3 Semiconductor Mutual Funds for Your 2026 Watchlist

The semiconductor industry is one of the most crucial building blocks of the global economy.

The world has seen, just how dependent modern industry is on these chips. They power not only smartphones and electric vehicles but also cloud computing, satellites, smart manufacturing-and now, artificial intelligence.

The industry is in a structural expansion phase, not a short-term boom. Today, advanced chip demand is driven by rapid adoption in artificial intelligence, cloud infrastructure, 5G, robotics, and high-performance computing.

Semiconductor mutual funds, especially those offering exposure to chipmakers and equipment manufacturers from around the world, enable Indian investors to ride this trend without actively picking stocks.

We have listed 3 semiconductor mutual funds in which the allocation towards semiconductor stocks is high, with a strong rolling 5-year CAGR and better asset allocation, sector focus, and fund management.

#1 - Canara Rob Infrastructure Fund

Launched in 2005, the Canara Rob Infrastructure Fund has steadily positioned itself as a specialised theme-based fund capturing India's long-term infrastructure expansion cycle.

As India accelerates investments across roads, railways, power, logistics, digital infrastructure and manufacturing, this fund has emerged as a relevant choice for investors seeking exposure to the structural 'India growth' story.

A key strength of this fund lies in its bottom-up stock-picking strategy. This disciplined philosophy has contributed to consistent performance across market phases, demonstrated resilience in volatile times, benefiting from themes such as construction, cement, power utilities, engineering and industrial manufacturing.

Over recent years, the Canara Rob Infrastructure Fund has delivered a 5 year rolling CAGR of 32.27%, reflecting a strong ability to capture opportunities arising from rising capex cycles.

India's ambition to build a semiconductor ecosystem-through new fabs, chip packaging units, and supply-chain infrastructure-adds another layer of opportunity.

Semiconductor manufacturing requires advanced power systems, precision engineering, water supply infrastructure, logistics networks and high-quality industrial parks, all of which directly support the infra ecosystem that this fund invests in.

This makes semiconductor-led capex an emerging supplementary driver for infrastructure-linked companies in the coming years.

As of November 2025, the fund holds significant allocation toward sectors such as capital goods 23.84%, power 11.32% and infrastructure 10.7%.

Major holdings include L&T (9.81%), RIL (4.41%) and SBI (4.42%), reflecting its focus on high-conviction names with strong fundamentals and earnings visibility.

#2 - HSBC Infrastructure Fund

HSBC Infrastructure Fund has evolved into a competitive offering within the thematic infrastructure category, leveraging global research capabilities and disciplined domestic execution.

With the country prioritising development across transportation, power, utilities, industrial manufacturing and urban infrastructure, the fund plays directly into some of India's most powerful long-term growth drivers.

The fund follows a pragmatic investment style by maintaining meaningful exposure to large-cap infrastructure leaders while also capturing high-growth opportunities among mid-cap engineering, construction and manufacturing companies.

This barbell-style allocation helps the fund balance risk, maintain stability during volatile phases, and simultaneously participate in the cyclical uptrend of infrastructure-linked sectors.

In recent years, the fund has delivered a 5 year rolling CAGR of 29.75% showcasing its ability to benefit from India's sustained infrastructure momentum.

A significant emerging theme supporting the fund's long-term outlook is the country's push into semiconductor manufacturing. As India ramps up its semiconductor mission, infrastructure-linked companies stand to gain, indirectly strengthening the thematic potential of the fund.

As of November 2025, the fund manages assets worth Rs 23.71 bn and maintains diversified sector allocations across capital goods (32.23%), infrastructure (12.53%) and telecom (9.24%).

Its top holdings include Bharati Airtel (9.23%), NTPC (8.33%), and Bharat Electronics (8.29%), reflecting a high-conviction approach backed by extensive research.

HSBC Infrastructure Fund is positioned to benefit from India's multi-year infrastructure upgrade as well as capex cycles driven by semiconductor and electronics manufacturing.

#3 - Motilal Oswal Flexi Cap Fund

Launched in 2014, the Motilal Oswal Flexi Cap Fund has emerged as a conviction-driven offering within the flexi cap category, known for its focused investment approach and long-term wealth creation philosophy.

The fund typically adopts a diversified yet high-conviction portfolio structure, maintaining significant exposure to large-cap leaders while selectively allocating to mid-cap and emerging opportunities that demonstrate strong growth potential.

Motilal Oswal Flexi Cap Fund's investment philosophy is deeply rooted in bottom-up stock selection. The management emphasises businesses with strong earnings visibility, robust governance, pricing power, and clear long-term growth drivers.

Instead of making aggressive sector rotations, the fund prefers to stay committed to high-quality names that may compound over multiple years.

Over the past few years, the fund has delivered a 5 year rolling CAGR of 20.74% supported by its focused exposure to structurally strong sectors.

The semiconductor mission indirectly benefits several companies in capital goods, engineering, IT, EMS, and industrial manufacturing-areas the fund selectively taps into.

Key allocations across sector are IT (18.57%), retail (16.25%), and capital goods (11.2%). Its top holdings include Persistent Systems (10.05%), Eternal (8.87%), and Dixon Technologies (8.65%).

Data as of December 01, 2025
(Source: ACE MF)

What You Should Know

The rapid expansion of digital technologies will support structural demand for chips. At the same time, the sector is becoming more geographically diversified, with multiple countries investing heavily to strengthen supply-chain resilience.

For India, the coming years may mark the foundation phase of its semiconductor ecosystem. While the journey will take time, investments in chip fabrication, packaging, specialised infrastructure, and electronics manufacturing will create opportunities in many sectors.

Overall, the semiconductor industry's future is shaped by a mix of opportunity and evolution. For investors, this makes the semiconductor theme a compelling yet dynamic space-one that benefits from thoughtful allocation, patience, and an understanding of its potential and inherent cyclicality.

Invest wisely.

Happy investing.

Table Note: Data as of December 01, 2025
The securities quoted are for illustration only and are not recommendatory
Past performance is not an indicator for future returns.
Returns are on rolling CAGR basis and in %. Direct Plan-Growth option.
Those depicted over 1-Yr are compounded annualised.
Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.

Disclaimer: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, enlistment as IA with Exchange and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

An MBA in Finance and a Master's degree in Commerce (M.Com), Mitali Dhoke is a Sr. Research Analyst at PersonalFN with close to five years of experience in the financial services industry. At PersonalFN, Mitali primarily focuses on mutual fund research and is recognized as an NFO (New Fund Offer) specialist.

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