Top 2 Mutual Funds if you want to invest in US Companies

Summary

In this episode, the speaker discusses two top mutual funds/ETFs for gaining exposure to the US market, focusing on the strengthening US dollar and long-term growth potential. The first fund is the Motilal Oswal NASDAQ 100 ETF (MN100), offering diversified exposure to the top 100 US tech stocks like Apple, Nvidia, and Microsoft. The second is the Mirae Asset NYSE FANG Plus ETF, which focuses on the biggest tech companies such as Facebook, Amazon, and Google, providing a more concentrated but high-risk, high-reward option. Both funds are presented as solid choices for long-term investors seeking exposure to US innovation-driven growth.

Takeaways

• 😀 Limit foreign investments to 7.5% of your portfolio to manage risk, regardless of whether it's in U.S. or other foreign markets.
• 😀 Always consider the tracking error and expense ratio when choosing mutual funds or ETFs, as these can significantly impact returns.
• 😀 Mutual funds provide easier, hands-off investing, while ETFs can offer lower fees but may have liquidity issues due to low volume.
• 😀 U.S. investments should be considered as long-term plays, with compounding taking time to show significant returns.
• 😀 The NASDAQ 100 index consists of the largest and fastest-growing companies in the U.S., including tech giants like Nvidia, Apple, Microsoft, and Google.
• 😀 Investing directly in U.S. stocks can be more expensive and complicated due to high fees and slow fund transfers, making mutual funds a simpler alternative.
• 😀 The Motilal Oswal NASDAQ 100 ETF (MN100) tracks the performance of the NASDAQ 100 and is a passive, long-term investment option with a low expense ratio (0.24%).
• 😀 The Mirai Asset NYSE FANG+ ETF focuses on the top 10 growth companies like Meta, Amazon, Apple, Netflix, and Google, offering a concentrated portfolio with higher potential risks and rewards.
• 😀 The MN100 ETF has delivered 24% compound annual growth rate (CAGR) over the past 5 years, making it a solid, long-term investment option.
• 😀 The FANG+ ETF has seen strong performance in the past year, outperforming the NASDAQ 100 with a 53% return, driven by companies like Nvidia.
• 😀 While the FANG+ ETF offers high growth potential, its highly concentrated nature (focused on just 10 stocks) means it's riskier compared to the more diversified NASDAQ 100.
• 😀 Both MN100 and FANG+ ETFs provide excellent exposure to U.S. markets, with MN100 being a broader, safer option and FANG+ offering aggressive growth potential for those willing to take on more risk.

Q & A

What is the main topic of the video?

The video discusses two mutual funds that investors can consider for gaining exposure to US companies, particularly through the NASDAQ 100 index and the Mirai Asset NYSE FANG+ ETF.

What is the recommended percentage of a portfolio to allocate to foreign investments like US stocks?

The recommended allocation is no more than 7.5% of your portfolio to international investments. Exceeding this could drastically increase risk.

Why should investors consider mutual funds or ETFs for international exposure instead of directly buying US stocks?

Investing in mutual funds or ETFs is easier due to lower fees, better liquidity, and the convenience of not having to deal with currency conversion or the long withdrawal times often associated with direct investments in US stocks.

What factors should be considered when choosing a mutual fund or ETF for US market exposure?

Important factors to consider include the tracking error, expense ratio, and performance compared to a benchmark index like the NASDAQ.

What are the key advantages of investing in the NASDAQ 100 index through a fund?

Investing in the NASDAQ 100 gives exposure to a diverse group of the largest US tech companies, providing a relatively stable and long-term growth opportunity due to the strength of companies like Apple, Microsoft, and Nvidia.

What is the performance history of the NASDAQ 100 index as discussed in the video?

The NASDAQ 100 index has shown strong long-term performance, with a 5-year CAGR of 24%. In the past year, it has delivered a return of 39%.

How does the Motilal Oswal NASDAQ 100 ETF work?

The Motilal Oswal NASDAQ 100 ETF (MN100) tracks the NASDAQ 100 index and allows for passive, long-term investment in the same companies represented in the index.

What are the potential risks of investing in ETFs like the Motilal Oswal NASDAQ 100 ETF?

ETFs can sometimes have low trading volumes, leading to difficulties in buying or selling at attractive prices. They are also subject to the overall performance of the index they track, and a downturn in key companies could impact returns.

What is the key difference between the two funds discussed in the video—the NASDAQ 100 ETF and the Mirai Asset NYSE FANG+ ETF?

The NASDAQ 100 ETF provides exposure to 100 companies in the NASDAQ index, offering broad exposure to tech giants. In contrast, the Mirai Asset NYSE FANG+ ETF focuses on just 10 high-growth companies in the tech sector, such as Meta, Amazon, and Nvidia, making it more concentrated and higher-risk.

How does the performance of the Mirai Asset NYSE FANG+ ETF compare to the NASDAQ 100 ETF?

The Mirai Asset NYSE FANG+ ETF has outperformed the NASDAQ 100 ETF over the past year, with a return of 53%, compared to the NASDAQ's 34% return. However, this performance is influenced by the strong performance of Nvidia and other key holdings.

What are the risks associated with the Mirai Asset NYSE FANG+ ETF?

The main risk of the Mirai Asset NYSE FANG+ ETF is its high concentration in just 10 companies. A downturn in any of these companies, like Nvidia, could significantly impact the fund's performance.

What is the minimum investment required for the Motilal Oswal NASDAQ 100 Fund of Fund?

The minimum investment for the Motilal Oswal NASDAQ 100 Fund of Fund is 500 rupees.