So I want to make some investments in Motilal NASDAQ 100, but cannot decide whether to go for ETF or FoF. The benefit of ETF is that it will have low expense ratio than FoF but the buy price of unit will be more than the NAV. Also, since I also have shares in my demat account so I dont want to put all my eggs in one basket. God forbid if broker goes duck then i’ll loose all my investments.
The benefit of FoF is that unit price at can be bought at NAV and the holding will be independent from demat account. But 0.5% of additional expense will be incurred. (In fact factsheet only 0.5% expense is mentioned, so this would be in addition to 0.56% expense of ETF? Plz correct me if I am wrong)
CSDL/NSDL are the custodians of shares/EFT not Brokers. Brokers just execute your order based on the agreement you have with them(like PoA). SEBI has recently taken care most of the issues of Broker misusing these agreements.
you need to actually look at liquidity when choosing a ETF. FoF do not have such issue as AMC take care of Buy/Sell.
Just an update to those who are following this thread… I have finally decided to go for Motilal S&P 500 Index Fund rather than Nasdaq 100, just to get a more diversification and kicker in returns from comparatively smaller companies.
This article gives interesting perspective. Would be nice if there is a similar analysis of Nasdaq 100 vs S&P 500.
The reason I am interested in S&P 500 instead of Nasdaq 100 is that there might be a multi-bagger from 101 to 500 stocks (for eg., HDFC, etc.) which may later replace someone from top 100.
Top 100 stocks already have had their run and may give returns slightly more than debt. But they are not going to grow more than that.
There are number of articles on index funds and ETFs from many fund houses in that blog, if you are searching for index funds or ETFs. I am sure you will gain some additional insights. Go through the blog, as you want to invest in indices.
I think only Motilal has S&P 500 Index fund. No ETFs. No FoFs. So that there are no options / choice to consider for pros/cons (if I have understood your query correctly). What is Coin BTW?
Right, for S&P I did not find an ETF (for Indian investors).
For Nasdaq there is a MOS N100 ETF which one buy/sell on the exchanges as well as MOS N100 FoF. Similar with some China-based FoFs and ETFs.
So my query was as long as both options are comparable (wrt to index/portfolio constituents) will liquidity and expense ratios be the only points of difference that affect our returns?
Is Nasdaq 100 an equal weight index? I’m not so sure: https://www.slickcharts.com/nasdaq100
Apple is approx 11% of the index at the moment.
Agree with you on Nasdaq over S&P500.
There are capping on the weights in Nasdaq 100 for very large companies. No such cap in S&P 500.
The smaller companies (in same market cap range) get equal weight, the larger ones get a cap on their weights when they become too large.
