Aditya Birla Sun Life NASDAQ 100 FoF (NFO) – Features, issue details and Review
Aditya Birla Sun Life Mutual Funds has launched NASDAQ 100 Fund of Fund. This New Fund Offer would open for subscription on 15th October, 2021. This is an open-ended international mutual fund that would invest in overseas ETFs and/or Index funds that would invest in the NASDAQ 100 Index. Since it invests in other ETFs or Index funds, it is termed as fund of fund. Should you invest in Aditya Birla Sun Life NASDAQ 100 FoF NFO? What are the various risk factors associated with such funds?
Also Read: Should you invest in NFO of ITI Pharma and Healthcare Fund now?
NFO Issue details of Aditya Birla Sun Life NASDAQ 100 FoF
This is an open ended equity mutual fund scheme. Here are the NFO issue details.
| Scheme Opens | 15-Oct-21 |
| Scheme Closes | 29-Oct-21 |
| Scheme reopens for continuous purchase/sale | Within 5 working days |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 500 for 6 months |
| NAV of the fund | Rs 10 during NFO period |
| Entry Load | Nil |
| Exit Load | Nil |
| Risk | Very High Risk |
| Benchmark | NASDAQ 100 TRI |
| Fund Manager | Mr. Vinod Bhat |
| Max TER | 1.00% |
Aditya Birla Sun Life NASDAQ 100 Fund of Fund SID
What is the investment objective of this MF scheme?
The investment objective of the scheme is to provide long-term capital appreciation by investing in units of overseas ETFs and/or Index Fund based on NASDAQ-100 Index.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
What is the allocation pattern in this mutual fund?
This fund investment pattern is as follows:
| Type of instruments | Min % | Max % | Risk Profile |
|---|---|---|---|
| Units of overseas ETF’s and/or Index Fund based on NASDAQ 100 Index | 95% | 100% | High |
| Debt and Money Market Instruments | 0% | 5% | Low to Medium |
Why to invest in the Aditya Birla Sun Life NASDAQ 100 FoF?
Here are a few reasons to invest in such mutual fund schemes.
1) This fund would invest in overseas ETFs and index funds that invests in the NASDAQ 100 Index. NASDAQ 100 Index has outperformed in the last 5-10 years (25% annualized returns), hence investing in such index would provide superior returns to investors.
2) This fund invests in ETFs/Funds that invest in NASDAQ 100 companies. Investors can get overseas investment exposure, which they would be investing in major companies like Google, Facebook, Amazon, Twitter, Netflix etc., that are part of the NASDAQ 100 index.
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) This fund would invest in ETFs and Index funds based on NASDAQ 100 Index stocks. If the underlying stocks are not good or underperforming, it would affect the returns.
2) This fund invests in the NASDAQ 100 index companies. Investments in foreign assets would have currency risk and geopolitical risks.
3) It invests some part in debt instruments which are turned to be high risk these days.
4) You can refer complete risk factors in NFO Scheme Information Document.
Performance of underlying ETFs / Index Funds
This fund would invest in existing ETFs and index funds which invests in NASDAQ 100 Index. Here is the performance of respective ETFs / Index Funds.
1) Invesco QQQ Trust Series 1
1 Year returns – 26%
3 year annualized returns – 28%
5 year annualized returns – 28%
10 year annualized returns – 21%
2) iShares NASDAQ 100 ETF USD Acc
1 Year returns – 18%
3 year annualized returns – 27%
5 year annualized returns – 24%
10 year annualized returns – 23%
3) Lyxor NASDAQ 100 ETF Acc
1 Year returns – 27%
3 year annualized returns – 29%
5 year annualized returns – 25%
4) USAA NASDAQ 100 Index Fund
1 Year returns – 26%
3 year annualized returns – 29%
5 year annualized returns – 26%
10 year annualized returns – 21%
You may like: ICICI Prudential Smallcap Index NFO
Should you invest in Aditya Birla Sun Life NASDAQ 100 FoF?
Aditya Birla Sun Life NASDAQ 100 Fund of Fund invests in overseas ETFs and/or index funds that are investing in the NASDAQ 100 Index. I have recommended earlier several times to invest in Motilal Oswal NASDAQ ETF or Fund of Fund that outperformed in the last 5-10 years. Its 1 year returns are 26%, 5 year annualized return is 28% and 10 years annualized returns is 25%. We could see some correction in the last 6 weeks in this index. While both funds invest in the NASDAQ 100 index, Motilal Oswal NASDAQ 100 ETF invests directly in this index, whereas Aditya Birla Sun Life NASDAQ 100 FoF would invest in ETFs and index funds that invests in the NASDAQ 100 index. Beyond this, there is no other major difference. These international mutual funds would have currency risks and geo-political risks too. High risk investors can invest in this new fund for 5-10 years’ time frame. Moderate to low risk investors should avoid such funds.
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I wish to know what shares of which companies of NASDAQ are in each Nasdaq Fund. I don’t buy a cat in a sack. Without knowing how each fund is built it is not worth investing.