.64 | 0.53 | 0.0 |
| Axis Innovation Fund | 1,170.71 | 1.31 | 18.4 |
| Union Innovation & Opp Fund | 1,031.97 | 0.7 | 0.0 |
| Baroda BNP Paribas Innovation Fund | 957.70 | 1.06 | 0.0 |
| UTI Innovation Fund | 839.18 | 0.88 | 0.0 |
Note: The data on the list of the best innovation funds is from 18th September 2025. It is derived from the Tickertape Mutual Funds Screener using the following filters:
- Plan: Growth
- AUM: Sorted from Highest to Lowest
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
What are Innovation Funds?
Innovation funds are mutual funds that invest in companies engaged in innovative technologies and new-age sectors such as artificial intelligence, biotechnology, robotics, and clean energy. The aim is to capitalise on the long-term growth potential of industries that are pioneering significant changes in the market. These funds typically focus on high-growth companies that are pushing the boundaries of innovation.
Overview of the Best Innovation Mutual Funds
SBI Innovative Opportunities Fund
SBI Innovative Opportunities Fund focuses on investments in sectors driven by innovation, such as technology, healthcare, and renewable energy. The fund aims to capture the growth potential of emerging industries, offering a diversified portfolio that taps into India’s dynamic growth sectors.
ICICI Pru Innovation Fund
ICICI Pru Innovation Fund invests in companies that are at the forefront of technological and industry innovations. The fund seeks to capitalise on opportunities in sectors such as technology, pharmaceuticals, and clean energy, providing exposure to high-growth, disruptive industries.
Nippon India Innovation Fund
Nippon India Innovation Fund targets investments in emerging sectors powered by technological advancements and innovation. It focuses on industries such as IT, biotechnology, and renewable energy, providing a growth-oriented investment strategy in India’s rapidly evolving market.
HDFC Innovation Fund
HDFC Innovation Fund focuses on investing in companies that utilise innovative technologies and drive industry changes. With an emphasis on sectors like digitalisation, healthcare, and clean energy, the fund offers exposure to high-growth potential industries in India.
Tata India Innovation Fund
Tata India Innovation Fund targets investments in sectors characterised by technological advancement and disruption, such as information technology, healthcare, and energy. The fund employs a growth-focused approach, targeting innovation-driven industries with high growth potential.
Bandhan Innovation Fund
Bandhan Innovation Fund focuses on investing in companies operating in innovative sectors, including technology, pharmaceuticals, and clean energy. The fund aims to provide growth opportunities through exposure to industries that are shaping the future of the Indian economy.
Axis Innovation Fund
Axis Innovation Fund invests in companies driving change through technological advancements and innovation. It focuses on sectors such as technology, digitalisation, and biotechnology, seeking growth opportunities in industries that are positioned for long-term disruption and progress.
Union Innovation & Opportunities Fund
Union Innovation & Opportunities Fund targets investments in emerging sectors such as technology, renewable energy, and biotechnology. The fund aims to capitalise on the growth potential of innovative companies poised to drive the next wave of industry transformation in India.
Baroda BNP Paribas Innovation Fund
Baroda BNP Paribas Innovation Fund invests in companies that develop new technologies and innovations. Focused on sectors such as technology, renewable energy, and healthcare, the fund offers exposure to high-growth industries that are shaping the future.
UTI Innovation Fund
UTI Innovation Fund invests in companies in sectors driven by technological advancements and innovation. The fund focuses on industries like information technology, healthcare, and energy, aiming to capitalise on emerging trends and growth in India’s innovative landscape.
How to Invest in Innovation Opportunities Funds?
You can easily invest in the innovation funds by following these steps:
- To invest in mutual funds, you can visit an equity investment platform such as smallcase or Tickertape.
- The next step would be to research and identify the top innovation funds that align with your investment thesis. You can easily select and learn more about innovation opportunities funds with the help of a financial tool like the Tickertape Mutual Fund Screener. With 50+ pre-loaded filters, it helps you to create a comprehensive list by giving insights about the fund’s performance. Try it now!
- Once you have selected the best innovation mutual funds based on different metrics and parameters, go to smallcase.com or the smallcase app, and login via your phone number. Click on ‘Discover‘ and enter the name of the specific mutual fund in the search bar and hit enter. You can click on ‘invest now’ and select whether you want to invest a lump sum amount or start a SIP and start investing!
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade model portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered investment experts (also known as smallcase managers)
- smallcase offers over 500+ stock portfolios, created by 200+ managers
Here are a few popular smallcases among new investors:
Disclosures for aforementioned smallcases
Features of Innovation Funds in India
- Focus on Emerging Sectors: These funds primarily target industries such as artificial intelligence, biotechnology, and renewable energy, which are expected to revolutionise the economy.
- Growth-Oriented Approach: Innovation funds aim to deliver higher returns by investing in companies with significant growth potential, often in early stages of technological development.
- Active Management: Fund managers take a hands-on approach, constantly monitoring and adjusting the portfolio to seize emerging opportunities in the innovation space.
- Diversified Exposure: While focusing on innovative sectors, these funds typically maintain a diversified portfolio across various industries, balancing risk while pursuing growth.
Benefits of Investing in Innovation Funds
- Exposure to Emerging Markets: Innovation funds often invest in both developed and emerging markets, offering a broader scope for growth and reducing the reliance on traditional markets.
- Capitalising on Technological Advancements: These funds focus on businesses that leverage cutting-edge technologies, allowing investors to tap into transformative changes shaping industries and markets.
- Long-Term Growth Potential: Innovation-driven sectors typically offer higher long-term returns as they benefit from ongoing advancements and increasing adoption of new technologies.
- Diversification of Portfolio: Investing in innovation funds helps diversify an investment portfolio by providing exposure to emerging industries that may not correlate with traditional markets, such as stocks and bonds.
- Opportunity to Invest in Disruptive Companies: These funds offer the chance to invest in companies that are pioneers in their field, potentially providing significant upside as they disrupt established industries.
Risks of Investing in Innovation Funds
- High Volatility: Innovation funds often invest in emerging sectors that are prone to significant price fluctuations. This volatility can result in short-term losses, especially during market downturns.
- Regulatory Uncertainty: Like many innovation sectors, such as biotechnology and AI, these industries are subject to evolving regulations. Changes in government policies or legal frameworks can significantly impact their growth prospects.
- Market Risk: The high-growth sectors targeted by innovation funds can sometimes be overvalued, making them more vulnerable to market corrections, especially if investor sentiment shifts.
- Limited Historical Data: Some of the sectors innovation funds focus on are relatively new, meaning there is limited historical data to predict future performance. This lack of data can make it harder to assess the long-term stability of investments.
- Sector-Specific Risks: Sectors like clean energy or technology may be highly dependent on factors like consumer adoption, competition, or technological breakthroughs, which can create risks specific to those industries.
Taxation on Innovation Mutual Funds
Understanding the latest tax regulations on innovation opportunities funds is essential for making informed investment decisions. The Union Budget 2024 has introduced significant changes to the taxation of equity funds in India, simplifying the tax structure while altering rates and benefits. Here is a detailed breakdown of the new tax rules on equity funds, which also apply to innovation opportunities funds:
Equity Funds
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
- No Indexation Benefit: This change affects the overall tax liability, potentially increasing it for long-term investors.
Factors to Consider When Investing in Innovation Funds
- Risk Appetite: Innovation funds often invest in sectors with high potential but also higher volatility. An investor’s risk tolerance plays a key role in determining whether these funds align with their investment goals.
- Investment Horizon: The nature of innovation-driven industries suggests that they may require a long-term investment horizon. Short-term investors may find the inherent volatility of these funds challenging.
- Fund Performance: Performance data from the Association of Mutual Funds in India (AMFI) can offer insight into a fund’s historical performance. While past performance isn’t a guarantee, it provides a snapshot of how the fund has navigated market fluctuations.
- Expense Ratio: Higher management fees are often associated with actively managed innovation funds. Investors may want to assess the cost-effectiveness of these fees relative to potential returns.
- Fund Manager Expertise: A key factor in the success of innovation funds is the expertise of the fund managers. Their ability to identify emerging trends and make strategic decisions in rapidly evolving sectors can influence fund performance.
To Wrap It Up
Innovation funds offer a unique opportunity to invest in emerging technologies and industries that have the potential to transform the global economy. However, these funds come with higher risks due to the volatility and regulatory uncertainties surrounding innovative sectors. It’s essential to assess your risk tolerance and investment horizon before investing in these funds. As always, a diversified approach can help mitigate some of the risks while capitalising on growth opportunities.
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Frequently Asked Questions About Innovation Funds
Innovation funds focus on sectors such as technology, biotechnology, clean energy, and digital transformation. These sectors are characterised by rapid growth and technological advancements that are expected to shape the future of various industries.
The performance of innovation funds is often tracked through metrics like NAV (Net Asset Value), which is available on AMFI and other financial platforms like the Tickertape Mutual Fund Screener. Historical performance can be reviewed to understand how the fund has responded to market conditions.
The investment horizon for innovation funds typically spans several years, given the growth trajectory of the sectors in which they invest. These funds typically require a long-term perspective to capitalise on emerging trends and innovations.
Many innovation funds are actively managed, meaning fund managers select and adjust investments based on market trends and sector-specific developments. Active management aims to optimise returns in dynamic sectors.
Innovation funds provide exposure to sectors that are driving technological and economic change. By including these funds in a portfolio, investors can gain access to industries that are expected to experience significant development over time.
Yes, the performance of innovation funds can vary depending on market conditions, sector performance, and other macroeconomic factors. It is common for funds focusing on emerging sectors to experience fluctuations in value.
