Mirae Asset NYSE FANG +ETF Fund of Fund: Aims to Benefit from Global Innovation Leaders - Outside View by PersonalFN

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Mirae Asset NYSE FANG +ETF Fund of Fund: Aims to Benefit from Global Innovation Leaders
Apr 22, 2021

Due to the COVID-19 pandemic, our relationship with digital technology has been rapidly growing. As a result of the pandemic, there was an inevitable surge in the usage of digital technologies to comply with social distancing norms and nationwide lockdowns.

Many organizations and educational institutions made a shift to work-from-home with the help of innovative technologies and is still ongoing due to the second wave of COVID-19. Considering, the ease of entertainment and quality of content available on OTT platforms, there was a significant rise in app downloads and viewership amid the pandemic. In addition, customers' interest on e-commerce websites has also increased.

This caused a stir in the equity market globally, as the stocks of these tech-enabled companies performed better in the midst of the pandemic, attracting investors' attention. Facebook, Apple, Amazon, Netflix, and Google (FAANG) are some of the tech giants that are changing the world we are living in.

If you wish to invest in international funds to benefit from the growth of these companies, you could invest through passively managed mutual funds/ETFs or through a fund of fund scheme that invests in an international fund/index. This will allow you to gain low-cost exposure to global markets and introduce international diversification to your investment portfolio.

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Mirae Asset Mutual Fund is the first fund house to launch Mirae Asset NYSE FANG + ETF Fund of Fund, an open-ended fund of fund scheme predominantly investing in Mirae Asset NYSE FANG+ ETF.

On the launch of this fund, Mr Swarup Mohanty CEO of Mirae Asset Investment Managers (India) Pvt. Ltd. said, "There are a few global companies that do not just follow future megatrends but rather drive the change with their constant innovations. They have not just shaped our society; they have provided good returns to investors for years together. Through the Mirae Asset NYSE FANG+ ETF', and the 'Mirae Asset NYSE FANG + ETF Fund of Fund' they can participate in this global growth story, and consequently feel like they too are part of the change driving our world today."

Table 1: Details of Mirae Asset NYSE FANG+ ETF FoF
Type An open ended fund of fund scheme predominantly investing in Mirae Asset NYSE FANG+ ETF Category Fund of Fund - Overseas (FoF)
Investment Objective The investment objective of the scheme is to provide long-term capital appreciation from a portfolio investing predominantly in units of Mirae Asset NYSE FANG+ ETF. There is no assurance that the investment objective of the Scheme will be realized.
Min. Investment Rs 5000/- and in multiples of Re 1 thereafter. Additional purchase Rs 1000/- and in multiples of Re 1 thereafter. Face Value Rs 10/- per unit
SIP/STP/SWP Available
Plans
  • Direct
  • Regular
Options
  • Growth
Entry Load Not Applicable Exit Load
  • If redeemed within 3 months from the date of allotment: 0.50%
  • If redeemed after 3 months from the date of allotment: NIL.
Fund Manager - Ms Ekta Gala Benchmark Index NYSE FANG + Total Return Index (TRI) (INR)
Issue Opens: April 19, 2021 Issue Closes: May 03, 2021
(Source: Scheme Information Document)

What will be the Investment Strategy for Mirae Asset NYSE FANG+ ETF Fund of Fund?

The scheme intends to achieve its investment objective by predominantly investing in units of the underlying scheme i.e. Mirae Asset NYSE FANG+ ETF that invests in NYSE FANG+ Index.

The underlying scheme aims to passively invest in stocks in a proportion that match as close as possible to the weights of these stocks in NYSE FANG+ Index. This benchmark Index holds 10 highly traded growth stocks of technology and tech-enabled companies. The FANG+ stocks aims to capture growth and scale across multiple parameters, which will make investment in these stocks beneficial to investors.

Investments made from the net assets of the Scheme would be in accordance with the investment objective of the Scheme and the provisions of the SEBI (MF) Regulations. The AMC will strive to achieve the investment objective by way of a judicious portfolio mix comprising of Debt and Money Market Instruments and equity/ equity related instruments.

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About the benchmark

The NYSE FANG+ Index is an equal-dollar weighted Index designed to represent a segment of the technology and consumer discretionary sectors consisting of 10 highly traded growth stocks of technology and tech-enabled companies such as Facebook, Apple, Amazon, Netflix, and Alphabet's Google etc.

7 out of the 10 companies forming part of NYSE FANG+ Index have made it to the list of top 50 most innovative companies for year 2020. The total market capitalisation of NYSE FANG+ Index is 3 times more than the Indian equities listed on BSE.

The following is list of constituents and sectors under the Index by their weightage as of now:

(Source: Mirae Asset NYSE FANG+ ETF FoF Product Presentation)

The weight of each index constituents is set at 10% (equal weigh) on the date of rebalancing and it occurs quarterly. In between, the two periodical rebalancing quarter, the weight of each index constituents may drift due to price movement observed of each stock.

Apart from investing 95% of its assets in the Units of Mirae Asset NYSE FANG+ ETF, this scheme will also invest up to 5% of its assets in Money market instruments / debt securities, Instruments and/or units of debt/liquid schemes of domestic Mutual Funds.

Under normal circumstances, asset allocation will be as under:

Table 2: Asset Allocation of Mirae Asset NYSE FANG+ ETF FoF
Instruments Indicative Allocations
(% of Net Assets)
Risk Profile
High/Medium/Low
Minimum Maximum
Units of Mirae Asset NYSE FANG+ ETF 95 100 High
Money market instruments / debt securities, Instruments and/or units of debt/liquid schemes of domestic Mutual Funds 0 5 Low to Medium
(Source: Scheme Information Document)

Who will manage Mirae Asset NYSE FANG+ ETF Fund of Fund?

Ms Ekta Gala will be the dedicated fund manager for Mirae Asset NYSE FANG+ ETF Fund of Fund.

Ms Ekta Gala is a Fund Manager - ETFs at Mirae Asset Investment Managers (India) and she has over 4 years of experience in financial services industry. Her primary responsibility includes dealer & fund management; prior to this, she was associated with ICICI Prudential AMC as ETF dealer.

Ms Ekta's qualification includes, Inter CA (IPCC) and B.com. Currently other schemes under her management are; Mirae Asset NIFTY 50 ETF, Mirae Asset NIFTY Next 50 ETF, Mirae Asset ESG Sector Leader ETF, Mirae Asset ESG Sector Leader Fund of Fund.

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Fund Outlook - Mirae Asset NYSE FANG+ ETF Fund of Fund

Mirae Asset NYSE FANG+ ETF FoF aims to follow a passive investment strategy by tracking and replicating the performance of the underlying scheme that invests in the units of NYSE FANG+ Index.

This scheme allows Indian investors to take a concentrated and equal weighted exposure in 10 high-growth innovative technology companies that are at the forefront of many megatrends by passively investing in the underlying scheme. The FANG+ companies are leaders in their respective fields, and they are transforming the world we live in through constant innovation.

By investing in this scheme, investors can take low cost exposure in global markets and grab the opportunity for wealth creation through international diversification. In last 5 years, NYSE FANG+ index has significantly outperformed both NASDAQ 100 index and NIFTY 50 index.

However, keep in mind this scheme would invest passively in the units of the underlying scheme that invests in the growth stocks of the benchmark index NYSE FANG+, which is a pure equity index. The scheme will be investing 95% of its assets in international equities, which makes it a highly risky proposition.

Though you can benefit international diversification in equities under NYSE FANG+ Index, you must ensure that you hold a high-risk profile to survive the market volatility, long-term investment horizon and investment objective that aligns with the fund.

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Author: Mitali Dhoke

This article first appeared on PersonalFN here.

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PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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