Investing in Motilal Oswal Nasdaq 100 FOF: A Monthly SIP Strategy for Long-Term Growth
Introduction to the NASDAQ-100 Index
The NASDAQ-100 index, also known as the NQ, includes some of the top 100 domestic and international non-financial companies listed on the Nasdaq stock market. This index reflects companies across diverse sectors like computer hardware, software, telecommunications, and more. A significant feature of the NASDAQ-100 is the limitation of a single index constituent to a maximum weight of 24, which prevents heavy concentration in any one company. This index includes famous companies such as Apple, Microsoft, and Facebook.
Launch of Motilal Oswal Nasdaq 100 FOF
The launch of Motilal Oswal Nasdaq 100 FOF (Fund of Funds) provides Indian investors with an opportunity to participate in the NASDAQ-100 index. This FOF seeks to mirror the returns of the NASDAQ-100 index, offering investors exposure to a diversified portfolio of top-performing companies listed on the Nasdaq stock market.
Monthly Systematic Investment Plan (SIP) Strategy
Due to the fluctuating nature of the global stock market, particularly during the COVID-19 pandemic, investing in such an FOF through a monthly SIP strategy can be particularly beneficial for long-term investors. This approach helps in averaging out the cost of investment over a period, reducing the risk of investing a large sum at a single point in time. Given that you have a time horizon of more than 5 years, investing in the Motilal Oswal Nasdaq 100 FOF through an SIP can be a prudent choice.
Current Performance and Future Outlook
Since its launch on 29th November 2018, the Motilal Oswal Nasdaq 100 FOF has generated an average return of 36.31%. The fund's performance post-pandemic has been particularly strong, with a 1-year return of 52.28%. However, the recent American presidential election will have impacts on the market. Both Donald Trump and Joe Biden, the current leading candidates, have different economic strategies. Market sentiment currently favors Donald Trump, but the outcome could influence market stability and future performance.
For new investors, it is crucial to leverage the opportunity provided by the current market conditions. Investing in global equity, particularly during the month of November, can be a strategic move, as it often aligns with the beginning of the fiscal year in the US, which can lead to better-than-average returns.
Diversification Benefits
Including the Motilal Oswal Nasdaq 100 FOF in your portfolio can also provide diversification benefits. By investing in this FOF, you gain exposure to a range of multinational companies, which can help mitigate the risk associated with investing in a single market or sector. A well-diversified portfolio can lead to a more stable and sustainable growth trajectory over the long term.
Conclusion
In conclusion, investing in the Motilal Oswal Nasdaq 100 FOF through an SIP strategy can be a strategic choice for long-term investors with a time horizon of more than 5 years. The fund's performance, coupled with the benefits of diversification, makes it an attractive option. Additionally, the current market context, including the upcoming presidential election, provides an opportunity for new investors to enter the global equity market.