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With the recent growth in technology and innovation and the realization that growth needs to be sustainable with undeniable evidence of global warming, investors need to keep up, exposure in Artificial Intelligence and sustainable technology are required. It would be beneficial to invest a small sum in companies making products like Electric Vehicles, cloud computing platforms enabling remote working, renewable and clean energy, fintech and agrotech products to name a few, these products have a bright future ahead and the need for them is on the rise, to invest early would provide bumper returns in future.
Such innovation-based investments are highly risky and should be made in moderation keeping in mind the risk tolerance and the long time horizon for investing, a SIP is suggested to buy units of an ETF as they provide returns while ensuring there is no wrong-way risk. A couple of new funds to watch out for are;
Mirae Asset Artificial Intelligence & Technology ETF Fund of Fund
Mirae Assets has recently filed documents of offer with SEBI for the Mirae Asset Artificial Intelligence and Technology ETF Fund of Fund, which is an open-ended fund scheme that will replicate the returns of Global X Artificial Intelligence and Technology ETF.
The dates of the New Fund Offer remain undisclosed and the fund is to be managed by Mr. Sidharth Srivastava, who has 11 years of experience in this sector and is managing a lot of leading funds like the Mirae Asset NYSE FANG+ ETF.
The initial price of the NFO will be at INR 10 per unit and its objectives are to provide long term capital growth by investments in ETF, it is to be noted that the company does not guarantee any returns, the investment has a very high-risk profile, and should be invested in the form of a SIP to reduce risk.
The allocation of the funds are supposed to be in the following manner,
Some of the companies in which the fund will invest are eBay Inc (NASDAQ:), Rockwell Automation Inc (NYSE:), Amazon (NASDAQ:) Inc, Alphabet Inc Class A (NASDAQ:), Cisco (NASDAQ:), Oracle (NYSE:) and other market leaders in this sector. It is not advisable to buy these securities individually as they are overpriced and they tend to fall and rise by a large margin while positive returns are good they may lead to heavy losses.
Mirae Asset Cloud Computing ETFs Fund of Fund
Another fund for which Mirae Assets has filed documents with SEBI is Mirae Asset Cloud Computing ETFs Fund of Fund, the date for the launch of the fund are undisclosed and the fund is said to be tracking and replicating the ETF run by Global X ETFs.
The fund is managed by Mr. Sidharth Srivastava who is the head of ETF products at Mirae Assets India.
The fund aims to provide long-term capital growth by investing in cloud computing technology, these innovations are in high demand now and in the future and the fund hopes to benefit from digital infrastructure and shared servers.
The fund has a very high-risk profile and the investment is for a long time horizon, the allocation of funds will be according to the following table,
Some of the key holdings of the ETF will be Amazon Inc, Workday Inc (NASDAQ:), Dropbox Inc (NASDAQ:), Netflix (NASDAQ:), Zoom Video Communications Inc (NASDAQ:), Microsoft (NASDAQ:), and Google (NASDAQ:) and it is a good investment option to get exposure in the cloud computing and remote working revolution which has started since COVID-19.
Tavaga View
While we would like to refrain from commenting whether these ETFs are worth buying or not, there are certain things that investors must keep in mind before subscribing to this NFO (whenever it is open for investors):
1. An NFO is different from an IPO. In an IPO, the price on a listing day can go up or down depending upon the demand and supply of the stock. However, the pricing of FoF NFOs solely depends on the benchmarking movement
2. Asset Allocation: Prudent allocation of foreign equity to your portfolio is important. Thematic ETFs are very risky and the allocation to them should be as per the risk appetite. Ideally, even high-risk investors prefer to not go beyond 5% in such ETFs
3. Expense Ratio: Investors must consider contacting the AMC and get to know about the Total Expense Ratio of this fund
4. Mode of buying: Team Tavaga has always recommended a SIP approach rather than a lump-sum mode while buying funds. It makes sense to follow a staggered lump-sum approach during large drawdowns, but doing a one-time lump-sum investment during market highs and sitting on it without adding on dips won’t augur well for investors
5. Consult a SEBI RIA: A SEBI Registered investment advisor like Tavaga will ensure that all the things discussed above are taken care of. Not only that – a fund can change its expense ratio and many other things in the future. It gets very difficult for an investor to track everything. Hence, having an RIA always helps
Disclaimer: Not a recommendation. Only for informational purposes
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