When I want to buy, I see a price of earlier date on Coin app. How do I know if I will be allotted units and the rate at which I will be allotted units? Do these rates stay valid for 1 day or do they fluctuate during the day?
Not an expert, FOF is similar to MF and hence the NAV is arrived at the end of day. Once you apply, the allotment happens at the end of day NAV (after market closes), just like any MF.
If you have not yet invested in this FOF, do a research on Motilal Oswal MOSt Shares NASDAQ 100 ETF. This is a ETF and going by the name, I am sure both are the same.
In an ETF, you can buy and sell just like a stock. Also check on the expense ratio. For Motilal Oswal it is 0.59%. I am told that in case of FOF, there will be two commission an investor need to pay, one for the main AMC and the second for the US AMC.
Anyways, do your research.
Thank you for the clarity. So my research said, in most nasdaq 100 etf, there is more tracking error apart from expenses. On the other hand, liquidity too is less. So one may have to pay more while investing and get less while selling. On the other hand in kotak fof, expenses are nearly same considering the cost of ishares plus kotak. Hardly 3-4bps difference but easily makes up for the arbitrage plus tracking error. Still open to knowing more.
Since Kotak NASDAQ 100 FOF is essentially a mutual fund, you’ll get the NAV as on that date. NAV is calculated at the end of day. I didn’t understand this point:
On the other hand, liquidity too is less. So one may have to pay more while investing and get less while selling
Could you elaborate? For any international ETF, the liquidity is not high in Indian markets yet.
When someone says “Liquidity is less” what exactly do they mean. I have invested in ETF and never found that there is no sellers or no buyers on any of my ETF. There is always some seller or buyer. To arrive at the true value of the underlying investment, I check on SBI website under iNAV. This indicates the true value at that moment of the underlying securities i.e stocks under the etf and when you compare this with what is being offered, you will know the spread. If the difference is too high, I just dont buy or sell.
Liquidity is the ease of buying and selling i.e volume of a particular asset… Because of low liquidity/volume there is a high spread.
Some etfs are highly liquid i.e tradeble than others… Just compare the volume of Nippon vs edelweiss nifty50 etf.
I agree with this approach but when we have to buy, we have to buy. We can’t wait for many days else we might regret tge price which we miss. So there is report by hdfc securities that etfs usually trade between +6% to -5% of the Nav range. This means you run a risk for buying expensive or selling cheap. Specifically the report gave a range of approx 1.5% on both sides for motilal nasdaq etf. They have precise numbers but I am just sharing the gist. I am unable to attach it as it does not allow pdf to be attached.
Does anyone know how exactly the Kotak Nasdaq 100 FoF evaluate the NAV for a day’s close? The US markets close at around 2:00 am (say on 1st Sep 2022). So to capture the NAV based on this Nasdaq close will the 1st Sep IST end of day NAV be applicable or we should look at the Nasdaq futures and put in a buy request for the fund by 31st Aug , 3:00 pm IST to capture the Nasdaq close later that night?
FOF comes with higher expense ratio. I think it is better to opt for a feeder fund.