Analysis of Navi NASDAQ 100 FoF Direct- A Detailed Look
- Fund Name: Navi NASDAQ 100 FoF Direct Growth
- Fund Type: Other FoF Overseas/Domestic
- Fund Manager Background: The fund is managed by Aditya Mulki, a fund manager with 6 years of experience. Under his guidance, the Navi NASDAQ 100 FoF Direct Growth aims to offer long-term capital appreciation by investing in units of overseas ETFs and/or Index Funds based on the NASDAQ 100 Index.
Holding Analysis Or Portfolio Breakdown
This fund uniquely holds 100.02% in the Invesco NASDAQ 100 ETF (QQQM), with a negligible cash and cash equivalent percentage of -0.02%. This focused investment strategy underscores the fund’s confidence in the NASDAQ 100’s growth potential.
Returns And Rankings In Their Category
Since its inception on 23 Mar 2022, the Navi NASDAQ 100 FoF Direct Growth has provided an impressive average annual return of 44.15%. It stands out in its category for its performance, with a 1-year return of 44.22%, significantly outpacing the category average.
How Old Is The Fund
The Navi NASDAQ 100 FoF Direct Growth was established on 23 March 2022, making it a relatively new entrant in the mutual fund market with a promising start.
Analysis: Pros And Cons
Pros:
- Low Expense Ratio: At 0.13%, the fund’s expense ratio is remarkably low, increasing the net return for investors.
- High Returns: With an average annual return of 44.15% since inception, the fund has significantly outperformed its peers.
- Focused Investment Strategy: The investment in Invesco NASDAQ 100 ETF (QQQM) taps into the potential of top NASDAQ 100 companies.
- No Exit Load: Investors can redeem their investment without any exit charges, providing flexibility and ease of access to funds.
Cons:
- Very High Risk: Classified as ‘Very High Risk,’ it might not suit investors with a low risk tolerance.
- Lack of Diversification: The fund’s concentration in a single ETF may expose investors to higher volatility and risk.
- New Fund: Being a relatively new fund, it lacks a long-term track record, which might concern cautious investors.
Conclusion: Given the fund’s low expense ratio, outstanding performance compared to its peers, and the management’s clear investment strategy, the Navi NASDAQ 100 FoF Direct Growth stands as a compelling option for investors seeking exposure to the NASDAQ 100 Index. Its very high risk factor and focus on a single ETF, however, require investors to consider their risk tolerance and diversification needs carefully.
TLDR: Navi NASDAQ 100 FoF Direct Growth Analysis
Overview:
Navi NASDAQ 100 FoF Direct Growth is a high-risk, overseas/domestic fund of funds (FoF) with a primary focus on the NASDAQ 100 Index. It targets long-term capital appreciation by investing in units of overseas ETFs and/or Index Funds based on the NASDAQ 100 Index. The fund has shown a remarkable average annual return of 44.15% since its inception on 23 March 2022.
For Different Types of Investors:
- High-Risk Investors: Suitable, given its very high-risk profile and potential for high returns.
- Medium and Low-Risk Investors: Not suitable due to its very high-risk nature.
Investment Horizon:
- Long-Term (>5 Years): Highly recommended due to its impressive long-term growth potential.
- Medium-Term (1-5 Years): Suitable, considering its performance but with a caution on volatility.
- Short-Term (<1 Year): Not advisable due to high volatility and risk.
Key Data:
- Current NAV: ₹13.56 as of 27 March 2024.
- Expense Ratio: Low at 0.13%, which is beneficial for maximizing investor returns.
- Turnover Ratio: Not provided, which makes it challenging to assess trading frequency and associated costs.
- Returns in Last 1 Year: High returns of 44.22%, showcasing excellent short-term performance.
- Sharpe Ratio: 2.34, indicating high risk-adjusted returns compared to peers.
- Alpha: 38.78, demonstrating the fund manager’s ability to beat the market significantly.
Peer Comparison:
Compared to peers, Navi NASDAQ 100 FoF Direct Growth stands out with a lower expense ratio and higher returns. However, it’s newer with less established long-term data. Its focused investment in the NASDAQ 100 through the Invesco NASDAQ 100 ETF (QQQM) means its success is closely tied to the performance of tech-heavy NASDAQ stocks.
Conclusion: Navi NASDAQ 100 FoF Direct Growth is a compelling choice for high-risk, long-term investors drawn to the growth potential of NASDAQ 100 companies. Its low expense ratio enhances its attractiveness. However, its suitability diminishes for those averse to volatility or seeking short to medium-term investments.
Analysis of Navi NASDAQ 100 FoF Direct-Growth Mutual Fund
This analysis focuses on the Navi NASDAQ 100 FoF Direct Growth, a fund of funds investing in overseas ETFs and/or Index Funds based on the NASDAQ 100 Index. It’s designed for investors seeking long-term capital appreciation with a high-risk tolerance. Below, we delve into the key financial ratios and metrics to evaluate its performance, risk, and cost-effectiveness.
Current NAV
- Current NAV (Net Asset Value): ₹13.56 as of 27 March 2024. The NAV reflects the per-unit value of the fund’s assets minus its liabilities. A higher NAV indicates the fund has grown in value.
Turnover Ratio
- Turnover Ratio: Not explicitly provided. This ratio indicates how frequently the fund’s holdings are bought and sold by the manager. A lower turnover ratio is generally preferred for long-term investing as it suggests stability and lower transaction costs, which can enhance net returns.
Returns in the Last 1, 3, 5 Years
- The fund started on 23 March 2022; hence, only 1-year return data is available, showing an impressive average annual return of 44.15% since inception. It indicates a strong short-term performance but lacks historical data for 3 and 5 years to assess its long-term consistency.
Expense Ratio
- Expense Ratio: 0.13% as of 28 March 2024. It is notably low compared to peers, indicating cost efficiency. A lower expense ratio means more of the fund’s returns are passed on to the investors, making it an attractive option for cost-conscious investors.
Advanced Ratios
- Sharpe Ratio: 2.34. This ratio measures risk-adjusted returns. A Sharpe ratio greater than 1 is considered good, indicating the fund has provided higher returns per unit of risk. The fund’s ratio suggests it has delivered strong returns compared to its risk level.
- PE Ratio and PB Ratio: Not specified for the fund itself but are important for analyzing the valuation of underlying investments. Generally, a lower PE suggests better value, while the PB ratio helps assess the market’s valuation of a company’s equity relative to its book value.
- Cat Exp Ratio (Category Expense Ratio): Not provided, but the fund’s expense ratio is significantly lower than many peers, suggesting cost efficiency.
- Cat Sharpe Ratio (Category Average Sharpe Ratio): Not explicitly given. However, the fund’s Sharpe ratio outperforms many competitors, implying superior risk-adjusted performance.
Peer Comparison
Compared to its peers like Motilal Oswal Nasdaq 100 FOF and Franklin India Feeder – Franklin U.S. Opportunities Fund, the Navi NASDAQ 100 FoF Direct-Growth showcases a competitive edge with its lower expense ratio and high returns since inception. Its singular focus on the NASDAQ 100 through the Invesco NASDAQ 100 ETF (QQQM) also differentiates it, though this strategy may not suit all investors.
Pros
- Low Expense Ratio: Enhances net returns for investors.
- High Short-Term Returns: Shows the fund’s strong recent performance.
- Focused Investment Strategy: Direct exposure to NASDAQ 100’s growth potential.
Cons
- High Risk: Not suitable for low-risk tolerance investors.
- Lack of Long-Term Data: This makes it difficult to assess long-term performance consistency.
- Single ETF Concentration: Exposes investors to sector-specific risks and volatility.
Conclusion
The Navi NASDAQ 100 FoF Direct-Growth is a high-performing, cost-efficient fund suitable for investors with a high-risk tolerance and a focus on tech-heavy NASDAQ 100 stocks. While its short-term performance is impressive, potential investors should consider the lack of long-term performance data and the high-risk profile associated with its focused investment strategy.
Top Holdings Company
The Navi NASDAQ 100 FoF Direct Growth primarily invests in the Invesco NASDAQ 100 ETF (QM), which comprises 100% of its portfolio. This indicates a focused investment strategy, capitalizing on the performance of the NASDAQ 100 Index, a benchmark of 100 of the largest non-financial companies listed on the NASDAQ stock exchange.
Advanced Ratios
- Expense Ratio: At 0.13%, the fund boasts a significantly low expense ratio, enhancing the net return potential for investors. This is below the category average, indicating efficient management and lower operational costs.
- Turnover Ratio: Not explicitly mentioned, but a lower turnover ratio is preferable as it indicates stability and lower transaction costs, which is crucial for long-term growth.
- AUM (Assets Under Management): With ₹898.59Cr in AUM as of 28 Mar 2024, the fund is relatively sizeable, suggesting investor confidence and the ability to achieve economies of scale.
- Performance Metrics: The fund has shown impressive returns, with a notable average annual return of 44.15% since inception, showcasing its ability to outperform many of its peers.
Peer Comparison
- Navi NASDAQ 100 FoF vs. Peers: When compared to its peers, the Navi NASDAQ 100 FoF Direct Growth stands out for its exceptionally low expense ratio and robust returns. While funds like the Motilal Oswal Nasdaq 100 FOF and Franklin India Feeder – Franklin U.S. Opportunities Fund have higher expense ratios (0.18% and 0.54%, respectively), they do not consistently offer higher returns than the Navi fund.
Fund House and Investment Objective
- Fund House: Managed by Navi Mutual Fund, a fund house known for its digital-first approach and innovative investment solutions. The AMC has established a reputation for transparency and efficiency.
- Investment Objective: Aim to provide long-term capital appreciation by investing in units of overseas ETFs and/or Index Funds based on the NASDAQ 100 Index. This objective aligns well with investors looking for growth through exposure to international markets, particularly the U.S. technology sector.
Pros
- Low Expense Ratio: At 0.13%, it offers one of the lowest expense ratios in its category, translating into higher net returns for investors.
- Strong Performance: With an average annual return of 44.15% since inception, it outperforms many peers, making it an attractive option for growth-seeking investors.
- No Exit Load: Allows investors flexibility and encourages long-term investment without the worry of additional costs upon withdrawal.
- Focused Investment: Direct investment into a NASDAQ 100 ETF ensures exposure to top-performing U.S. technology and non-financial firms.
Cons
- Market Risk: Being invested entirely in an ETF that tracks the NASDAQ 100 Index, it is subject to high market volatility, particularly in the technology sector.
- Limited Diversification: The focus on a single ETF limits diversification, making the fund’s performance heavily reliant on the NASDAQ 100’s performance.
- Foreign Investment Risk: Exposure to foreign markets introduces currency risk, geopolitical risk, and regulatory risk.
In conclusion, the Navi NASDAQ 100 FoF Direct-Growth is a compelling option for investors seeking exposure to the U.S. equity market, particularly the technology sector, with the benefits of a low expense ratio and strong historical performance. However, potential investors should be mindful of the risks associated with market volatility and limited diversification inherent in the fund’s focused investment strategy.
Is it Following any Indices or Benchmark?
The Navi NASDAQ 100 FoF Direct Growth is structured to track the Nasdaq-100 Index, which comprises 100 of the largest non-financial companies listed on the NASDAQ stock exchange. This focus ensures that the fund’s performance is closely aligned with that of the Nasdaq-100, aiming to replicate its return profile and capital appreciation potential.
Risk Profile of this Mutual Fund
The Navi NASDAQ 100 FoF Direct-Growth is classified as Very High Risk. This risk assessment is primarily due to its investment in overseas markets, specifically the US stock market, and its focus on the technology and non-financial sectors, which are known for their volatility. The fund’s performance is directly tied to the fluctuations of the Nasdaq-100, making it susceptible to market risks, currency exchange risks, and geopolitical changes.
Market Cap Weightage
As the Navi NASDAQ 100 FoF Direct Growth invests entirely in the Invesco NASDAQ 100 ETF (QQQM), its market cap weightage directly mirrors that of the Nasdaq-100 Index, which is heavily skewed towards large-cap companies. The Nasdaq-100 is renowned for its concentration in technology giants and other leading companies in the non-financial sectors, which typically fall into the large-cap category. There is no explicit investment in mid-cap or small-cap companies within this fund.
For Whom this Mutual Fund is Suitable – Investor Profile
The Navi NASDAQ 100 FoF Direct-Growth is best suited for investors with the following profile:
- Risk Tolerance: High. Given its very high-risk classification, it’s suitable for investors who are comfortable with significant market fluctuations and understand the risks of investing in overseas markets.
- Investment Horizon: Long-term. Investors should have a long-term perspective to weather the inherent volatility of the technology and non-financial sectors predominant in the Nasdaq-100 Index.
- Investment Objective: Capital Appreciation. Ideal for those seeking substantial growth and are primarily interested in tapping into the growth potential of major US-based companies.
- Experience: Savvy. Due to its overseas focus and high risk, it’s more appropriate for experienced investors who possess a good understanding of international markets and currency risks.
Pros:
- Exposure to top-tier US companies without direct investment overseas.
- A low expense ratio enhances net return potential.
- No exit load facilitates easier entry and exit.
Cons:
- Very high risk due to market volatility and concentration in specific sectors.
- Limited diversification as it invests solely in a single ETF tracking the Nasdaq-100.
- Currency and geopolitical risks inherent in international investing.
In summary, the Navi NASDAQ 100 FoF Direct-Growth offers an attractive avenue for investors looking to gain exposure to US equities, particularly the tech giants and leading non-financial firms. However, its suitability is geared towards those with a high-risk tolerance, a long-term investment outlook, and a desire for significant capital growth.
Risk Profile Analysis
The Navi NASDAQ 100 FoF Direct-Growth is classified with a Very High-Risk profile. This assessment is due to its investment strategy, which exclusively targets the NASDAQ 100 Index, a composite of the 100 largest non-financial companies listed on the NASDAQ stock exchange, known for its concentration in technology and biotech sectors.
These sectors are particularly volatile, with their values subject to rapid changes based on market trends, technological advancements, and regulatory changes. Additionally, as a Fund of Funds (FoF) that invests in overseas markets, it carries additional risks related to currency fluctuations, geopolitical issues, and differing market regulations. This fund is most suitable for investors who have a high tolerance for risk and are looking for significant growth opportunities in the international market.
Scheme Information
The Navi NASDAQ 100 FoF Direct Growth was launched on 23 March 2022, marking its focus on capital appreciation by investing in units of overseas ETFs and/or Index Funds based on the NASDAQ 100 Index. The fund aims to mirror the performance of the NASDAQ 100, offering investors exposure to a broad range of leading technology and innovation-driven companies.
It features a notably low expense ratio of 0.13%, making it an efficient choice for investors seeking exposure to the US tech giants without the high fees typically associated with international investments. Additionally, the scheme has no exit load, providing flexibility for investors to enter and exit according to their investment strategy.
AMC Profile and AUM in Details of this Mutual Fund
Navi AMC Limited manages the Navi NASDAQ 100 FoF Direct Growth. The AMC is part of the broader Navi Group, which has garnered attention for its technology-driven approach to finance and investment services. With a focus on leveraging technology to provide transparent, easy-to-use, and effective investment solutions, Navi AMC has positioned itself as a forward-thinking asset management company in India.
As of 28 March 2024, the Assets Under Management (AUM) for the Navi NASDAQ 100 FoF Direct Growth stood at ₹898.59Cr, reflecting a healthy level of investor trust and interest in the fund. This AUM size is significant, as it indicates the fund’s capacity to manage large investments effectively, providing liquidity and potentially better investment management efficiencies.
Pros:
- Low Expense Ratio: At only 0.13%, it stands out for its cost-efficiency compared to peers.
- Flexibility: No exit load enhances the fund’s attractiveness by providing investors the flexibility to adjust their investment as needed without incurring additional costs.
- Exposure to US Tech Giants: Offers direct exposure to leading US technology companies through a single investment.
Cons:
- Very High Risk: Suitable only for investors who can stomach significant volatility and understand the risks of investing in tech-heavy international funds.
- Limited Diversification: Concentration in the NASDAQ 100 means exposure is limited to predominantly large-cap technology and biotech sectors, which can be more volatile than more diversified investments.
- Foreign Investment Risks: In addition to market risk, investors are exposed to currency risk, geopolitical risks, and the risk of regulatory changes in foreign markets.
In conclusion, the Navi NASDAQ 100 FoF Direct Growth presents an appealing option for investors looking to gain exposure to the US tech sector with a low expense ratio and no exit load. However, its very high-risk profile and focus on a specific segment of the market mean it is best suited for investors with a long-term horizon, high risk tolerance, and a specific interest in the technology sector.