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Best Performing ETFs

21 Jul

What are ETFs?

Exchange Traded Funds are essentially Index Funds that are listed and traded on exchanges like stocks. Until the development of ETFs, this was not possible before. Globally, ETFs have opened a whole new panorama of investment opportunities to Retail as well as Institutional Money Managers. They enable investors to gain broad exposure to entire stock markets in different Countries and specific sectors with relative ease, on a real-time basis and at a lower cost than many other forms of investing.

 Advantages of ETFs:

 An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or BSE Sensex. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. Think of it as a Mutual Fund that you can buy and sell in real-time at a price that change throughout the day.

ETFs offer several advantages to investors: –

1. Can easily be bought / sold like any other stock on the exchange through terminals across the country.

2. Can be bought / sold anytime during market hours at a price close to the actual NAV of the Scheme.

3. No separate form filling. Just a phone call to your broker or a click on the net.

4. Ability to put limit orders.

5. Minimum investment is one unit.

6. Enjoy flexibility of a stock and diversification of index fund.

7. Expense Ratio is lower.

8. Provides arbitrage between Futures and Cash Market.

 Who are the Major Players? Can you invest?

The major players in this market have historically been Large Institutional players seeking to Index core holdings or pursue more aggressive market timing and sector rotation strategies. However, since Smaller Institutions and Retail Investors can trade in small lots, they can invest in essentially the same terms as Large Investors.

1. For Retail or Wholesale Investors with a long-term horizon, it allows diversification of portfolio with one single investment. It insulates them from short term trading activity of other investors in the Fund as ETFs have a unique in-kind creation / redemption mechanism. Lower costs of ETFs enhance net returns in the long term.

2. For FIIs, Institutions and Mutual Funds, it allows easy Asset Allocation, Hedging and Equitising Cash at a low cost.

3. For Arbitrageurs, it provides ease with low Impact Cost to carry out arbitrage between the Cash and the Futures market.

4. For investors with a shorter term horizon, ETFs provides access to liquidity due to the ability to trade during the day and at values near to NAV.

 Is it a popular investment option?

ETFs are very popular abroad with nearly 60% of trading volumes on the American Stock Exchange (AMEX) captured by ETFs. At the end of March 2008, there were over 1280 ETFs with assets of US$ 760.80 billion managed by 79 managers across 42 exchanges around the World.

We will analyze which is the best performing ETF in India in last 2 years.

Motilal Oswal MOSt Shares NASDAQ 100 ETF is the best performing ETF in India in last 2 years.

Annualized return for 2 years is 31.2 % and return for one year is 25.7 %.

This fund belongs to the house of Motilal Oswal mutual fund group and invests only in international markets like NASDAQ in US. Its investments are in commodities sector.

For Record this fund invests in NASDAQ 100 Index. US markets were doing reasonably well compared to other markets, this fund managed to outperform others in its category.

So this investment exposes you to US markets and those who want to participate in US markets can surely invest in this with a time lines of at least 3-5 years.

Second in the list is GS Hang Seng BeES ETF which gave a solid return of 17 % annualized in last 2 years.

Average return in this category is just 2 %. So in comparison this is definitely an outperformer.

This ETF is from global financial giant Goldman Sachs and mostly invests in Hang Seng Index which has performed well in last 2 years compared to other indexes.

This will give good return as long as Hang Seng does well.

Other than these 2 ETFs, all have given a return of 5-6 % annualized.
If you look at the last one year performance, here are the top 5 best performers.

 1Year Best Performers ETFs

Fund Name 

                                                          % Return

Motilal Oswal MOSt Shares NASDAQ 100 ETF

25.90%

GS Shariah BeES                                

23.50%

GS Hang Seng BeES

20.90%

GS Junior BeES

18.80%

ICICI Pru SPIcE Plan

17.40%

So if you are bullish on these country specific indexes go ahead and invest.

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1 Comment

Posted by on July 21, 2013 in Uncategorized

 

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One response to “Best Performing ETFs

  1. pminevest

    August 5, 2013 at 3:50 pm

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