NFO analysis: Mirae Asset NYSE FANG+

Mirae Asset Mutual Fund has launched Mirae Asset NYSE FANG+ exchange-traded fund (ETF) and fund of funds (FoF). This is an international offering from Mirae Asset Mutual Fund, an open-ended equity scheme that seeks to replicate or track the NYSE FANG+ Total Return Index (TRI).  

Swarup Mohanty, CEO of Mirae Asset Investment Managers (India) 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.” 

Mirae Asset NYSE FANG+is open for subscription up to April 30, 2021. It will again re-open for subscription on May 7, 2021. 

Click here to access its scheme information document. 

Objective 

The scheme aims to generate returns, before expenses, that is corresponding with that of the performance of NYSE FANG+ TRI, subject to any tracking error and forex movement. 

Asset allocation 

The above asset allocation shows that at all times, it will not invest less than 95 per cent in securities that are included in NYSE FANG+ Index. Moreover, the NYSE FANG+ index includes funds such as Facebook, Amazon, Netflix, Alphabet (Google), Apple, Tesla & Twitter. Even Baidu, Nvidia, and Alibaba contribute to this index. 

Benchmark 

The performance of this scheme will be benchmarked against the performance of NYSE FANG+ TRI converted in Indian rupee terms. However, its true peers would be international funds or overseas FoF that predominantly invests in the US stock market. 

Investment strategy 

Mirae Asset NYSE FANG+ ETF is a passively managed fund, which will make investments in stocks in such a proportion that would match as close as possible to the weights of these stocks in the NYSE FANG+ Index. 

NYSE FANG+ Index is an equal dollar weighted index that represents a segment of the technology and consumer discretionary sectors, consisting of 10 highly traded growth stocks of technology and tech-enabled companies. 

Therefore, the investment strategy of this scheme is pretty straight forward as it will be investing in a basket of securities forming part of the NYSE FANG+ Index in a similar weight proportion. 

Hence, the main strategy would be to reduce tracking error to the least possible by rebalancing the portfolio regularly, taking into account the change in weights of stocks in the underlying index and the incremental collections redemptions in the scheme. Moreover, to meet liquidity requirements, the scheme may also, invest in debt and money market instruments. 

Fund manager 

This scheme will be managed solely by Siddharth Srivastava, Head – ETF Products, Mirae Asset Mutual Fund. Srivastava has over 10 years of experience in the field of financial services and stock markets. At present, the fund manager doesn’t manage any other schemes of the fund house.  

Our take 

To diversify your portfolio, we do believe that you should have exposure to funds investing internationally. This helps you to reduce risk to some extent. Moreover, even those who are planning to send their child abroad for education may consider having exposure to international funds. Having said that, Mirae Asset FANG+ ETF is a quite concentrated portfolio, where the investment is spread across only 10 companies. Not just that, but it is also concentrated on the sectoral front wherein this scheme is likely to pick companies purely from the technology and consumer discretionary sector. And speaking about sectors, they run in cycles and no sector always outperforms. There would be a slowdown as well. Also, as it invests just in the US-based companies, it exposes it to country-specific risk. Therefore, before investing in it, you should be aware of all these things. We believe that an ideal international fund is the one that invests across geographies and sectors.