1. Executive Summary

Motilal Oswal Nasdaq Q 50 ETF (MONQ50) is an open-ended, passively managed exchange-traded fund that seeks to mirror the performance of the Nasdaq Q-50 Total Return Index (NXTQ TRI), before fees, expenses and tracking error. Allotted on 23 December 2021, the scheme gives Indian investors direct access to a basket of fifty of the largest Nasdaq-listed, non-financial companies that currently sit outside the Nasdaq-100 Index but are viewed as strong candidates for future inclusion in it.

As of 31 May 2026, the fund managed an AUM of approximately ₹176.12 crore, carried a total expense ratio of around 0.47%, and reported a one-year return of 70.77%, a three-year CAGR of 32.21% and a since-inception CAGR of 14.72% under the Regular Growth plan. These figures reflect a sharp rally in mid- and next-generation US growth and technology names over the trailing twelve months, and should be read alongside the fund's Very High riskometer rating and its concentrated, single-country, single-currency exposure.

2. Fund Snapshot

Figures compiled from the Motilal Oswal AMC official scheme page and cross-checked against Tickertape, IndMoney and TradingView. Minor variances between data vendors on TER and AUM reflect differing update cycles.

3. Understanding the Underlying Index: Nasdaq Q-50

A common point of confusion is the "Q" in Nasdaq Q-50 — it does not stand for "Quality". The Nasdaq Q-50 (ticker NXTQ) is a market-capitalisation-weighted index of the 50 largest Nasdaq-listed, non-financial companies that satisfy Nasdaq-100 eligibility criteria but are not yet part of the Nasdaq-100 Index. It is often described as a "feeder" or "on-deck" index — a watch-list of companies considered next in line for potential promotion into the Nasdaq-100.

Key mechanics of the index, drawn from Nasdaq's published methodology:

● Universe: all domestic and foreign companies listed on the Nasdaq Stock Market.

● Screen: financial-sector companies (per the Industry Classification Benchmark) are excluded, mirroring the Nasdaq-100 approach.

● Selection: the 50 largest remaining companies by market capitalisation that are not already Nasdaq-100 constituents are included.

● Weighting: modified market-capitalisation weighted, with an individual security cap of 4% to limit concentration risk.

● Reconstitution: reviewed quarterly; a stock that graduates into the Nasdaq-100 is removed from the Q-50 without a same-day replacement.

Since its 2007 launch, well over a hundred companies have at some point graduated from the Nasdaq Q-50 into the Nasdaq-100 — historical examples cited by Nasdaq include Meta Platforms, Netflix, Atlassian, Splunk and CrowdStrike at various points in their growth cycle. This graduation dynamic is the central investment thesis of the index: it aims to capture emerging, high-growth Nasdaq companies at an earlier stage than the mega-cap-dominated Nasdaq-100.

4. Performance Analysis

4.1 Trailing Returns (Regular Growth Plan, as of 31 May 2026)

Source: Motilal Oswal AMC official scheme page, data as on 31 May 2026. Returns for periods of one year or more are Compounded Annualised Growth Rate (CAGR); returns are for the Regular Growth plan and do not account for brokerage or transaction costs incurred while buying/selling the ETF on the exchange.

4.2 Reading the Numbers

The one-year return of 70.77% is materially higher than the three-year and since-inception CAGRs, indicating that the bulk of the fund's cumulative gain has been generated in the trailing twelve months rather than spread evenly since launch. This is consistent with a strong rally in AI-linked semiconductor, cloud-infrastructure and biotechnology names — several of which feature prominently in the fund's current top holdings (Section 5). Investors should note that such a sharp one-year move also implies elevated recent volatility, and that a 70%+ single-year return is unlikely to be a sustainable annual run-rate.

The gap between the 3-year CAGR (32.21%) and the since-inception CAGR (14.72%) also reflects the fund's difficult early years: the scheme was launched in December 2021, shortly before a sustained 2022 drawdown across global growth and technology equities, from which the Nasdaq Q-50 subsequently recovered.

5. Portfolio Composition

5.1 Top 10 Holdings (as of 31 May 2026)

The portfolio held 50 constituents as of 31 May 2026, consistent with the index's fixed-count design. Individual stock weights are capped at approximately 4% by the index methodology, which limits single-name concentration relative to a market-cap-weighted index without such a cap.

5.2 Sector Allocation (selected, as of 31 May 2026)

The sector mix confirms a technology-and-innovation tilt (software, semiconductors, hardware together account for roughly 28% of NAV), balanced by meaningful exposure to biotechnology and a long tail of industrial, travel, retail and consumer names — a materially more diversified sector spread than the mega-cap-heavy Nasdaq-100.

6. Costs and Trading Efficiency

● Total Expense Ratio: reported at approximately 0.47% by Tickertape and IndMoney; TradingView cites a marginally lower 0.42%. As an ETF, MONQ50 does not offer a separate Direct plan — the quoted TER applies uniformly to all unit holders.

● Tracking Error: 0.43% over the twelve months to 10 March 2026 versus the NXTQ TRI — a reasonably tight tracking error for a fund replicating a US-listed, INR-denominated index subject to currency translation.

● Portfolio Turnover: 1.05x over the trailing year, higher than a plain-vanilla large-cap index fund, reflecting the Nasdaq Q-50's quarterly reconstitution and the natural churn created when constituents graduate to the Nasdaq-100.

● Exchange Premium/Discount: as with most India-listed international ETFs, MONQ50's on-exchange market price can diverge from its published NAV owing to limited on-shore creation/redemption capacity for overseas ETFs and time-zone gaps between Indian trading hours and US market pricing. Some data providers have flagged periods of an elevated premium to NAV; investors should check the live iNAV/indicative NAV and prefer placing limit orders rather than market orders when transacting.

7. Risk Profile and Suitability

Both the scheme and its benchmark carry a 'Very High' riskometer rating. Relevant risk factors include:

● Concentration risk: the index holds only 50 stocks with an individual cap of ~4%, so idiosyncratic single-stock risk is higher than a broad-market fund.

● Currency risk: returns to an Indian investor are affected by INR–USD movements in addition to the underlying index's own price performance.

● Market-cap migration risk: by design, the strongest performers eventually graduate out of the Q-50 and into the Nasdaq-100, meaning the fund periodically loses its best-performing constituents and reinvests in earlier-stage names.

● Liquidity/premium risk: as an ETF investing in overseas securities, on-exchange liquidity and NAV-tracking can be less efficient than for domestic-equity ETFs.

● Volatility: historical index research published by Nasdaq notes that, owing to its smaller constituent count, the Q-50 has tended to exhibit somewhat higher volatility than both the Nasdaq-100 and broad US benchmarks such as the S&P 500.

The product label describes MONQ50 as suitable for investors seeking long-term capital growth and returns that track the Nasdaq Q-50 Total Return Index, subject to tracking error and forex movement. It is best suited to investors with a high risk tolerance, a long investment horizon, and an existing view on US mid-to-large-cap growth and technology-adjacent equities — typically as a satellite allocation within a diversified portfolio rather than a core holding.

8. Strengths and Considerations

8.1 Potential Strengths

● Differentiated exposure: access to the 'next generation' of Nasdaq-eligible companies not available through more commonly held Nasdaq-100 index funds.

● Rules-based, transparent index construction with a hard concentration cap per stock.

● Reasonably tight tracking error against the benchmark despite the complexity of replicating a US-listed index from India.

● No entry or exit load, and a low minimum investment ticket size (₹500).

8.2 Considerations for Investors

● Very high volatility and a short live track record (allotted December 2021) limit the depth of through-cycle performance history.

● The one-year return of 70.77% is well above the fund's 3-year and since-inception CAGRs and should not be extrapolated forward.

● Exchange-traded premium/discount dynamics mean investors should verify live NAV before placing orders rather than relying solely on the last traded price.

● As a satellite, thematic-style allocation, position sizing within an overall portfolio deserves particular care given the Very High risk rating.

9. Conclusion

Motilal Oswal Nasdaq Q 50 ETF offers Indian investors a distinctive, rules-based route into a segment of the US equity market that sits just below the Nasdaq-100 by market capitalisation — companies Nasdaq itself characterises as the 'next generation' of potential mega-cap leaders. Trailing performance to May 2026 has been strong, powered by a broad rally in technology, semiconductor and biotechnology names within the index, but this performance has been concentrated in the most recent year and the fund carries a Very High risk rating, tracking error, currency risk and exchange-premium considerations that warrant careful, informed allocation sizing rather than an outsized or core portfolio position.