At the time when many AMCs are advocating to diversify the MF portfolio by investing in foreign equities and thereby spread the risk across geographies, many people are looking for MFs which invest in foreign equities with good returns. When one goes by returns than there is one international fund whose returns "STAND OUT" in the international fund category. The one year return of Motilal Oswal Nasdaq 100 ETF is around 40% which is well above the MFs in the international fund category.
So with such good returns, which even some of the domestic equities have failed to generate, the big question is should one invest in the fund? To answer this question we looked at the fund at a much closer detail. One big clue that made the hunt for the big returns simpler was the fund is an ETF and hence it closely tracks NASDAQ 100 Index.
Motilal Oswal NASDAQ 100 ETF is an open-ended exchange-traded fund (ETF) and it aims to mirror the performance of the NASDAQ-100 index, subject to tracking error. The fund invests at least 95% of its total assets in the securities comprising NASDAQ-100. The fund brings in the much required diversification for Indian investors. The fund ensures that investors get to invest in some of the best of non-financial companies in the US.
The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial securities listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies.
NASDAQ 100 index in the past one year has generated a 10% return than what should an Exchange Traded Fund, which closely mirrors the NASDAQ 100 Index, generate a return of 32% (from 31-Mar-2011 to May-2012) which is almost 220% more than the underlying index??
The answer to the above question was largely to do with the fluctuations in the Rupee against the US Dollar. If we take the period from 31-Mar-2011 (when the MOSt NASDAQ 100 ETF fund was launched) till 31-May-2012, the rupee has fluctuated from 44.475 to 56.086. In this period Rupee touched a low of 43.960 and a high of 56.505. So basically the Rupee depreciated roughly by 26%, which means one would get a better exchange rate for investments made across.
For the above reasoning, we took the month wise data from the launch date of MOSt NASDAQ 100 ETF which is 31-Mar-2011 to 31-May-2012 and following are the findings
31-Mar-2011 to 29-Apr-2011
NASDAQ 100 % Return: 2.78%
MOSt NASDAQ 100 % Return: 2.12%
29-Apr-2011 to 31-May-2011
NASDAQ 100 % Return: -1.31%
MOSt NASDAQ 100 % Return: -1.60%
31-May-2011 to 30-Jun-2011
NASDAQ 100 % Return: -2.00%
MOSt NASDAQ 100 % Return: -2.49%
Now if we look at the INR VS USD comparison for the above period, the Rupee has appreciated by 0.88%, due to which I believe the MoSt NASDAQ 100 has UNDERPERFORMED the NASDAQ 100 benchmark.
30-Jun-2011 to 29-Jul-2011
NASDAQ 100 % Return: 1.62%
MOSt NASDAQ 100 % Return: 2.06%
29-Jul-2011 to 31-Aug-2011
NASDAQ 100 % Return: -5.15%
MOSt NASDAQ 100 % Return: -2.19%
31-Aug-2011 to 30-Sep-2011
NASDAQ 100 % Return: -4.54%
MOSt NASDAQ 100 % Return: 4.94%
For the above period if we look at the INR VS USD comparison, the Rupee has depreciated by 11.32%, due to which I believe the MoSt NASDAQ 100 has OUTPERFORMED the NASDAQ 100 benchmark.
30-Sep-2011 to 31-Oct-2011
NASDAQ 100 % Return: 10.33%
MOSt NASDAQ 100 % Return: 8.78%
Here the Rupee has appreciated by 0.88%, due to which I believe the MoSt NASDAQ 100 has UNDERPERFORMED the NASDAQ 100 benchmark.
31-Oct-2011 to 30-Nov-2011
NASDAQ 100 % Return: -2.75%
MOSt NASDAQ 100 % Return: -1.62%
30-Nov-2011 to 30-Dec-2011
NASDAQ 100 % Return: 0.76%
MOSt NASDAQ 100 % Return: 5.53%
Here the Rupee has depreciated by 8.90%, due to which I believe the MoSt NASDAQ 100 has OUTPERFORMED the NASDAQ 100 benchmark.
30-Dec-2011 to 31-Jan-2012
NASDAQ 100 % Return: 8.35%
MOSt NASDAQ 100 % Return: 0.92%
31-Jan-2012 to 29-Feb-2012
NASDAQ 100 % Return: 6.29%
MOSt NASDAQ 100 % Return: 5.31%
Here the Rupee has appreciated by 7.55%, due to which I believe the MoSt NASDAQ 100 has UNDERPERFORMED the NASDAQ 100 benchmark.
29-Feb-2012 to 30-Mar-2012
NASDAQ 100 % Return: 5.04%
MOSt NASDAQ 100 % Return: 9.75%
30-Mar-2012 to 30-Apr-2012
NASDAQ 100 % Return: -1.15%
MOSt NASDAQ 100 % Return: 1.43%
30-Apr-2012 to 31-May-2012
NASDAQ 100 % Return: -7.30%
MOSt NASDAQ 100 % Return: -0.98%
Here the Rupee has depreciated by 14.44%, due to which I believe the MoSt NASDAQ 100 has OUTPERFORMED the NASDAQ 100 benchmark.
The below table explains the above findings in a concise format.
So with such good returns, which even some of the domestic equities have failed to generate, the big question is should one invest in the fund? To answer this question we looked at the fund at a much closer detail. One big clue that made the hunt for the big returns simpler was the fund is an ETF and hence it closely tracks NASDAQ 100 Index.
So first things first.. What is MOSt Nasdaq 100 ETF????
Motilal Oswal NASDAQ 100 ETF is an open-ended exchange-traded fund (ETF) and it aims to mirror the performance of the NASDAQ-100 index, subject to tracking error. The fund invests at least 95% of its total assets in the securities comprising NASDAQ-100. The fund brings in the much required diversification for Indian investors. The fund ensures that investors get to invest in some of the best of non-financial companies in the US.
Next What is NASDAQ 100 Index and What industries are included in NASDAQ 100 Index???
The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial securities listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies.
Third and the last the answer to the Big Q
NASDAQ 100 index in the past one year has generated a 10% return than what should an Exchange Traded Fund, which closely mirrors the NASDAQ 100 Index, generate a return of 32% (from 31-Mar-2011 to May-2012) which is almost 220% more than the underlying index??
The answer to the above question was largely to do with the fluctuations in the Rupee against the US Dollar. If we take the period from 31-Mar-2011 (when the MOSt NASDAQ 100 ETF fund was launched) till 31-May-2012, the rupee has fluctuated from 44.475 to 56.086. In this period Rupee touched a low of 43.960 and a high of 56.505. So basically the Rupee depreciated roughly by 26%, which means one would get a better exchange rate for investments made across.
For the above reasoning, we took the month wise data from the launch date of MOSt NASDAQ 100 ETF which is 31-Mar-2011 to 31-May-2012 and following are the findings
31-Mar-2011 to 29-Apr-2011
NASDAQ 100 % Return: 2.78%
MOSt NASDAQ 100 % Return: 2.12%
29-Apr-2011 to 31-May-2011
NASDAQ 100 % Return: -1.31%
MOSt NASDAQ 100 % Return: -1.60%
31-May-2011 to 30-Jun-2011
NASDAQ 100 % Return: -2.00%
MOSt NASDAQ 100 % Return: -2.49%
Now if we look at the INR VS USD comparison for the above period, the Rupee has appreciated by 0.88%, due to which I believe the MoSt NASDAQ 100 has UNDERPERFORMED the NASDAQ 100 benchmark.
30-Jun-2011 to 29-Jul-2011
NASDAQ 100 % Return: 1.62%
MOSt NASDAQ 100 % Return: 2.06%
29-Jul-2011 to 31-Aug-2011
NASDAQ 100 % Return: -5.15%
MOSt NASDAQ 100 % Return: -2.19%
31-Aug-2011 to 30-Sep-2011
NASDAQ 100 % Return: -4.54%
MOSt NASDAQ 100 % Return: 4.94%
For the above period if we look at the INR VS USD comparison, the Rupee has depreciated by 11.32%, due to which I believe the MoSt NASDAQ 100 has OUTPERFORMED the NASDAQ 100 benchmark.
30-Sep-2011 to 31-Oct-2011
NASDAQ 100 % Return: 10.33%
MOSt NASDAQ 100 % Return: 8.78%
Here the Rupee has appreciated by 0.88%, due to which I believe the MoSt NASDAQ 100 has UNDERPERFORMED the NASDAQ 100 benchmark.
31-Oct-2011 to 30-Nov-2011
NASDAQ 100 % Return: -2.75%
MOSt NASDAQ 100 % Return: -1.62%
30-Nov-2011 to 30-Dec-2011
NASDAQ 100 % Return: 0.76%
MOSt NASDAQ 100 % Return: 5.53%
Here the Rupee has depreciated by 8.90%, due to which I believe the MoSt NASDAQ 100 has OUTPERFORMED the NASDAQ 100 benchmark.
30-Dec-2011 to 31-Jan-2012
NASDAQ 100 % Return: 8.35%
MOSt NASDAQ 100 % Return: 0.92%
31-Jan-2012 to 29-Feb-2012
NASDAQ 100 % Return: 6.29%
MOSt NASDAQ 100 % Return: 5.31%
Here the Rupee has appreciated by 7.55%, due to which I believe the MoSt NASDAQ 100 has UNDERPERFORMED the NASDAQ 100 benchmark.
29-Feb-2012 to 30-Mar-2012
NASDAQ 100 % Return: 5.04%
MOSt NASDAQ 100 % Return: 9.75%
30-Mar-2012 to 30-Apr-2012
NASDAQ 100 % Return: -1.15%
MOSt NASDAQ 100 % Return: 1.43%
30-Apr-2012 to 31-May-2012
NASDAQ 100 % Return: -7.30%
MOSt NASDAQ 100 % Return: -0.98%
Here the Rupee has depreciated by 14.44%, due to which I believe the MoSt NASDAQ 100 has OUTPERFORMED the NASDAQ 100 benchmark.
The below table explains the above findings in a concise format.
| MOSt NASDAQ 100 ETF Performance Chart (31-Mar-2011 to 31-May-2012) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NASDAQ 100 | MOSt NASDAQ 100 | NASDAQ 100 % Return | MOSt NASDAQ 100 % Return | Comments | ||||||||||
| 31-Mar-2011 | 2338.99 | 104.672 | Rupee Appreciated by 0.88% | |||||||||||
| 29-Apr-2011 | 2404.08 | 106.891 | 2.78% | 2.12% | ||||||||||
| 31-May-2011 | 2372.52 | 105.182 | -1.31% | -1.60% | ||||||||||
| 30-Jun-2011 | 2325.07 | 102.561 | -2.00% | -2.49% | ||||||||||
| 29-Jul-2011 | 2362.81 | 104.672 | -1.62% | -2.06% | Rupee Depreciated by 11.32% | |||||||||
| 31-Aug-2011 | 2241.01 | 102.378 | -5.15% | -2.19% | ||||||||||
| 30-Sep-2011 | 2139.18 | 107.432 | -4.54% | 4.94% | ||||||||||
| 31-Oct-2011 | 2360.08 | 116.867 | 10.33% | 8.78% | Rupee Appreciated by 0.88% | |||||||||
| 30-Nov-2011 | 2295.2 | 114.977 | -2.75% | -1.62% | Rupee Depreciated by 8.90% | |||||||||
| 30-Dec-2011 | 2277.83 | 121.33 | 0.76% | 5.53% | ||||||||||
| 31-Jan-2012 | 2467.95 | 122.448 | 8.35% | 0.92% | Rupee Appreciated by 7.55% | |||||||||
| 29-Feb-2012 | 2623.1 | 128.952 | 6.29% | 5.31% | ||||||||||
| 30-Mar-2012 | 2755.27 | 141.522 | 5.04% | 9.75% | Rupee Depreciated by 14.44% | |||||||||
| 30-Apr-2012 | 2723.68 | 143.552 | -1.15% | 1.43% | ||||||||||
| 31-May-2012 | 2524.87 | 142.147 | -7.3% | -0.98% | ||||||||||
As seen from the above table, overall the returns that NASDAQ 100 Index has provided is 10.97% Vs 31.96% generated by MOSt NASDAQ 100 ETF.
The above analysis hopes to clear the clouds of higher percentage return which in the fund`s case was driven by the rupee depreciation if we compare it with the benchmark index. It would be interesting to see how the fund performs when the rupee appreciates and stabilizes. The fund though, without rupee depreciation or appreciation would have generated 10% returns and is invested in a benchmark which is considered to be the safest bet in US.
The above data source is from finance.yahoo.com for NASDAQ 100 benchmark, moneycontrol.com for MoSt NASDAQ 100 and forexpros.com for Forex data comparison
