A well-diversified portfolio spread across asset classes and geographies with adequate allocation can mitigate the overall risk. Given the current market environment, investors are considering an allocation to international funds that allow you to invest in the top firms and a variety of sectors/themes available in the global market. Expectations of higher profit after tax for the index constituents compared to Pre-Covid years, reasonable valuations and unique businesses not available in India are some reasons to invest in the international markets.
The international market indices have a low correlation with Indian markets. The well-known global market index -the NASDAQ 100, focuses on modern-day industrials and technology giants such as Microsoft, Apple, Google, Amazon, Meta Platform, Netflix, Tesla, and more. The majority of the index comprises disruptive technology sectors like Big Data and AI, robotics, cloud computing, 5G business, semiconductors, green economy, etc. These companies will likely witness a demand surge and, therefore, growth in business and revenues.
Currently, less than 50% of the revenue of companies in the NASDAQ 100 is from the US. Thus, investors can be assured of geographical diversity. Although technology is the index’s primary focus, it targets various sunrise industries to provide investors with meaningful diversification. Indian investors can get exposure to the NASDAQ 100 TRI stocks by investing in the Indian NASDAQ-based fund of funds or ETF schemes.
Axis Mutual Fund has launched a new international scheme – Axis NASDAQ 100 Fund of Fund. It is an open-ended fund of fund scheme investing in the units of ETFs focused on the Nasdaq 100 TRI.
Commenting on the launch of this fund, Mr Chandresh Nigam, MD & CEO at Axis AMC, said, “As investors are maturing and taking an active interest in their wealth creation journey, the paradigms of asset allocation are changing dynamically as well. With global boundaries slowly blurring, investors are eager to gain access to some international growth stories, which was earlier not feasible so seamlessly. With Axis NASDAQ 100 Fund of Fund, we are presenting investors with the opportunity to gain global exposure. We are confident that the fund’s philosophy and underlying structure will make it a valuable addition for investors.”
Table 1: Details of Axis NASDAQ 100 Fund of Fund
|An open-ended fund of fund scheme investing in the units of ETFs focused on the Nasdaq 100 TRI
|Fund of Fund (Overseas)
|To replicate the performance of the Nasdaq 100 TRI by investing ETFs whose primary objective is to track/replicate the performance of the Nasdaq 100 TRI, subject to tracking errors. However, there is no assurance or guarantee that the scheme's investment objective will be achieved.
|Rs 500/- and in multiples of Re 1/- thereafter. Additional Purchase Rs 100/- and in multiples of Re 1/- thereafter.
|Rs 10/- per unit
|Mr Hitesh Das
|NASDAQ 100 TRI
|October 07, 2022
|October 21, 2022
(Source: Scheme Information Document)
The investment strategy for Axis NASDAQ 100 Fund of Fund will be as follows:
Axis NASDAQ 100 Fund of Fund scheme aims to provide long-term capital appreciation by replicating the performance of the NASDAQ 100 TRI by investing in ETFs whose primary objective is to track/replicate the performance of the NASDAQ TRI Index.
The NASDAQ 100 is one of the world’s preeminent 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 capitalisation. While technology is a dominant segment in the index, it is well-balanced by sectors such as consumer services, healthcare, consumer goods, and industrials, amongst others.
The exchange-traded fund route is one of the most efficient ways to gain exposure to the index. The fund may use one or more ETFs mentioned below to achieve its investment objective. Details of underlying funds: iShares NASDAQ 100 UCITS ETF, Invesco EQQQ NASDAQ-100 UCITS ETF, and Xtrackers Nasdaq 100 UCITS ETF.
The scheme may also invest in similar overseas Exchange Traded Funds, which shall have similar investment objectives, asset allocation, benchmark, and investment strategy. All these details shall be disclosed in the Scheme Information Document in respect of the underlying schemes as and when the scheme invests in such underlying schemes.
Under normal circumstances, the Asset Allocation will be as under:
Table 2: Asset Allocation for Axis NASDAQ 100 Fund of Fund
|Indicative Allocation (% of net assets)
|Units of overseas ETFs focused on Nasdaq 100 TRI
|Debt, Money market instruments
|Low to Medium
(Source: Scheme Information Document)
About the benchmark
The NASDAQ-100 Index is designed to measure the performance of 100 of the largest NASDAQ-listed non-financial companies. The index offers access to leading global brands and opens up the playing field for investors to participate in the international market.
Who will manage Axis NASDAQ 100 Fund of Fund?
The designated fund manager for this scheme is Mr Hitesh Das. He holds PGDM, M. Tech and B. Tech degrees and has an overall experience of 11 years in the financial services industry. Prior to joining Axis AMC, he was associated as an Equity Research Analyst – with Barclays Securities India Pvt. Ltd., Credit Suisse Securities (India) Pvt. Ltd., Ebusinessware (India) Pvt. Ltd. and as a Risk Analyst with Yes Bank.
At Axis Mutual Fund, Mr Das currently manages Axis Growth Opportunities Fund, Axis ESG Equity Fund, Axis Global Equity Alpha Fund of Fund, Axis Special Situations Fund, Axis Blue-chip Fund, Axis Midcap Fund, Axis Multicap Fund, Axis Focused 25 Fund, Axis Quant Fund, Axis Value Fund, Axis Greater China Equity Fund of Fund, Axis Global Innovation Fund of Fund, Axis Retirement Savings Fund which includes Aggressive Plan, Conservative Plan & Dynamic Plan, Axis Flexi Cap, and Axis Small Cap Fund.
Fund Outlook – Axis NASDAQ 100 Fund of Fund
Axis NASDAQ 100 Fund of Fund aims to passively invest in units of overseas exchange-traded funds (ETFs) that invest in the NASDAQ-100 index. The scheme offers investors a portfolio exposure to global innovators and disruptors; it invests in innovative technologies through international value creators of the NASDAQ-100 Index.
The scheme offers investors with diversification across fast-growing sectors and innovative path-breaking themes. The current NASDAQ 100 Index is a tech-heavy index and has exposure to new economy sectors like consumer discretionary, communication, consumer staples, healthcare, industries, and utilities. The scheme has a low correlation to the Indian equity market and allows to participate in themes largely unrepresented in the Indian market, plus it 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 and currency risks. The fortune of this scheme will depend on the performance of the underlying overseas ETFs.
Additionally, the current market conditions are unsettling due to the slowdown in the global economy, geopolitical unrest, spiralling inflation, and rising interest rates by central banks across the globe; according to a World Bank report, several indicators point to a potential global recession in 2023. The margin of safety appears to be narrow, and the clear direction for the equity markets from the current elevated levels is uncertain. These factors, among others, may affect the scheme’s performance, and the portfolio may face higher volatility in the near term. The scheme commands a high risk in the riskometer.
Thus, this scheme is suitable only for aggressive investors who are looking to tap the growth potential of companies comprising the NASDAQ-100 Index and diversify their portfolio by investing beyond their home country. Ensure a high-risk appetite, a long investment horizon of at least 5-7 years, and your investment objectives should be aligned with the fund.
This article first appeared on PersonalFN here