Mirae Asset Mutual Fund will launch S&P 500 Top 50 ETF

The new fund offer (NFO) will start from September 1 and will continue till September 14.

Simultaneously, the fund house is also launching a Fund of Funds (FOF) to invest in units of ETFs. This is to enable investors who do not have demat and trading accounts to invest in the underlying scheme.

A demat and trading account is required to buy ETF units. The ETF will have an expense ratio of 0.37%, while the FoF for the Direct plan will have an expense ratio of 0.62%.

For the regular plan, the FoF expense ratio will climb up to 1.05%.

By comparison, the Motilal Oswal S&P 500 Index Fund, which tracks the broader S&P 500 Index, has an expense ratio of 0.49% on the Direct plan and 1.06% on its Regular plan.

According to a presentation released by the fund house, the S&P 500 Top 50 has delivered a 22.6% Compound Annual Growth Rate (CAGR) return in rupee terms (as of July 31) over the past 10 years.

Over the past five years, and one year, the S&P 500 Index Top 50 returns have come in at 21.7% and 33.6%. In two out of three periods, the S&P 500 has outperformed the Nifty 50, which has delivered a CAGR of 12.5% ​​in the last 10 years and a CAGR of 14.5% in the last five years.

Some of this outperformance comes from the rupee’s depreciation, which falls about 3-4% per year against the dollar.

In the last one year itself, Nifty has outperformed with a return of 44.2%.

Moreover, the correlation of S&P 500 Top 50 Index with Nifty is just 0.14, which means that S&P 500 Top 50 Fund can remove some of the investor’s risk. Moreover, the S&P 500 Top 50 Index has historically suffered less downside than the Nifty. For example, when the Covid crisis hit 2020, the Nifty 50 index fell 38%, while the S&P 500 Top 50 fell only 26% (both in rupee terms).

The S&P 500 Top 50 Index has a very high correlation with the broader S&P 500. According to mire asset Presentation, it is as much as 0.98. “We think the top 50 is better than a broad-based 500. In a polarized post-Covid world, the top 50 is better,” said Swarup Mohanty, CEO, Mirae Asset Mutual Fund. index.

In polarized markets, the top companies gain more market share. “We as a position want to be a thematic ETF, so our ETFs will be a bit off the broader indices,” Mohanty said. The top five companies in the S&P 500 Top 50 are Apple, Microsoft, Alphabet, Amazon and Facebook. count.

Information technology has the largest share of 38.5% in the index, followed by communication services (18.4%) and consumer discretionary (13.5%).

Mirae Asset Mutual Fund is part of a global asset manager. However, it recently made its first foray into international funds from India in May with the Mirae Asset Fang+ ETF and FoF.

These are the funds to invest in the 10 top technology stocks listed in the US.

“Large companies tend to outperform in polarized markets as was the case in the period 2018-20 in India and hence you can invest in this fund if you feel that the polarization will continue. If not, I would generally recommend a fund that invests in a broad index like the S&P 500. International exposure should be 10-15% of your portfolio,” said Amol Joshi, Founder, Plan Rupee Investment Services.