MUMBAI: Mirae Asset Mutual Fund has announced the launch of two FANG+ funds, its first foray into international funds. The fund house is launching an Exchange Traded Fund (ETF) tracking the NYSE FANG+ Index in the US as well as a Fund of Funds (FoF) tracking the same index.
The FoF will invest in the ETF and will make it possible for investors without demat and trading accounts to invest. The New Fund Offer (NFO) will run from 19 April to 3 May. Being open ended in structure, the funds can be purchased and sold thereafter as well.
The Fang + Index is composed of 10 equally weighted technology stocks – Facebook, Apple, Amazon, Netflix, Alphabet, Alibaba, Baidu, Nvidia, Tesla and Twitter. A presentation by Mirae Asset shows that the index has delivered a return of 46.8% CAGR over the past five years in rupee terms. In other words a rupee invested in the index would have multiplied almost seven times in five years. This outpaces the 28.1% returns given by the NASDAQ 100 Index and the 17.3% given by the Nifty 50 (as of 26th Feb 2021).
“These stocks have rallied strongly in the recent past which has been supported by strong earnings and their expected earnings growth is also high. The ETF will have an expense ratio of just 0.33% while the FoF will have an expense ratio of 0.5% on the direct plan and 1% on the regular plan, inclusive of the underlying ETF charges. The ETF will be investing in these stocks directly,” said Siddarth Srivastava, Head ETF Products, Mirae Asset Global Investments.
“This is an opportunity for Indian investors to invest in the world’s greatest innovators – companies like Apple, Google, Tesla, Facebook, Netflix, etc. These 10 companies have a market cap of $ 7.7 trillion – nearly 3 times the Indian market and revenues of $1.09 trillion – 3x of Indian govt total receipts. The Index returns have been phenomenal- 8 times in the past 6 years as compared to 4x for Nasdaq and 2x for S&P 500. But investors must note that this is a concentrated portfolio and is a higher risk proposition for investors who are willing to take that risk,” says Chetan Gill, a Chandigarh-based distributor.
International ETFs and FoFs are taxed as debt funds in India. This means tax at slab rate for holding periods below three years and at 20% with indexation for longer holding periods on capital gains in them.
Other mutual funds in this space include the Motilal Nasdaq 100 ETF and FoF. The Motilal Nasdaq ETF completed 10 years last month, delivering a CAGR of 24.98% since launch.
Last year in March, Edelweiss Asset Management had launched a US Technology Equity Fund of Fund which is up 73.81% since inception.