What is the difference between ICICI Nasdaq 100 index and Motilal Oswal 100 Nasdaq FoF?

Personal finance
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  1. With both portfolio holdings being similar (if my understanding is correct), why ICICI Nasdaq 100 provides lower returns than Motilal Oswal Nasdaq 100 Fund of Funds (FoF)?
  2. What will happen if the INR starts appreciating against the USD?
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  1. Both are similar in nature, and the returns of each depend on their fund structure, such as expense ratio and tracking error. Therefore, we may see a slight difference in returns. This applies to all such funds.

  2. If the INR appreciates significantly, the value of the gains, when converted to INR, will be reduced. As a result, we may observe a slight drop in the NAV.

hope this helps !

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Waiting for this to happen for a very long time, but its one way street as shown below. Not in my lifetime, will it ever reverses.

In 1947 USD to InR was 3.47.
Today Nov 2024 it is 84.31.

Copied from the attached article.

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Nope, there is a difference.
While both funds endeavor to provide returns linked to Nasdaq 100 index, way they invest is different.
ICICI pru one is an index fund and invest money directly in Nasdaq 100 stock. That is they buy the US stocks directly
Whereas, MO is a FOF and it does not buy US stocks directly but instead buy MO nasdaq 100 etf (MON100) units from Indian market. MON100 is an ETF and it buys US stocks. So MO FOF holds US stocks indirectly through MON100 ETF

Now this is interesting part. In normal times, this would not have happened. Or at least not as visibly as it is happening now.
But then these are not normal times :slight_smile:
As most MFs have surpassed the foreign investment limit set by RBI, they are unable to make fresh investment in foreign stocks and have stopped inflows.
But MON100 ETF continues to trade on Indian exchanges an investor are buying it at premium (currently it is trading at almost 10% premium to its actual value)
more details here:

So this is driving up the price on MON100 etf, which in turn is driving up MO FOF return.

Hope this helps :slight_smile:

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Thank you everyone for your replies

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Is it the same with all Fund of funds?

For example, I still see some funds like Edelweiss U.S technology funds accepting inflows. Do they also buy corresponding underlying ETFs from Indian market?

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Hard to generalize, as foreign focused FoF generally have to options - buy Foreign ETF listed in Indian market or buy foreign instruments listed outside. Both are possible

No they invest in a US fund by JP Morgan.
Yes there are couple of caveats to that limits. There is a USD 7 billion overall limit and 1 billion limit for individual fund house. There is also separate limit of USD 1 billion for investment in foreign ETF.
Also, I think fund houses are allowed to buy against redemption they had.

So depending on these, some small fund houses might still have some limit / room to buy. But most big funds are near to breach and have stopped inflows.

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