Investors are slowly warming up to the realization of not limiting their investments to the domestic markets. In order to diversify your investment portfolio, many investors consider allocation to international equity funds. It offers opportunities to invest in sectors and themes that are rarely available in the domestic markets.
International mutual funds allow you to participate in the best companies and several sectors across the globe. Investors may gain benefit from the growth potential of these companies by investing in its units. However, international equities are highly risky in nature; thus, investors must ensure to have a high-risk appetite if they wish to invest in these mutual funds.
Passively managed international funds are a good option for domestic investors willing to invest in international markets. Invest in a Fund of Fund scheme that tracks an international index or a scheme that is directly tracking an international benchmark, rather than investing in international stocks individually.
Aditya Birla Sun Life Mutual Fund has launched Aditya Birla Sun Life NASDAQ 100 FoF. It is an open-ended fund of fund investing in units of overseas ETF’s and/or Index Fund based on NASDAQ-100 Index.
The fund house believes that the new-economy areas such as, payments, e-commerce, and transformative technology are presenting significant prospects. The high growth disruptors of these sectors have been consistently listed on the Nasdaq 100 index and makes it conducive for the upward trend to continue.
Table 1: Details of Aditya Birla Sun Life Nasdaq 100 FoF
| Type | An open ended fund of fund investing in units of overseas ETF's and/or Index Fund based on NASDAQ-100 Index. | Category | Fund of Fund (Overseas) |
| Investment Objective | 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. The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes' objectives will be achieved. | ||
| SIP/STP/SWP | Available | ||
| 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 |
| Plans |
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Options |
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| Entry Load | Not Applicable | Exit Load | Nil |
| Fund Manager | Mr Vinod Bhat | Benchmark Index | NASDAQ 100 TRI |
| Issue Opens: | October 15, 2021 | Issue Closes: | October 29, 2021 |
(Source: Scheme Information Document)
The investment strategy for Aditya Birla Sun Life NASDAQ 100 FoF will be as follows:
Aditya Birla Sun Life NASDAQ 100 FoF follows a passive investment strategy and will predominantly invest in units of overseas ETF’s and/or Index Fund based on NASDAQ 100 Index.
The scheme shall invest in units of overseas ETF’s and/or Index Fund based on NASDAQ 100 Index, except to meet its liquidity requirements. The scheme will invest in units of the underlying schemes based under the NASDAQ 100 index in the same proportion.
The scheme endeavours to provide investors with global exposure by investing in units of underlying scheme based on the NASDAQ 100 index. It is a passively managed scheme that restricts the fund manager’s involvement.
The performance of this scheme will depend on the performance of the underlying schemes where the fund manager allocates its assets. The scheme will invest in units of underlying scheme, subject to tracking errors.
About the benchmark
The NASDAQ-100 Index is designed to measure the performance of 100 of the largest NASDAQ-listed non-financial companies.
The NASDAQ-100 Index is one of the world’s pre-eminent large-cap growth indexes. It includes 100 of the largest domestic and international non-financial companies listed on the NASDAQ Stock Market based on market capitalization. The index offers access to leading global brands and opens up the playing field for investors to participate in the international market.
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation for Aditya Birla Sun Life Nasdaq 100 FoF
| Instruments | Indicative Allocation (% of net assets) | Risk Profile | |
| Minimum | Maximum | High/Medium/Low | |
| Units of overseas ETF's and/or Index Fund based on NASDAQ 100 Index | 95 | 100 | High |
| Debt schemes, Debt & Money Market Instruments, including Tri Party Repo^, G-Secs, Cash and Cash at call | 0 | 5 | Low to Medium |
(Source: Scheme Information Document)
Who will manage Aditya Birla Sun Life NASDAQ 100 FoF?
Mr Vinod Bhat will be the dedicated fund manager for this scheme.
Mr Vinod Bhat is a Portfolio Manager and Equity Strategist at Aditya Birla Sun Life AMC Limited (ABSLAMC). He is a CFA (USA), MBA Finance – Wharton University of Pennsylvania (USA), M.S. Industrial Engineering – Pennsylvania State University (USA), B.Tech & Mechanical Engineering – IIT Bombay. Mr Bhat has an overall experience of 21 years with over 12 years in the financial markets and investment banking space.
Prior to joining ABSL AMC, he has worked as the Vice President – Corporate Strategy and Business Development with Aditya Birla Management Corporation Pvt. Ltd., Ocean Park Advisors (USA) as a Senior Associate Investment Banking and as Associate – Investment Banking with Credit Suisse (USA).
The other schemes Mr Bhat manages are Aditya Birla Sun Life Global Emerging Opportunities Fund, Aditya Birla Sun Life Global Excellence Equity Fund of Fund, Aditya Birla Sun Life Asset Allocator FoF, Aditya Birla Sun Life Financial Planning FoF, Aditya Birla Sun Life Special Opportunities Fund, Aditya Birla Sun Life Flexi Cap Fund, Aditya Birla Sun Life ESG Fund, Aditya Birla Sun Life Multi-Cap Fund, Aditya Birla Sun Life International Equity Fund, and Aditya Birla Sun Life Dividend Yield Fund.
Fund Outlook – Aditya Birla Sun Life NASDAQ 100 FoF
Aditya Birla Sun Life NASDAQ 100 FoF aims to passively invest in units of overseas exchange traded funds (ETFs) and index funds that invest in the NASDAQ 100 index. The scheme offers investors with a portfolio exposure to global innovators and disruptors; it invests in innovation and growth through global value creators of the NASDAQ-100 Index.
The scheme provides diversification across sectors and themes, access to ‘new economy’ fast growing sectors and innovative path breaking themes. It has a low correlation to Indian equity market and has investing scale and themes largely unrepresented in Indian market.
The scheme also gives a hedge against currency depreciation; however, do note that the scheme will invest a majority of its assets passively in international equities, which are risky in nature. The scheme will also be prone to geopolitical risk, currency risk, and may face higher volatility due to dynamic global market conditions. This makes the scheme a risky investment proposition.
Thus, it is suitable only for investors with a high risk profile and a long investment horizon that can survive the market volatility and risks involved. Ensure your investment objective is aligned with the fund.
This article first appeared on PersonalFN here
