NE BUSINESS BUREAU
NEW DELHI, APR 20
Digital financial services platform Paytm announced that its wholly-ownedsubsidiary ‘Paytm Money’ is empowering the country’s retail investors with access to top tech stocks from the US in association with Mirae Asset’s NYSE FANG+ ETF. The country is already one of the largest markets for companies like Facebook, Amazon, Netflix, and Google (Alphabet) – FANG, and its importance will only rise over the next decade, says a release.
NYSE FANG+ Index is a focused index and includes the original FANG companies + 6 tech leaders in the global Markets – Apple, Alibaba, Baidu, Nvidia, Tesla, and Twitter. Most of these are household names for millions of Indians, and the NFO is expected to be a success, driven primarily by the impressive 102% return delivered by NYSE FANG+ Index over the last year. The underlying tech stocks like Tesla delivered 390% return, and Google (Alphabet) delivered 80% return during this period.
Along with the NYSE FANG+ ETF, Mirae Asset is also launching a mutual fund scheme (NYSE FANG+ ETF Fund of Fund) which will predominantly invest in NYSE FANG+ ETF. From an investor’s perspective, there are certain things to be considered before deciding on the right instrument. The table below clearly lays out these considerations:
| ETF | Direct MF | Regular MF | |
| Expense Ratio | 0.33% | 0.50% | 1.00% |
| Fund Type | Passive | Open-ended | Passive | Open-ended | Passive | Open-ended |
| Flexibility | Higher Flexibility
Traded in the market throughout the day at real time prices. |
Lower Flexibility
Can only be bought or sold with the AMC. Transaction happens only once a day, and investors have limited control over the final price |
Lowest Flexibility
Can only be bought or sold with the AMC, via a distributor. Transaction happens only once a day, and investors have limited control over the final price |
| Minimum Investment (NFO) | Rs. 5,000 | Rs. 5,000 | Rs. 5,000 |
| Minimum Investment (Post NFO) | 1 unit (Less than Rs. 100) |
Lumpsum: Rs. 5,000 SIP: Rs. 5,000 |
Lumpsum: Rs. 5,000 SIP: Rs. 5,000 |
| Investment Mode | Stock Trading Account | AMC / Direct MF platforms | MF Distributor |
Illustrative comparison of investing across all three modes with a 3-year holding period is shown below:
| ETF | Direct MF | Regular MF | ||
| Investment Amount | 100,000 | 100,000 | 100,000 | |
| CAGR | 20% | 20% | 20% | |
| Expense Ratio | 0.33% | 0.50% | 1.00% | |
| Total Expense | 1,422 | 2,151 | 4,284 | |
| Investment Value @ Year 3 |
171,378 | 170,649 | 168,516 | |
| Return (Before Tax) | 71,378 | 70,649 | 68,516 | |
| LTCG Tax @20%
(Assuming – Indexation |
11,778 | 11,633 | 11,206 | |
| Net Return (After tax) | 59,600 | 59,016 | 57,310 |
Varun Sridhar, CEO of Paytm Money said, “NYSE FANG+ index represents some of the most dominant tech players globally, and has delivered more than 40% CAGR over the last 3 years. The retail Indian investor today is increasingly looking to diversify beyond traditional funds and asset classes, and Mirae Asset’s NYSE FANG+ ETF is a very attractive proposition at an expense ratio of only 0.33%. We are expecting a lot of demand for this offering. ETF as a category has been very popular in the US markets for quite some time, and we are now seeing ETFs gain acceptance in India as well, with 27% of Paytm Money’s equity users already owning at least one ETF in their portfolio. ETFs are a great way to build long-term wealth, and we believe it will be one of the most important investment instruments for the next decade of investing in Indian capital markets”.