In the last few months, international ETFs have become quite popular among Indian investors. Most of the companies that are a part of our daily lives, such as Facebook, Google are listed on US exchanges. Hence, investment in US-based ETFs helps to gain exposure to tech-giants besides portfolio diversification.
Mirae Asset Management recently launched two new FANG+ funds: Mirae Asset NYSE FANG+ ETF and Mirae Asset NYSE FANG+ ETF Fund of Fund.
What is FANG?
FANG refers to Facebook, Amazon, Netflix, and Google. Besides these four tech companies, it constitutes six other companies: Apple, Tesla, Twitter, Baidu, Nvidia and Alibaba.
The ETF will track NYSE FANG+ total return index, which is an equal dollar weighted index. This means that each stock has a 10% index weight. The portfolio constituting ten stocks will offer exposure to sectors such as social media, e-commerce, streaming, electric vehicles, search engines.
The other FANG+ fund is a fund of fund that will invest in the ETF. Investors who don’t have a Demat account can invest in the fund of fund offer.
As per the data shared by Mirae Asset Mutual Fund, the combined annual revenue of these companies stands at USD 1.09 trillion. The figure is three times the Indian government’s total receipt (FY2019-2020). The overall annual net profit of these ten companies was USD 179 billion, which exceeds the net profit of all Indian equities.
If we talk about the performance of NYSE FANG+ Index, it has outperformed S&P 500 and NASDAQ 100 by a significant margin over 1-, 2- and 3-year periods.
Also, the fund can help to diversify the portfolio as the index has a low correlation of 0.15 with Nifty 50 on a rupee-denominated basis.
Investors can invest in global markets. It helps to diversify investment portfolio and benefit from rupee depreciation.
Moreover, as it is an ETF, the expense ratio of this fund is extremely low.
We have seen that FANG+ index comprises just ten stocks. Although the companies are market leaders, the index is highly concentrated. This makes the fund a high-risk investment.
About the Fund:
- The new fund offer will close on April 30, 2021. The scheme will re-open for investments and redemptions on 7th May 2021.
- The fund is suitable for wealth creation.
- Mr. Siddharth Srivastava will manage the fund.