scorecardresearchNavi US Total Stock Market Fund of Fund: All you want to know

Navi US Total Stock Market Fund of Fund: All you want to know

Updated: 08 Feb 2022, 08:37 AM IST
TL;DR.

Navi US Total Stock Market Fund of Funds is a convenient way to get exposure to US equities. The NFO closes on Feb 18

Navi Mutual Fund projects this as an opportunity to invest in the US stock market which represents 44 percent of the world’s stock market cap.

Navi Mutual Fund projects this as an opportunity to invest in the US stock market which represents 44 percent of the world’s stock market cap.

Navi Mutual Fund has announced a new fund offer (NFO) for a scheme — Navi US Total Stock Market Fund of Funds, which is set to close on February 18. The fund enables you to invest in Vanguard Total Stock Market ETF (VTI), one of the largest passively managed US-based ETFs. The proposed fund is currently the only one in India that enables investors to invest in VTI, which is the third largest ETF in the world with $1.3 trillion in assets.

Navi Mutual Fund — the asset management company (AMC) — projects this as an opportunity to invest in the US stock market which is $53.76 trillion in size, representing 44 percent of the world’s stock market cap. The AMC also projects this as a potential hedge against the rupee's depreciation of INR vs USD.

 

Article
We explain what exactly is a fund of funds.

VTI tracks the CRSP US total market index comprising 4,000 plus stocks representing the entire equity US market, which essentially means you get exposure to the entire US market through one fund. 

VTI invests in US equities across caps — small, mid, and large, it has exposure to big names such as Apple, Microsoft, Alphabet, Amazon, Tesla and Facebook. Its top 10 holdings account for 25 percent, the fund is not heavily inclined towards technology with 29 percent allocation, as other sectors play a significant part too, with healthcare comprising 12.8 percent, financials 10.9 percent and consumer discretionary 16 percent.

 

The VTI’s rate of return for past 10 years can be seen here:

DurationCAGR (in %)
One year28.15
Five years20.11
10 years20.27

 

The mutual fund house beckons investors who want to diversify their portfolio by getting an exposure to US equities, and the ones who want to capitalise on the growth of emerging US companies which are yet not part of S&P500 or Nasdaq100. Also, the fund bears a minimal cost with a total expense ratio of 0.06 percent per annum and is seen as a good investment for investors who are looking forward to capital appreciation over the long term.

From the investment perspective of an Indian investor, it is a low-cost way to invest in US equities and hedge the future risk of steep fall in Indian rupee against US dollar.

 

First Published: 07 Feb 2022, 05:43 PM IST