Over the past few years, many global technologies and fund houses have started giving you an option to invest in them. One such asset company is Mirae Asset, which is all set to open an NFO among the people of India.
Mirae Asset Investment Managers India announced the launch of two NFO (New Fund Offer) - Mirae Asset NYSE FAANG + ETF and NYSE; an open-ended fund of fund scheme mainly investing in Mirae Asset NYSE FANG + ETF. According to the news, the NFO is open for subscription between 19 April to 3 May 2021.
The house is offering you a fund of funds (FOF) route to invest directly in ETF schemes.
What is an ETF?
Exchange-Traded Funds or ETF’s are one of the types of investment funds that are traded on the stock exchange.
ETF’s are quite similar to mutual funds except one that ETF’s can be bought and sold throughout the day on the stock exchanges just like stocks while mutual funds are bought and sold based on their price at the end of the day.
What is FOF?
A FOF or funds of the fund is nothing but a mutual fund scheme that allows investors to invest in the units of other funds. For instance, the Mirae Asset NYSE FAANG + ETF is a fund of funds that will invest in the units of Mirae Asset NYSE FAANG + ETF.
What’s an OFFER?
Here the NYSE FANG Plus Index (NFPI) will come into play. This is because NFPI will provide exposure to today’s highly traded top 10 tech giants in the world which are listed overseas. These tech companies include Facebook, Apple, Amazon, Netflix, Google, Tesla, Twitter, Alibaba, Baidu and NVIDIA.
You might have heard the popular acronym FAANG which stands for Facebook, Apple, Amazon, Netflix and Google (Alphabet Inc). Now, the FAANG word has spread as the five other stocks have been added to it.
Needless to say, these tech giants are extremely popular all over the world as they offer bountiful services that are used by millions of people across the world.
Therefore, if these businesses are put together in one portfolio, they offer a large number of profits as they have the ability to grow in the different geographies of the world.
If we talk about the past data, we get a detailed insight into NFPI as the index has managed to deliver 33.41% annualized returns between September 2014 and March 2021. The percentage amount is quite large if we compare it to NASDAQ - 100 which has given a 20.77% return between the same years, and 13.23% for the S&P 500 said by the reports of ICE Data Indices.
Advantages
The fund offers exposures to the top industry leaders in their respective segments, which is a plus point for every individual. This is because investing your money in these companies can minimize the chance of risks associated with the business. These businesses hold minimum risks as most of the businesses present in this index are known for their innovations.
Since these companies are not listed in Indian stock exchanges, a FOF can act as a good way to invest in these established technology sector leaders. Also, including these stocks may create a beautiful diversification to your portfolio.
Disadvantages
The addition of the top 10 tech companies into the index makes it highly concentrated. This means investors who saw a dream to invest in this index may be exposed to concentration risk. Stock market is full of volatility and hence it would be beneficial for you to be aware of the downward volatility.
Secondly, these businesses face numerous regulatory changes in many countries which may affect the stock’s price. Also, these companies often face several acquisitions by the policymakers of different countries which could lead to huge risks and downward volatility.
Key Details of the Fund:
The subscription date for both funds starts on April 19, 2021, while the closing dates are different. The closing date of FAANg +ETF is on April 30, 2021, whereas the closing date of FAANG +ETF fund of funds is on May 3, 2021.
The Mirae Asset FAANG+ETF will be handled by Mr Siddharth Srivastava while the Mirae Asset FAANG+ETF FOF will be handled by Ms Ekta Gala.
The minimum investment amount required by both the schemes will be Rs 5000 and multiples of Re 1.
The Mirae Asset FAANG+ETF FOF will offer investors multiple options such as regular plan and direct plan.
Each stock’s weightage in NYSE FAANG+ Index is equally weighted that consists of highly traded growth stocks.
The NYSE FAANG+Index will allow Indian stock trading investors to invest in these potential stocks like Facebook, Apple, Amazon, Google, Tesla, Twitter, Netflix etc.
It may be noted that 7 out of 10 companies in the NYSE FAANG+ Index have made it a list of top 50 innovative companies with exceptionally well innovative ideas.
The Number of Funds managed by Ms Ekta Gala is mentioned below:
Mirae Asset NIFTY 50 ETF
Mirae Asset NIFTY Next 50 ETF
Mirae Asset ECG Sector Leader ETF
Mirae Asset ECG Sector Leader FOF
Mr Siddharth Srivastava, fund manager of Mirae Asset NYSE FANG+ETF said: this index gives Indian investors a new way to put their money in these highly brilliant, growth innovative companies. Through these investments, Indian investors now can invest a small part of their money into these shares and participate in the growth stories of these companies.
Takeaway
It has been seen that many FIIs and global investors have put their eyes on Indian stock market and investors. Many top market gainers have been constantly researching on Indian stock exchange and analyzing the pattern of the stock market.
By doing this, most of them have started to invest in the Indian stock market. Also, they want many retail investors to contribute to the top-notch stocks.
Therefore, they came with the idea of ETFs and added FAANG stocks with ETFs so that many Indian investors can benefit from these stocks.
The primary objective of these companies behind the diversification of these stocks among different geographical areas is the expansion of shares among different retailers and investors so that they can evenly contribute towards the growth of these top giants.
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