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Quantum Nifty 50 ETF Fund of Fund NFO – Do you have to make investments?


Quantum Mutual Fund launching India’s first Nifty 50 ETF Fund Of Fund (FoF) claiming as a brand new type of product. As Index funds are gaining recognition amongst Indians, must you put money into Quantum Nifty 50 ETF Fund of Fund NFO?

Everyone knows that Index Funds are gaining recognition amongst Indians. Primarily due to clear definitions of funds primarily based on SEBI Recategorization, constant underperformance of main lively funds, low price, and ease.

Mutual Fund corporations making an attempt their encash this development by launching one-by-one Index Funds. Nevertheless, is it price contemplating all these Index Funds simply because the tagline is INDEX FUND?

Quantum Nifty 50 ETF Fund of Fund NFO – Do you have to make investments?

I’m a staunch believer in index funds. Nevertheless, on the similar time, I’m lethal in opposition to the gimmick these mutual fund corporations create in us by encashing our temper. The basic instance is Quantum Nifty 50 ETF Fund of Fund NFO. The explanations are as beneath.

# Price –

They’ve their very own 14 years outdated underlying the Nifty 50 ETF. The price of this ETF as per their declaration is 0.094%. That is clearly a low price in comparison with typical Index Mutual Funds (not ETF to ETF). Nevertheless, should you put money into Quantum Nifty 50 ETF Fund of Fund, then it’s a must to bear two prices. One is the underlying ETF price and the second is the Quantum Nifty 50 ETF Fund of Fund price. Therefore, it’s a double costing product for us. Nevertheless, if the full price is lower than the accessible Nifty 50 Index Funds, then we could say that it’s cost-effective. In any other case, a waste product.

# Taxation –

As this fund is handled as a Fund Of Fund for taxation, the tax guidelines of debt funds will probably be relevant right here. Therefore, in case your holding interval is lower than three years, then the achieve will probably be taxed as per your tax slab. Nevertheless, in case your holding interval is greater than three years, then the achieve will probably be taxed at 20% with an indexation profit.

The most important disadvantage of such Fund Of Funds in right now’s tax regime is TAXATION, which many ignore earlier than investing in such merchandise.

# Monitoring Error or Monitoring Distinction –

If you happen to don’t know what’s monitoring error and monitoring distinction, then check with my newest put up “Monitoring Distinction Vs Monitoring Error of ETF and Index Funds“. It’s important to face two varieties of monitoring errors and monitoring variations right here. One is the underlying ETF monitoring error and distinction and one other is that this fund’s monitoring error and distinction. Take a look at the newest monitoring error and monitoring distinction of this ETF.

Quantum Nifty 50 ETF - Tracking Error and Tracking Difference

Although monitoring errors and variations look much less, your Quantum Nifty 50 ETF Fund of Fund will add extra monitoring errors and monitoring variations. As a result of they will’t replicate 100% of the monitoring error and monitoring distinction of underlying ETF.

# Liquidity, SIP and Demat Account

This product could also be pushed to you by saying you’ll not face any liquidity points, SIP is feasible (however not in ETF), and Demat account necessities like underlying ETF. It’s true. Nevertheless, simply by these three options of this product, one can’t ignore the bills, taxation, and monitoring error or distinction pointers.

Therefore, contemplating extra negatives than positives, although Quantum Mutual Fund firm could also be claiming this as India’s first Nifty 50 ETF Fund Of Fund, higher to IGNORE. Relatively both select the direct ETF (if you’re effectively versed with the way it works like promoting, shopping for, and Demat account necessities) or just select the present Nifty 50 Index Funds.

All the time be cautious with the strikes of mutual fund corporations. In case your requirement is real, then make investments. Else, an upfront NO is much better.

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