Two big AMCs have unveiled two new thematic investment options on the passive investing side. ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Consumption ETF, an open-ended Index Exchange Traded Fund tracking Nifty India Consumption Index. Aditya Birla Sun Life Mutual Fund has launched Aditya Birla Sun Life Nasdaq-100 FOF (an open-ended fund of fund investing in units of overseas ETFs and/or Index Fund based on Nasdaq-100 Index). Let us look at the offerings in detail.
ICICI Prudential Consumption ETF
ICICI Prudential Consumption ETF new fund offer (NFO) period closes October 25, 2021. This is an open-ended Index Exchange Traded Fund tracking Nifty India Consumption Index. The product seeks to provide exposure to a diversified portfolio of companies representing domestic consumption sectors such as Consumer Non-durables, Healthcare, Auto, Hotels etc. Minimum investment required during NFO: Rs. 1,000 (plus in multiple of Re. 1/-).
The consumption theme is appealing. Given that India is a relatively young country with a large millennial population, with workforce addition in millions each year, combined with increasing disposable income and growing trends of luxury spending, the consumption sector has a massive potential to grow.
Speaking on the launch of the product, Chintan Haria, Head- Product Development & Strategy, ICICI Prudential AMC said, â€œICICI Prudential Consumption ETF is the newest addition to our sector/thematic ETF product bouquet. Through this offering an investor gets exposure to 30 large and mid-cap companies that are engaged in goods and services used on a daily basis catering to all age groups. An investor can consider this offering as a part of their equity allocation.â€
Nifty India Consumption Index is a portfolio of companies representing the domestic consumption sector which includes sectors like Consumer Non-durables, Healthcare, Auto, Telecom Services, Pharmaceuticals, Hotels, Media & Entertainment, etc. Apart from being from the consumption sector, companies which are a part of the index derive more than 50% of its revenue from domestic markets (other than export income). The index is rebalanced semi-annually. In terms of return potential, Nifty India Consumption TRI has outperformed Nifty 50 TRI 4 out of 8 times till 2020.
At the moment the top holdings of the index are Bajaj Auto, Avenue Supermarts, Nestle India, M&M, Titan, Maruti etc. Do remember this is an index based ETF. ETFs require a demat account to be bought and sold, and traded on the stock exchange platform.
Aditya Birla Sun Life Nasdaq-100 FOF
Aditya Birla Sun Life Mutual Fund has launched Aditya Birla Sun Life Nasdaq-100 FOF. This is an open ended fund of fund investing in units of overseas ETFs and/or Index Fund based on Nasdaq-100 Index).
Innovation is now constantly around us â€“ Be it the latest smartphone or gadgets, social media, e-commerce, automobiles, fuel technologies, or technology solutions to aspects like remote working or healthcare in the post covid world. Most or all of these companies have benefited from these changes and innovative products that have helped them lead. They are disruptors and game changers who are even challenging the status quo of how we do our daily activities. High growth disruptors in these sectors have consistently joined the Nasdaq-100 index, thereby ensuring that the growth trajectory continues. While these companies are largely unrepresented in the Indian stock markets, investors can participate in the growth journey of these future-ready companies by investing in Aditya Birla Sun Life Nasdaq 100 FOF.
The scheme offers not just the potential to better returns, but will also serve as a potential hedge against rupee depreciation. A geographically diversified portfolio helps in protecting the investment from the downside emerging in a single country. Investors can also benefit from sectoral diversification across high growth companies, and at the same time enjoy a hassle-free investing experience with lower costs and risks.
Aditya Birla Sun Life Nasdaq-100 FOF closes for subscription on October 29. From an index perspective, Nasdaq 100 Index has for over 35 years been home to innovation leaders of the world and has delivered some of the best and most consistent long term returns for its investors. Nasdaq 100 Index constitutes the top 100 largest innovative companies listed on the Nasdaq Stock Market based on market capitalization. In the decade gone by, the index has considerably outperformed Indian indices by delivering more than 2.5x returns of the NIFTY 50 index.
The minimum application amount for this fund is Rs 5,000. Do note that this is a FoF or Fund of Fund. Hence, FoF costs will be higher than investing in the underlying fund directly. Also, international funds are taxed like debt funds. Capital gains are added to your income if the holding period is three years or less. They are taxed after providing for indexation if you sell them after three years.