After witnessing a huge rally in the stock market over the past few years, US benchmark indices such as Nasdaq 100 have corrected sharply, providing good investment opportunities for investors.
The year-to-date (YTD) returns of the Nasdaq 100 and the S&P 500 — the two most popular US indices — have been -25% and -16%, respectively.
Still, you can Investment Directly into specific stocks only if you are a well informed investor. Otherwise, it would be better to stick to the fund route. Although mutual funds investing abroad have crossed the industry aggregate limit of $7 billion, fresh inflows into these funds have been stopped from February 2022.
Having said that, Feeder Funds or Fund of Funds (FOF) are investing in Exchange Traded Funds (ETFs) are still open for investment abroad. In the case of investments in foreign ETFs, there is a separate investment limit of $1 billion, which has not yet been breached.
Note that, those investing internationally in the secondary market can also buy units of the ETF. However, you should be wary of mispricing ETFs.
“One needs to note that the ETF prices on the exchange may be at a premium to the existing NAV as additional units are not being created by the AMCs due to the shortfall premium. Samir, MD & CEO, TrustPlutus Wealth (India) Pvt Ltd Besides, liquidity is likely to be limited and it is up to any other investor to decide whether to sell their units, Kaul said.
Here, we focus on the feeder funds that are open for investment (see table).
Where to invest?
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Experts suggest that a fall in the US market, especially the Nasdaq 100 Index, provides a good buying opportunity for those who have already invested in the index, to reduce costs. Averaging down is a strategy to buy shares/units at a lower price, which results in lowering the average cost at which a share/unit is purchased.
Vishal Dhawan, Founder and CEO, Plan Ahead, said, “For investors whose portfolios already have investments in the Nasdaq, a sharp correction is an opportunity to gradually reduce their buyout, provided they have a minimum 10-year investment horizon. investing for.” Wealth Advisors. For investors looking to invest in the S&P 500 index, Dhawan said they might consider adding in the Navi US Total Stock Market Fund because the index it is tracking has significant overlap with the S&P 500 index. He also said that it is also a good fund for those who are starting to invest internationally as the index has exposure to the broader US market.
Talking about DSP MF’s Global Innovation Fund, Praleen Bajpai, Founder, Finfix Research & Analytics said that the Fund’s core investments include investments in both ETFs and actively managed international funds.
She said, “One should be aware that as soon as the mutual fund investment limit is revised upwards, the fund may revert to the original order. This may also increase the expense ratio of the fund (since the money is just two Will be investing in more funds than the current mix of ETFs).