Hello
The 5 yr rolling returns of Motilal Oswal Nasdaq 100 Fund of Fund looks to better than that of Motilal Oswal Nasdaq 100 ETF
I checked for the period 12 Jan 2018 onwards. Can one conclude that the former is a better option?
The fund of fund invests directly in the ETF. It does not own the stocks in it’s own capacity. The mutual fund is just literally buying ETF units on your behalf.
So you will be paying expense ratio of ETF + Mutual fund if you go mutual fund way.
Thank you.
This is the first time I encountered a MF that invests in ETFs.
Below is my understanding of index mutual fund vs ETF. Please correct if any of it (or my conclusions) are incorrect.
Index funds charge their expense ratio to the daily current value of your investment. Every investment is at a specific NAV.
Pure ETFs (not MFs that invest in ETFs) have no expense ratio. Since ETFs are traded and so their values can drift higher or lower than the iNAV. The overheads are the (typically smaller) ETF expense ratio+ trading charge.
So as long as one purchases ETFs at prices close to the iNAV they will give better returns than index funds over 5/8/10 years.
One other question: I have read that ETFs are more liquid than MFs. Are all ETFs traded in sufficient volumes that one can sell easily ?