In the latest episode of ‘Decoding the world of ETF-Season 2’ by Mirae Asset Mutual Fund and Moneycontrol, financial experts Vaibhav Shah, Head-Product Marketing, Mirae Asset Investment Managers India, and Vijay Hede, co-owner, Shivaranjani Securities Company elaborated on how investors can add international funds to their portfolios through Fund of Funds (FoF).
Sharing their expertise on the matter with CNBC-TV18’s Surabhi Upadhyay, experts informed about what constitutes FoF, how to invest in ETF-based FoF and much more.
Talking about the passive investing market and then sharing insights into FoF, Shah said it was becoming an interesting route to invest in the Exchange Traded Funds (ETFs).
“Passive investing has become a very big thing globally and you can clearly see that passive funds, be it ETFs or Index funds, have crossed globally crossed AUM of active funds. In the Indian market, the Fund of Funds is coming out in an interesting way. A lot of investors and partners can look at it to make investments in Indian and international equities and provide them the same flexibility that mutual funds provide. It combines the advantage of mutual fund and ETF together,” said Shah.
The FoF can be one of the good options owing to several advantages such as flexibility of investing in multiple funds and different asset classes such as equities and fixed income. Investors can also make systematic investments through FoF without opening a demat account.
Elucidating on parameters to keep in mind before investing in FoF, Hede advised on not getting swayed by big names.
“It is not (shouldn’t be) that these companies look good so I put all my money into international companies, this is a bad idea. Depending upon the capacity to take risks, we allocate somewhere between 15% and 30% of the equity portfolio into the international businesses and we have moved aggressively from FoFs to ETFs. As you move up the ladder, you can have more complex products,” he said.
The experts also delved into exposure to multiple countries and taxation.
Watch the full webinar here
Source : SEBI, Internal Research, Bloomberg, 30th June, 2021
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