Motilal Oswal Nasdaq 100 ETF – Should you invest?

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Motilal Oswal Nasdaq 100 ETF (Most shares nasdaq 100) has been outperforming in the last 8 years since inception. This is an international mutual fund scheme that invests in Nasdaq 100 index. Indian markets are taking a huge beating and many of your mutual funds are in deep red. Investors are looking for outstanding mutual funds or ETFs for medium to long term investment. Whether such outstanding performance in Nasdaq 100 ETF from Motilal Oswal would continue in future? here Should you invest in Motilal Oswal Nasdaq 100 ETF?

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What is Nasdaq 100 Index?


Before we jump into actual ETF details, let us know what is Nasdaq 100 Index is all about. Here are the details of this Index.

1) This has top 100 domestic and international non-financial securities listed on The Nasdaq Stock Market (USA) based on market capitalization.

2) This is one of the greenest major large cap U.S. equity benchmark indices.

3) This index has Long-established holdings include companies that have a legacy of leadership and innovation.

4) This index does NOT contain securities of financial companies, including investment companies in the USA.

5) Today, Apple, Microsoft, Google, Facebook and other Nasdaq 100 components have become the global leaders of business and are the new industrials, hence there is so much craze about the Nasdaq 100 Index.

Overview about Motilal Oswal Nasdaq 100 ETF


Here are the details of this ETF (erstwhile most shares nasdaq 100)

1) This is an Exchange Traded Fund that invests in Nasdaq 100 Index.

2) This ETF is already open for subscription from Mar-2011.

3) For this is an ETF, you need to have a demat account to invest in this scheme

4) You can buy the ETF units from the open market on NSE/BSE or directly from Motilal Oswal Mutual Funds..

5) You can invest in this through lump sum only and SIP is not available. You can see if your stock broker is offering Systematic Equity Plan (SEP) to invest up to specific amount each month in such scheme. SEP is offered by ICICIDirect, not sure about others.

6) Minimum investment is 1 unit and in multiples of 1 unit thereon.

7) Motilal Oswal Nasdaq 100 ETF Price is Rs 551.2653 per unit as on 8th September, 2019.

8) There is no entry load to invest in this Exchange Traded Fund.

9) There is no exit load if you wish you exit from this Exchange Traded Fund

10) This ETF is classified as HIGH risk investment scheme.

11) Motilal Oswal Nasdaq 100 ETF expense ratio is 0.54% of the investment.

12) Latest AUM is Rs 196 Crores as on end of Jul, 2019.

What is the investment objective and strategy of this Nasdaq 100 ETF from Motilal Oswal?


The scheme aims for investment return that corresponds to the performance of NASDAQ 100 Index, subject to tracking error.

Who is the Fund Manager of Motilal Oswal Nasdaq 100 ETF?


The Fund Manager is Herin Visaria from Jul 2019.

What is the benchmark for this scheme?


The benchmark for this ETF is the Nasdaq 100 TRI.

What is the allocation pattern of this ETF?


This ETF investment pattern is as follows:

1) It invests 95% to 100% in the Securities constituting NASDAQ-100 Index. The risk profile in this segment is Medium to high.

2) It invests 0% to 5% in Overseas Debt and Money market instruments and cash at call, Mutual fund schemes or exchange traded funds based on NASDAQ-100. This risk profile in this segment is low to medium.

What Sectors this ETF is investing?


This ETF is currently investing in the following sectors along with the weightage.

Motilal Oswal Nasdaq 100 ETF - Sector allocation as on Aug-2019

What are the top holdings of this Nasdaq 100 ETF?


Here are the top holdings of this ETF as on September-2019.

Motilal Oswal Nasdaq 100 ETF - Top 10 Holdings as on Aug-2019

What are various ratios about this ETF?


Here are various ratios which can help investors to know more about this ETF.

1) Beta of the ETF – 0.97

2) Sharpe Ratio – 0.86 – Annualised

3) Standard Deviation – 15.83 – Annualised

4) Portfolio Turnover Ratio – 0.03

How to invest in Motilal Oswal Nasdaq 100 ETF?


If you have demat account, you can buy this ETF units like any other stock purchase. You can invest through major demat brokers like icicidirect, zerodha and even mutual fund platform like Morningstar. If you still have issues, you can reach out to your demat account customer care.

What difference between Motilal Oswal Nasdaq 100 ETF Vs FOF?


Motilal Oswal recently came up with FoF that invests in this ETF itself. We have reviewed this earlier and said that such Motilal Oswal Nasdaq 100 Fund of Fund (FOF) would invest in this ETF and does nothing else. Hence, instead of investing in FOF, one can straight away invest in this ETF itself and save money.

What about Motilal Oswal Nasdaq 100 ETF Taxation on returns?


The taxation of returns from this ETF would work like debt mutual funds taxation.

i) Returns for ETFs sold in less than 36 months (3 years) – These are short term capital gains and returns are taxed based on individual income tax slab in that year.

ii) Returns from ETFs sold above 36 months (3 years) – These are long term capital gains and returns on such are taxed at 20% of indexation.

Understanding Debt Mutual Funds Taxation can help you to reduce tax on mutual funds.

Why to invest in Motilal Oswal Nasdaq 100 ETF?


Here are a few reasons to invest in this fund.

1) This is India’s first US Equity ETF that is a rupee denominated investment. Means, you are investing in rupees, but in the US Equity Stocks.

2) This fund invests in Nasdaq 100 Index stocks which has been outperforming in the last 8-10 years.

3) You can sell the ETF units on NSE/BSE any time, hence these are liquid investments.

4) This ETF comes with low expense ratio of 0.54%. This can help you to get higher returns compared to other mutual fund schemes that might have Total expense ratio up to 2.5%.

5) Returns from ETF are taxed as a debt, taxation category with/without indexation benefits.

Some key risk factors you should consider before you invest in such funds


One should consider some of these risk factors / negative factors before investing.

1) Its underlying mutual fund invests more than 95% in equity and related instruments of companies which is high risk.

2) It invests in NASDAQ 100 stocks that could be high risk.

3) This ETF can under perform due to local / political factors in the USA. Recent visa compliance issues and data leakage issues are impacting the performance of such large companies.

4) Past performance may or may not repeat in future.

How is the Performance of Existing International Mutual Funds?


Currently there are several international / global mutual funds, however, only a few are comparable. We have filtered mutual fund schemes that are investing in US equity and comparable with this ETF.

1) Franklin India Feeder US Opps Fund: This fund gave 13% annualized returns in the last 5 years and 17.5% annualized returns in the last 3 years. This fund has outperformed and gave 17% annualized return since inception of 7.5 years.

3) ICICI Pru US Blue Chip Equity Fund: This fund gave 11% annualized returns in the last 5 years and 13.7% annualized returns in the last 3 years. This fund too outperformed and gave 16% annualized returns, since inception from 2012.

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Should you invest in the Motilal Oswal Nasdaq 100 ETF?


Motilal Oswal Nasdaq 100 Exchange Traded Fund has outperformed in the last 8 years. This invests in US based equity stocks (outside India). The Performance of US based companies is attractive. However, everything is not rosy. Recent Visa compliance issues for local government is making Tuff for such US companies to hire resources outside the US. Large companies like Facebook are facing legal issues with user data leakage, etc., Such instances would reduce trust in such large companies along with increase in costs and reduction in profits. One should consider some of these risks. If you are a long term investor and willing to invest some of your investments in international ETFs / International Mutual Funds, Investing in this Motilal Oswal ETF could be the best bet.

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Suresh KP

Motilal Oswal Nasdaq 100 ETF Review

6 comments

  • RLN

    Hi Suresh,

    I have picked below three foreign funds for SIP based on your article last year.

    1. Franklin U.S feeder
    2. Edleweiss China
    3. Motilal Oswal nasdaq

    All three are doing good with above 10% return.

    My questions:

    1. According to your last year article it is good to have foreign fund for only an year
    2. I have completed close to 10 months on all three, can i take the money out and i have planned to re-invest on the same.
    3. 1000 each as SIP on all three
    4. should i keep taking the money out once in 12 months and start a fresh SIP

    • RLN, I would not have indicated 1 year. I would have said short term only. You can continue in these funds for next 1-2 years,but keep close watch as sector funds can always take u turn.

      • RLN

        Thanks Suresh..yes u never said 1 year..it is my interpretation based on ur article that I should get them out in one year as I saw better returns compared to two years.

        I will continue and keep reinventing the lumpsum also as a seperate investment.

    • RLN

      Thanks Suresh..yes u never said 1 year..it is my interpretation based on ur article that I should get them out in one year as I saw better returns compared to two years.

      I will continue and keep reinventing the lumpsum also as a seperate investment.

  • DeepakP

    Hi Suresh,

    I already taken SIP in ICICI Pru US Blue Chip Equity Fund. Is it good idea to start another SIP in Motilal Oswal Nasdaq 100 ETF?

    If you compare it with ICICI Pru US Blue Chip Equity Fund, which one is the best?

    Thanks,
    Deepak p

    • Both invests in US equity. However Motilal Oswal NASDAQ 100 ETF invests in all stocks under Nasdaq 100. This is strong index in US. ICICI Fund invests in few bluechip stocks. ICICI Would have more flexibility. In my view, both are good, but I would prefer Motilal Oswal NASDAQ 100 in medium to long term as we believe that US economy would grow in 5-10 years.

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