MIRAE ASSET NIFTY NEXT 50 ETF€¦ · NIFTY Next 50 portfolio captures the essence of large caps...

Mirae Asset Investment Managers

MIRAE ASSET NIFTY NEXT 50 ETF


NIFTY Next 50: Profile

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Source: ACE MF, as on Dec 31, 2019. The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same.

Parameter NIFTY 50 NIFTY Next 50 NIFTY Midcap 150

Segment Large Cap Mid Cap

Criteria Top 50 stocks by M-Cap Remaining 50 Stocks Companies ranked from 101 to 250 based on full MCap

Constituents 50 50 150

Avg. MCap 1,79,771 47,326 15,749

Avg. MCap (Top 25) 2,95,235 64,326 27,384

Avg. MCap (Next 25) 64,307 30,326 20,189

Top 5 Stocks (% Weight)

HDFC Bank (11.0) HDFC Life (4.7) Info Edge India (1.9)

Reliance (9.8) SBI Life (4.6) Federal Bank (1.9)

HDFC (8.3) ICICI Insurance (3.5) City Union Bank (1.9)

ICICI Bank (7.0) Shree Cement (3.3) RBL Bank (1.8)

Infosys (5.3) Dabur India (3.3) Voltas (1.7)

NIFTY Next 50 portfolio captures the essence of large caps and midcaps


NIFTY Next 50: Sector distribution

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Source: NSE, as on Dec 31, 2019. The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same.

NIFTY Next 50 portfolio is more diversified as compared to NIFTY 50

30%

8%

1%

2%

5%

2%

1%

16%

1%

5%

2%

0% 20% 40%

BANKS

FINANCIALINSTITUTION

HOUSING FINANCE

INSURANCE

INVESTMENTCOMPANIES

NBFC

OTHER FINANCIALSERVICES

Financial services sector

NIFTY Next 50 NIFTY 50

41%

11%

2% 2%

15%

6%

1% 0%

3%

12%

6%

32%

23%

12%

7% 6% 5% 4% 3% 2% 1%

6%

FIN

AN

CIA

L SE

RV

ICES

CO

NSU

MER

GO

OD

S

PH

AR

MA

CEM

ENT

& C

EMEN

TP

RO

DU

CTS EN

ERG

Y

AU

TOM

OB

ILE

SER

VIC

ES

Ch

emic

als

MET

ALS IT

Oth

ers

NIFTY 50 NIFTY Next 50


NIFTY Next 50: Stock distribution

3 |

Source: NSE, as on Dec 31, 2019. The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same.

NIFTY Next 50 portfolio is more diversified as compared to NIFTY 50

41%

61%

79%

2%

1%

20%

34%

58%

8%

2%

Top 5 stocks

Top 10 stocks

Top 20 stocks

Bottom 10 stocks

Median

Weight Distribution

NIFTY Next 50 NIFTY 50

Top Stocks by weight

Top 15 stocks in NIFTY Next 50

HDFC LIFE 4.7

SBI LIFE 4.6

ICICI LOMBARD 3.5

SHREE CEMENT 3.5

DABUR INDIA 3.3

GODREJ CONSUMER 3.3

DIVI'S LABORATORIES 3.0

BANDHAN BANK 2.7

PIDILITE INDUSTRIES 2.7

AVENUE SUPERMARTS 2.7

PETRONET LNG 2.6

HPCL 2.5

SHRIRAM TRANSPORT 2.5

COLGATE PALMOLIVE 2.5

LUPIN 2.3

Why Nifty Next 50?


NIFTY Next 50: Captures potential blue chips of tomorrow

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Source: ACE MF, as on Dec 31, 2019. The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same.

NIFTY Next 50 portfolio captures the potential blue chips of tomorrow, today !

Stocks that moved from NIFTY Next 50 to NIFTY 50 in last 10 years (Dec ’19)

S. No Name

1 KOTAK MAHINDRA BANK

2 BAJAJ FINANCE

3 INDUSIND BANK

4 ASIAN PAINTS

5 BAJAJ FINSERV

6 TITAN COMPANY

7 ULTRATECH CEMENT

8 TECH MAHINDRA

9 BAJAJ AUTO

10 COAL INDIA

11 BRITANNIA INDUSTRIES

12 DR. REDDY'S LABORATORIES

13 UPL

14 INDIAN OIL CORPORATION

15 EICHER MOTORS

16 GRASIM INDUSTRIES

17 ADANI PORTS AND SPECIAL ECONOMIC ZONE

18 VEDANTA

19 JSW STEEL

20 ZEE ENTERTAINMENT ENTERPRISES

21 BHARTI INFRATEL

22 YES BANK


NIFTY Next 50: Get active flavour in passive

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Source: NSE, as on Dec 31, 2019. CAGR Returns Past performance may or may not sustain in future.

NIFTY Next 50 portfolio may capture the upside of potential blue chips of tomorrow

By design, NIFTY Next 50 may capture the upside of potential blue-chips of tomorrow, before probable move to NIFTY 50

In last 10 years, 99 stocks have been replaced in NIFTY Next 50 Index, resulting in a turnover of almost 20% of stocks. A passive index usually have a rule based stock churn resulting in portfolio turnover like active mutual funds

Company name (Years in NIFTY Next 50/Years in NIFTY 50)

36%

93%

46%

25%

57%

27% 24%

45% 41%

22% 25%

14%

Asian Paints(9yrs/8yrs)

Bajaj Finance(1yr/2yrs)

Bajaj Finserv(5yrs/2yrs)

IndusInd Bank(2yrs/7yrs)

Kotak Mahindra Bank(7yrs/10yrs)

Titan(7yrs/2yrs)

Stock journey From NIFTY Next 50 to NIFTY 50 (CAGR Returns)

Returns with NIFTY Next 50 Returns with NIFTY 50


NIFTY Next 50: Provides an alternate exposure in large cap segment

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Source: ACE MF and Bloomberg. Industry based exposure data is as on Nov 30,2019 , other data is as on Dec 31, 2019. The sector(s)/stock(s)/issuer(s) mentioned

in this presentation do not constitute any research report/recommendation of the same.

NIFTY Next 50 portfolio provides different stock and sector exposure in large cap space

Industry based exposure

Sector Top 10 Large Cap Funds NIFTY 50 NIFTY Next 50

Banks 30.1 30.2 5.7

Oil, Gas & Consumable Fuels 9.9 13.7 5.4

IT Services 9.4 12.4

Construction & Engineering 3.8 3.3

Automobiles 3.8 5.6

Pharmaceuticals 3.7 2.2 7.5

Thrifts & Mortgage Finance 3.6 8.0 1.3

Insurance 3.3 1.1 14.8

Tobacco 3.2 4.3

Construction Materials 2.7 1.6 7.0

Wireless Telecom Services 2.5 1.7 0.7

Metals & Mining 2.1 2.3 1.9

Chemicals 1.7 2.2 4.1

Auto Components 0.9 3.8

Household Products 0.8 2.9

Diversified Financial Services 0.5 5.0

Personal Products 0.5 13.3

Beverages 0.2 4.2


NIFTY Next 50: Return and risk profile

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Period Returns Return to Risk Ratio

NIFTY 50 NIFTY NEXT 50 NIFTY Midcap 100 NIFTY 50 NIFTY NEXT 50 NIFTY Midcap 100

6 Months 3.9% 4.3% -2.5% 0.37 0.37 -0.19

1 Year 13.5% 1.6% -3.4% 0.98 0.11 -0.21

2 Years 9.0% -3.2% -9.2% 0.67 -0.21 -0.53

3 Years 15.6% 11.4% 7.2% 1.30 0.76 0.45

5 Years 9.4% 10.1% 7.5% 0.69 0.62 0.44

7 Years 12.3% 14.1% 11.8% 0.86 0.84 0.69

10 Years 10.2% 11.9% 10.0% 0.67 0.70 0.59

NIFTY Next 50 has given better returns than NIFTY 50 and NIFTY Midcap Index along with comparable return to risk ratio v/s NIFTY 50 over longer horizons

Source: NSE, as on Dec 31, 2019. Past performance may or may not sustain in future.


NIFTY Next 50: Calendar year returns

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Since 2009, NIFTY Next 50 has outperformed NIFTY 50 in 6 Calendar years and Midcap 100 in 7 calendar year respectively.

78%

19%

-24%

29%

8%

33%

-3%

4%

30%

5% 13%

131%

19%

-31%

50%

6%

46%

8% 8%

48%

-8%

2%

102%

20%

-30%

41%

-4%

58%

8% 8%

49%

-15%

-3%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NIFTY 50 - TRI NIFTY NEXT 50 - TRI NIFTY Midcap 100 - TRI


NIFTY Next 50: Rolling returns

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Average Rolling Returns

3 years investment horizon 1 year investment horizon

Period NIFTY 50 NIFTY NEXT 50 NIFTY Midcap 100 NIFTY 50 NIFTY NEXT 50 NIFTY Midcap 100

14 years 16.2% 19.3% 19.1% 16.6% 20.3% 18.8%

10 years 11.0% 15.8% 14.4% 13.7% 19.7% 17.8%

7 years 11.6% 16.2% 14.5% 13.6% 17.9% 15.9%

5 years 12.9% 19.2% 18.2% 11.4% 15.3% 14.1%

3 years 11.6% 16.3% 15.0% 14.0% 13.0% 9.8%

NIFTY Next 50 has consistently given better 3 yr rolling returns than NIFTY 50 and NIFTY Midcap 100

Source: NSE, as on Dec 31, 2019. Past performance may or may not sustain in future. 3 year rolling return in five year period provides the return which investor has realized in last 5 years (average), with investment starting in last 8 year.


NIFTY Next 50: Drawdown profile

Source: ACE MF, as on Dec 31, 2019. Drawdown is the % decline from the last all time high on the concerned index

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NIFTY Next 50 is more volatile than NIFTY 50 but had better drawdowns performance than Midcap

Next 50 drawdowns are more than NIFTY 50 but less than Midcap index

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19

NIFTY Midcap 100 - TRI NIFTY 50 - TRI NIFTY NEXT 50 - TRI


Summary: Why NIFTY Next 50 ETF

NIFTY Next 50 blends the flavor of large cap and midcap segment

Historical Performance

Higher returns than NIFTY 50 and NIFTY Midcap 100 in longer horizon

Higher volatility and draw down than NIFTY 50 but lower than NIFTY Midcap 100

Comparable Return to Risk Profile with NIFTY 50 in longer horizon

Has outperformed 78% of Large cap MF’s in previous 5, 7 years horizon

Portfolio

More diversified than NIFTY 50 at both stock and sector level

Provides different stock & sector level exposure compared to Large cap MFs and NIFTY 50 ETFs

NIFTY Next 50 aims to provides the stability of large cap with return potential of midcap

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Past performance may or may not sustain in future.


Mirae Asset NIFTY Next 50 ETF

NFO Period: Jan 13th to Jan 21st 2020

Minimum Application Amount during NFO Period: Rs 5,000 and thereafter multiple of Rs 1

Reopens for continuous sale and purchase : Jan 27th 2020

Post NFO Transaction: Investor can buy or sell ETF units in any quantity on exchange *or* directly with AMC in

multiples of creation unit size

Expense Ratio: ~15 bps

Authorized Participants: Mirae Asset Capital Markets (India)

ETF Units: Creation Unit Size = 10,000 units (Approx. 25 -30 Lakh INR)

Listing: NSE & BSE

Others: iNAV available on Website

Returns: Price & Div. Reinvestment returns similar to NIFTY Next 50 TR Index (Benchmark)

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Thank You

Annexure


ETF: Two investment ideas brought together

ETF Fund that trades like

a stock

Stock Tradable during day

Mutual Fund

Exchange Traded Fund (ETF) aims to generate total returns of the underlying index like NIFTY Next 50 by investing in the index portfolio

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ETF v/s Other Mutual Funds

Similarities Difference

Low Cost

Trades on

Exchange

Replicates the

Benchmark

(Beta instead

of Alpha)

Daily

Portfolio

Transparency

Portfolio

Diversification

Can be broad,

strategy,

sector or

theme based

Professional

Management

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Advantages of ETF

Low Cost: Lower expense ratio (Avg. of Large cap ETFs: 0.15 %) than equity MFs (Avg. of Large Cap MFs: 2.2%) No Exit Load

Liquidity: Trades on exchange like stocks throughout the day Priced close to Live NAV, hence can be brought and sold intra day at real time NAV

Transparency: Portfolio is disclosed on a daily basis Aim to replicate the return of the underlying Index

Performance: NIFTY Next 50 ETFs have outperformed 78% of large cap mutual funds in previous 5 year period*

Reduces Non Market risk: Reduces the unsystematic risk / Non Market risk

Data as on Dec 31, 2019. Source: ACE MF. *Large Cap Mutual funds based on the SEBI circular on categorization and rationalization of Mutual Fund Scheme

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How to trade in an ETF ? (Post NFO)

Investors

(Buy/Sell just like stocks in any quantity)

Large Investors (Buy /Sell in multiple of

creation unit size)

Stock Exchange (Quotes by

other investors and market maker)

Mutual Fund (Creates ETF basket/units

to mirror an Index)

Market Maker* (Authorized Participants)

Cash

Multiple of ETF creation units*

ETF Units

Cash for transaction in Multiple of ETF creation

unit size*

Buyer and Seller of ETF Units

Ensures trading around real time NAV

Transact on Exchange Transact directly with AMC

*Creation unit is the minimum portfolio size which the ETF deploy in the stocks of underlying index to create a replicable portfolio.

* Authorized participants are assigned by the AMC to provide continuous liquidity on the exchange around real time NAV. They provide both buy and sell quotes like Banks in forex market.

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ETF Performance v/s MF performance

Source: ACE MF, as on Dec 31, 2019. * Based on 28 Large cap, funds (Regular: Growth). *Large Cap Mutual funds based on the SEBI circular on categorization and rationalization of Mutual Fund Scheme. Past performance may or may not sustain in future.

• NIFTY 50 ETFs have outperformed 85% of large cap mutual funds* in 3 year period by an average margin of 2.7%.

• NIFTY Next 50 ETFs has outperformed 78% of Mutual fund in last 5 year and 7 year periods by an average margin of 1.0% and 1.1% respectively.

ETF Type

% of Large Cap MF schemes outperformed by ETF Excess return of ETFs over average returns of MF's

1 year 3 years 5 Years 7 years 10 years 1 year 3 years 5 Years 7 years 10 years

NIFTY 50 71% 85% 74% 41% 43% 1.5 2.7 0.8 -0.3 -0.3

NIFTY Next 50 0% 22% 78% 78% 67% -10.4 -1.8 1.0 1.1 0.8

Large Cap funds are finding increasingly difficult to outperform Large cap ETFs

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ETF Market Growth

Source: ACE MF and AMFI , as on Nov 30, 2019. Absolute growth rate.

Indian ETF market grew by 445% in last 3 years and by 70% in last 1 year period Primarily drivers:

EPFO investments in NIFTY 50 & Sensex ETFs Disinvestment via ETFs by government. Low cost and outperformance of Large Cap ETFs over Mutual funds

11,843 16,035

34,419

77,897

112,381

169,464

Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Nov-19

ETF AUM

4% 4%

7%

10%

14%

22%

Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Nov-19

% of ETF AUM to Equity MF AUM

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NIFTY Next 50: Potential for long team wealth creation


NIFTY Next 50 has potential to create wealth in long term

0

5000

10000

15000

20000

25000

30000

Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19

NIFTY 50 - TRI NIFTY NEXT 50 - TRI

900

1400

1900

2400

2900

Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

25.2 x

14.0 x

2.4 x

2.1 x

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Mirae Asset Global ETF Footprint

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Mirae Asset Investment Managers 24 |


Disclaimers DISCLAIMER OF NSE: As required, a copy of this Scheme Information Document has been submitted to National Stock Exchange of India Limited (hereinafter referred to as NSE). NSE has

given vide its letter NSE/LIST/5166 dated September 24, 2019 permission to the Mutual Fund to use the Exchange’s name in this Scheme Information Document as one of the stock exchanges

on which the Mutual Fund’s Units are proposed to be listed subject to, the Mutual Fund fulfilling the various criteria for listing. The Exchange has scrutinized this Scheme Information Document

for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Mutual Fund. It is to be distinctly understood that the aforesaid permission given by NSE

should not in any way be deemed or construed that the Scheme Information Document has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the

correctness or completeness of any of the contents of this Scheme Information Document; nor does it warrant that the Mutual Fund’s Units will be listed or will continue to be listed on the

Exchange; nor does it take any responsibility for the financial or other soundness of the Mutual Fund, its Sponsors, its management or any scheme of the Mutual Fund. Every person who

desires to apply for or otherwise acquire any Units of the Mutual Fund may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange

whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription /acquisition whether by reason of anything stated or omitted to

be stated herein or any other reason whatsoever.

DISCLAIMER OF BSE: “BSE Ltd. (“the Exchange”) has given vide its letter LO/IPO/LK/MF/IP/226/2019-20 dated September 19, 2019 permission to to use the Exchange’s name in this SID as

one of the Stock Exchanges on which this Mutual Fund’s Units are proposed to be listed. The Exchange has scrutinized this SID for its limited internal purpose of deciding on the matter of

granting the aforesaid permission to. The Exchange does not in any manner:- i) warrant, certify or endorse the correctness or completeness of any of the contents of this SID; or ii) warrant that

this scheme’s units will be listed or will continue to be listed on the Exchange; or iii) take any responsibility for the financial or other soundness of this Mutual Fund, its promoters, its

management or any scheme or project of this Mutual Fund; and it should not for any reason be deemed or construed that this SID has been cleared or approved by the Exchange. Every person

who desires to apply for or otherwise acquires any unit of of this Mutual Fund may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the

Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or

omitted to be stated herein or any other reason whatsoever.

Statutory Details: Trustee: Mirae Asset Trustee Company Private Limited; Investment Manager: Mirae Asset Investment Managers (India) Private Limited (AMC); Sponsor: Mirae Asset

Global Investments Company Limited.

The information contained in this document is compiled from third party and publically available sources and is included for general information purposes only. There can be no assurance and

guarantee on the yields. Investments in the sectors may or may not remain the same. Views expressed by the Fund Manager cannot be construed to be a decision to invest. The statements

contained herein are based on current views and involve known and unknown risks and uncertainties. Whilst *Mirae Asset Investment Managers (India) Private Limited (the AMC) shall have no

responsibility/liability whatsoever for the accuracy or any use or reliance thereof of such information. The AMC, its associate or sponsors or group companies, its Directors or employees accepts

no liability for any loss or damage of any kind resulting out of the use of this document. The recipient(s) before acting on any information herein should make his/her/their own investigation and

seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein. Any reliance on the accuracy or use of such

information shall be done only after consultation to the financial consultant to understand the specific legal, tax or financial implications.

All the data/performance provided in the presentation is pertaining to the Index and does not in any manner constitute performance of any scheme of Mirae Asset Mutual Fund. There is no

guarantee or assurance of returns/income generation/capital protection in any scheme of the Fund.

* Securities and Exchange Board of India (“SEBI”) vide its letter dated November 20, 2019 bearing reference no. SEBI/HO/IMD/DF5/OW/P/2019/30719/1 (“SEBI NOC”) had granted their non-

objection to transfer the AMC Business from 'Mirae Asset Global Investments (India) Pvt Ltd' to 'Mirae Asset Investment Managers (India) Private Limited'. Kindly refer notice cum addendum no.

AD/28/2019 dated November 25, 2019 for further details.

For further information about other schemes (product labelling and performance of the fund) please visit the website of the AMC: www.miraeassetmf.co.in

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

25 |

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MIRAE ASSET NIFTY NEXT 50 ETF€¦ · NIFTY Next 50 portfolio captures the essence of large caps...

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Transcript of MIRAE ASSET NIFTY NEXT 50 ETF€¦ · NIFTY Next 50 portfolio captures the essence of large caps...