Motilal Oswal NASDAQ 100 Fund of Fund – Should you Invest?

Motilal Oswal NASDAQ 100 Fund of Fund ReviewMotilal Oswal NASDAQ 100 Fund of Fund – Should you Invest?


Currently Indian stock markets are volatile. Investors are looking to see how they can beat this volatility. One of the good option is to invest in US Equity Markets. To tap this opportunity, Motilal Oswal is floating a mutual fund scheme. Motilal Oswal NASDAQ 100 Fund of Fund invests in one of its existing NASDAQ 100 ETF. This provides opportunity to invest directly in US Equity through SIP in smaller amounts. Should you invest in the Motilal Oswal NASDAQ 100 Fund of Fund (FOF)? What are the risk factors an investor need to consider before investing in this Motilal Oswal NASDAQ 100 Fund of Fund (FOF) New Fund Offer (NFO)?

Also Read: How to pickup good mutual fund scheme using Jensen Alpha’s Ratio?

Features of Motilal Oswal NASDAQ 100 Fund of Fund (MOFN100FOF)


This is an open-ended mutual fund equity scheme.

This fund invests in Motilal Oswal NASDAQ 100 Exchange Traded Fund (ETF) which is already existing for over 7+ years.

This scheme would open for subscription on 9th November, 2018

This scheme would close for subscription on 22nd November, 2018.

You can invest in INR through this mutual fund scheme, but in US markets.

Since this is an open ended scheme, it would again open for subscription after 5 business days from the date of allotment of Mf units after the NFO period.

This scheme is available in both regular and direct plans.

This plan offers only growth option. Dividend option not available.

Minimum investment is Rs 500 and in multiples of Rs 1 there-off for a lump sum as well as SIP.

There are several options available in SIP like Weekly SIP, Fortnighly SIP, Monthly SIP, Quarterly SIP and Yearly SIP.

The NAV of the NFO is Rs 10 per unit now during initial subscription.

There is no entry load to invest in this mutual fund scheme.

There is no exit load to invest in this mutual fund scheme.

Since this scheme invests in US equity, it is classified as high risk scheme.

This scheme benchmark is NASDAQ 100 index.

Scheme total expense ratio (TER) is estimated up to 2.50% of the total assets on any day.

Motilal Oswal NASDAQ 100 Fund of Fund details can be downloaded from here.

Who is the Fund Manager of Motilal Oswal NASDAQ 100 Fund of Fund?


The Fund Manager is Mr. Ashish Agrawal.

What is the investment objective and strategy of this Motilal Oswal NASDAQ 100 Fund of Fund?


The investment objective of the mutual fund scheme is to get returns by investing in units of Motilal Oswal Nasdaq 100 ETF.

The Scheme does not guarantee/indicate any returns. There can be no assurance that the scheme’s objectives will be achieved.

What is the allocation pattern in this mutual fund scheme?


This fund investment pattern looks as follows:

It invests upto 100% Motilal Oswal Nasdaq 100 ETF units.

Can NRI invest in this MF scheme?


Non-resident  Indians  (NRIs)  /  Persons  of  Indian  Origin  (PIOs) residing  abroad  on  repatriation  basis  and  on  non-repatriation  basis. NRIs and PIOs who are residents of the U.S. and Canada cannot invest in the Scheme.

Also Read: Which is the best SIP Date for Mutual fund Investments?

What are the risks involved in this fund?


Here are the risks of investing in this mutual fund.

1) One should consider the risk of investing in US equity. While domestic markets may perform well, US markets may or may not perform well and your mutual fund scheme may look odd in terms of performance compared to other funds.

2) Investors would face the risk of forex conversion between INR and USD. Due to Dollar becoming stronger, now USD is trading at Rs 72. If there is a decline (dollar declining), investors would need to bear this risk.

3) The underlying ETF invests in NASDAQ 100 shares. Most of the market capitalization is for US Technology companies. If there is declining in performance of such companies, it would have an impact on this mutual fund scheme performance.

4) Investing in this fund would have country risks. Any change in the strategy of the US Government would have an impact on the company performance in the US and in turn it would have an impact on the performance of this mutual fund scheme.

5) This mutual fund invests in NASDAQ 100 ETF which in turn invests in NASDAQ 100 shares. The Means ETF Fund Manager would not have any other strategy to change the portfolio of stocks in the underlying.

4) Like any other mutual fund scheme, investing in this fund does not guarantee any returns. Past performance should not be considered as guaranteed returns.

How this fund of fund returns would be taxed?


This fund of fund returns would be treated as non equity fund i.e. like any other debt mutual fund returns and taxed with or without indexation benefits.

How is the Performance of the Motilal Oswal Nasdaq 100 ETF?


Currently, Motilal Oswal NASDAQ 100 ETF already exists in the last 7 years. Let us look at the performance as new mutual fund scheme would invest only in this ETF.

1) This ETF has generated 23% CAGR returns since inception. If we convert this into INR (since forex impact would be there), it has generated 26% CAGR returns since inception.

2) This fund has generated 19% and 21% (with forex gains) annualized returns in the last 5 years.

3) This fund has generated 17% and 19% (with forex gains) annualized returns in the last 3 years.

4) This fund has generated 23% and 25% (with forex gains) returns in the last 1 years.

If you would have invested Rs 1 Lakh 5 years back, your investment would have grown to Rs 2.35 Lakhs.

In future if the dollar is declining, then you would see returns on the higher side, but when converted to INR gains, it might be little lower.

Should you invest in the Motilal Oswal NASDAQ 100 Fund of Fund?


This fund could be new. However, underlying ETF in which this fund invests is not new. This fund of fund invests only in this ETF. Hence we can see how the fund would have ideally performed in the past. Motilal Oswal has brought this fund of fund only to ensure that investors can invest smaller amounts through SIP. Currently one of the best ways to invest in mutual funds is to invest in US based mutual fund schemes to beat the Indian stock market volatility. One can have some exposure to US equity markets by investing in such funds.

If you like this article, please share this on your Facebook or Twitter. This would be a special gift which you would be giving to our blog.

Suresh

Motilal Oswal NASDAQ 100 Fund of Fund FOF – Should you invest

15 comments

  • Nitin

    I see market volatility as opportunity for investment and better returns. US market is less volatile. Also, I believe on Indian market, because companies from US (and other countries) are thinking India as emerging and better option for investments. Due to this, I avoid investing in any other country. From patriotic point, why should we (Proud Indian) help other countries to earn from our money? This is one of the reason we are making Indian currency week.

    • It is only to diversify our portfolio we can choose small portion in international funds/FoF investing in global countries. Yes, one can always take decision not to invest outside India. Thanks for your valuable comments.

  • mahesh bhat

    Hi Suresh:
    Thanks for this article. I am considering investment in this Motilal Oswal Nasdaq FOF. However I am confused, Should I buy ETF directly or should I invest in this fund. Other angle is taxation, why this would be considered as Debt Mutual fund for taxation?

    • Hello Mahesh, Like I indicated, Motilal Oswal has floated this mutual fund scheme majorly to get investors who can invest small amounts through SIP. OIf you are considering investing in lumpsum, ETF could be better. If you want to invest regularly MF would be better. Since this is fund of fund, the taxation is classified like debt mutual funds taxation.

  • Rahiman

    likes to invest a lumpsum amount and intend an SWP route. your advise please!

  • crazysid

    Suresh,
    Is there any difference between investing during NFO period and non-NFO period ?
    Since this is an open-ended scheme, I don’t see much difference.
    Thanks

  • RC

    Why should we invest in this fund if we can invest in ETF directly?

    • Hi RC, For one time you can invest in ETF through your demat account. If you want to invest through SIP or if you have only mutual fund account, this would be best option. Otherwise, ETF would be best option.

Leave a Reply

Your email address will not be published. Required fields are marked *