The Indian stock market 2024, represented by Nifty, has delivered a return of about 13% so far (as of December 12). However, the US stock market, specifically the NASDAQ index, has surged by approximately 33% in the same period. This raises an important discussion on investing in US markets for diversification and currency hedge benefits.
Why Invest in the US Market?
Investing in the US market, particularly in the NASDAQ 100, can offer two key benefits:
- Dollar Hedge: Over the years, the Indian Rupee has depreciated against the US Dollar. This means Indian investors may gain an additional advantage when investing in US assets.
- Diversification: The NASDAQ 100 has a much lower correlation with Nifty 50 (24.1%), making it a valuable diversification tool.
What is NASDAQ 100?
- The NASDAQ 100 tracks the top 100 non-financial companies listed on the NASDAQ exchange.
- It has a strong focus on technology and consumer discretionary sectors.
- Major companies include Apple, Microsoft, NVIDIA, Amazon, and Tesla.
How to Invest in NASDAQ 100 from India
Indian investors can gain exposure to the NASDAQ 100 through two primary methods:
- Investing in Indian ETFs that track NASDAQ 100
- Investing directly in US-listed ETFs
Two Popular NASDAQ 100 ETFs
If you want to invest in the NASDAQ 100, here are two main ETF options:
- Motilal Oswal NASDAQ 100 ETF (MOFN100)
- Traded on: Indian stock exchanges
- Expense Ratio: 0.58% (as of September 2024)
- Returns: Slightly lower than the NASDAQ 100 index due to tracking errors and costs
- Liquidity: Good for an India-based ETF, with daily trading volumes in lakhs
- Ease of Investment: Can be bought through any Indian brokerage account
- Invesco QQQ Trust (QQQ)
- Traded on: US stock exchanges
- Expense Ratio: 0.20%
- Returns: Closer to the NASDAQ 100 index, with lower tracking errors
- Liquidity: One of the most traded ETFs globally, with daily volumes in millions
- Ease of Investment: Requires an account with a US broker
Key Differences
| Feature | Motilal Oswal NASDAQ 100 ETF | Invesco QQQ Trust |
| Traded on | Indian stock exchanges | US stock exchanges |
| Expense Ratio | 0.58% | 0.20% |
| Returns vs. Index | 1% lower than NASDAQ 100 | 0.2% lower than NASDAQ 100 |
| Liquidity | Moderate | Very High |
| Investment Process | Easy via Indian brokers | Requires US brokerage account |
Things to Keep in Mind
- Expense Ratio Matters: The lower the expense ratio, the better for long-term returns.
- Tracking Error: Indian ETFs may lag behind their US counterparts due to time zone differences.
- Liquidity: Ensure the ETF has good trading volumes to avoid difficulty in buying/selling.
- Valuation Timing: As of December 2024, NASDAQ 100’s P/E ratio is around 37, which is on the higher side historically. Investors should consider valuations before investing.
- Tax Considerations: Investments in US-listed ETFs may have tax implications, including capital gains tax and dividend withholding tax.
Conclusion
Both ETFs provide exposure to the NASDAQ 100, but if you are comfortable opening a US brokerage account, Invesco QQQ Trust (QQQ) may be a better choice due to its lower expense ratio and better tracking efficiency. However, if you prefer a hassle-free investment through Indian exchanges, Motilal Oswal NASDAQ 100 ETF (MOFN100) is a good alternative.
Investing in NASDAQ 100 ETFs for the Long Term
The Indian stock market 2024, represented by Nifty, has delivered a return of about 13% so far (as of December 12). However, the US stock market, specifically the NASDAQ index, has surged by approximately 33% in the same period. This raises an important discussion on investing in US markets for diversification and currency hedge benefits.
Why Invest in the US Market?
Investing in the US market, particularly in the NASDAQ 100, can offer two key benefits:
- Dollar Hedge: Over the years, the Indian Rupee has depreciated against the US Dollar. This means Indian investors may gain an additional advantage when investing in US assets.
- Diversification: The NASDAQ 100 has a much lower correlation with Nifty 50 (24.1%), making it a valuable diversification tool.
What is NASDAQ 100?
- The NASDAQ 100 tracks the top 100 non-financial companies listed on the NASDAQ exchange.
- It has a strong focus on technology and consumer discretionary sectors.
- Major companies include Apple, Microsoft, NVIDIA, Amazon, and Tesla.
How to Invest in NASDAQ 100 from India
Indian investors can gain exposure to the NASDAQ 100 through two primary methods:
- Investing in Indian ETFs that track NASDAQ 100
- Investing directly in US-listed ETFs
Two Popular NASDAQ 100 ETFs
If you want to invest in the NASDAQ 100, here are two main ETF options:
- Motilal Oswal NASDAQ 100 ETF (MOFN100)
- Traded on: Indian stock exchanges
- Expense Ratio: 0.58% (as of September 2024)
- Returns: Slightly lower than the NASDAQ 100 index due to tracking errors and costs
- Liquidity: Good for an India-based ETF, with daily trading volumes in lakhs
- Ease of Investment: Can be bought through any Indian brokerage account
- Invesco QQQ Trust (QQQ)
- Traded on: US stock exchanges
- Expense Ratio: 0.20%
- Returns: Closer to the NASDAQ 100 index, with lower tracking errors
- Liquidity: One of the most traded ETFs globally, with daily volumes in millions
- Ease of Investment: Requires an account with a US broker
Key Differences
| Feature | Motilal Oswal NASDAQ 100 ETF | Invesco QQQ Trust |
| Traded on | Indian stock exchanges | US stock exchanges |
| Expense Ratio | 0.58% | 0.20% |
| Returns vs. Index | ~1% lower than NASDAQ 100 | ~0.2% lower than NASDAQ 100 |
| Liquidity | Moderate | Very High |
| Investment Process | Easy via Indian brokers | Requires US brokerage account |
Things to Keep in Mind
- Expense Ratio Matters: The lower the expense ratio, the better for long-term returns.
- Tracking Error: Indian ETFs may lag behind their US counterparts due to time zone differences.
- Liquidity: Ensure the ETF has good trading volumes to avoid difficulty in buying/selling.
- Valuation Timing: As of December 2024, NASDAQ 100’s P/E ratio is around 37, which is on the higher side historically. Investors should consider valuations before investing.
- Tax Considerations: Investments in US-listed ETFs may have tax implications, including capital gains tax and dividend withholding tax.
Conclusion
Both ETFs provide exposure to the NASDAQ 100, but if you are comfortable opening a US brokerage account, Invesco QQQ Trust (QQQ) may be a better choice due to its lower expense ratio and better tracking efficiency. However, if you prefer a hassle-free investment through Indian exchanges, Motilal Oswal NASDAQ 100 ETF (MOFN100) is a good alternative.
Investing in NASDAQ 100 ETFs for the Long Term
The Indian stock market 2024, represented by Nifty, has delivered a return of about 13% so far (as of December 12). However, the US stock market, specifically the NASDAQ index, has surged by approximately 33% in the same period. This raises an important discussion on investing in US markets for diversification and currency hedge benefits.
Why Invest in the US Market?
Investing in the US market, particularly in the NASDAQ 100, can offer two key benefits:
- Dollar Hedge: Over the years, the Indian Rupee has depreciated against the US Dollar. This means Indian investors may gain an additional advantage when investing in US assets.
- Diversification: The NASDAQ 100 has a much lower correlation with Nifty 50 (24.1%), making it a valuable diversification tool.
What is NASDAQ 100?
- The NASDAQ 100 tracks the top 100 non-financial companies listed on the NASDAQ exchange.
- It has a strong focus on technology and consumer discretionary sectors.
- Major companies include Apple, Microsoft, NVIDIA, Amazon, and Tesla.
How to Invest in NASDAQ 100 from India
Indian investors can gain exposure to the NASDAQ 100 through two primary methods:
- Investing in Indian ETFs that track NASDAQ 100
- Investing directly in US-listed ETFs
Two Popular NASDAQ 100 ETFs
If you want to invest in the NASDAQ 100, here are two main ETF options:
- Motilal Oswal NASDAQ 100 ETF (MOFN100)
- Traded on: Indian stock exchanges
- Expense Ratio: 0.58% (as of September 2024)
- Returns: Slightly lower than the NASDAQ 100 index due to tracking errors and costs
- Liquidity: Good for an India-based ETF, with daily trading volumes in lakhs
- Ease of Investment: Can be bought through any Indian brokerage account
- Invesco QQQ Trust (QQQ)
- Traded on: US stock exchanges
- Expense Ratio: 0.20%
- Returns: Closer to the NASDAQ 100 index, with lower tracking errors
- Liquidity: One of the most traded ETFs globally, with daily volumes in millions
- Ease of Investment: Requires an account with a US broker
Key Differences
| Feature | Motilal Oswal NASDAQ 100 ETF | Invesco QQQ Trust |
| Traded on | Indian stock exchanges | US stock exchanges |
| Expense Ratio | 0.58% | 0.20% |
| Returns vs. Index | ~1% lower than NASDAQ 100 | ~0.2% lower than NASDAQ 100 |
| Liquidity | Moderate | Very High |
| Investment Process | Easy via Indian brokers | Requires US brokerage account |
Things to Keep in Mind
- Expense Ratio Matters: The lower the expense ratio, the better for long-term returns.
- Tracking Error: Indian ETFs may lag behind their US counterparts due to time zone differences.
- Liquidity: Ensure the ETF has good trading volumes to avoid difficulty in buying/selling.
- Valuation Timing: As of December 2024, NASDAQ 100’s P/E ratio is around 37, which is on the higher side historically. Investors should consider valuations before investing.
- Tax Considerations: Investments in US-listed ETFs may have tax implications, including capital gains tax and dividend withholding tax.
Conclusion
Both ETFs provide exposure to the NASDAQ 100, but if you are comfortable opening a US brokerage account, Invesco QQQ Trust (QQQ) may be a better choice due to its lower expense ratio and better tracking efficiency. However, if you prefer a hassle-free investment through Indian exchanges, Motilal Oswal NASDAQ 100 ETF (MOFN100) is a good alternative.
Disclaimer: This content is for educational purposes only and is not intended as financial or investment advice. Please consult a qualified financial professional before making any financial decisions.