Thread by @avasthiniranjan

One frequently asked question on Edelweiss US Tech FoF bit.ly/ustechnfo

How is the underlying Fund - JP Morgan US tech fund different from Nasdaq 100 Index?

Strategy-
Nasdaq 100 includes top 100 non-financial cos listed on Nasdaq. A diversified index.

1/2

JPM US Tech Fund is a thematic fund that invests only in Technology companies that are disrupting old generation technologies.

These are technologies that are being adopted rapidly by consumers. (eg. Online streaming, cloud computing, autonomous cars, Artificial Intelligence)

Sectoral allocation-
Nasdaq 100:
Technology - 55%
Consumer Discretion - 24%
Healthcare - 7%
Telecommunications - 7%
Consumer staples - 5%

This is a diversified index with high allocation to Technology. Just like in India we have allocation to Finance in our indices.

JPM US Technology Fund:
has entire portfolio allocation to Technology theme.

Sub-Sectors in this fund are -
Software - 38%
Semiconductor - 31%
Internet - 16%
Hardware - 5%

The fund has 100% allocation to Tech hence, not comparable to Nasdaq 100 index which has 55% into Tech.

Marketcap allocation-
Nasdaq 100 has almost 100% allocation to largecaps.

JPM US Technology Fund is a multicap portfolio with
64% to Largecaps
16% to midcaps
20% to smallcaps

Portfolio diversification -
Nasdaq 100 Index
Apple ~12%
Microsoft ~11%
Amazon ~8%
Alphabet ~8%
Facebook ~4%

It has approx 43% exposure into top 5 richly valued large tech companies.

JPM US Technology Fund has a very diversified portfolio and only ~9% exposure to famous stocks that are part of FAANG.

Synopsys ~3.5%
AMD ~3.5%
Microsoft ~3.3%
Analog Devices ~3.1%
Alphabet ~2.8%

Essentially this fund has exposure to emerging tech companies.

In India's context, comparing Nasdaq 100 Index & JPM US Tech fund is like comparing Nifty 50 Index with Emerging Banking & Financial services strategy just because Nifty 50 has high exposure to Finance.

Both are very different and serve entirely different purpose in PF.

Performance-
Since both are very different in terms of strategy, sectors amd stocks there also a huge deviation in performance.

Nasdaq 100 index / JPM US Tech

1yr: 38.6/42.5
3yr: 22.9/29.9
5yr: 18.1/20.2
10yr: 10.1/21.1

USD performance as on 10th Feb 2020.

The purpose of JPM US Technology is to get exposure to emerging tech stocks that are disrupting old businesses.

Technology today is a very well diversified theme. Netflix is new age entertainment company, Uber and Lyft are new age transportation/Auto companies.

PayPal and Matercard are new age financial services company. Amazon and Apple is a new age consumption story.

Technology is a truly diversified theme which has exposure to various sectors where new age companies are disrupting old age companies.

Happy Investing!

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