some fancy linguistic footwork in the description of the 3x msci india fund. parsed it appears that base index for the fund (the underlying security in derivative terms) is the msci india index that in theory captures 85 % of the securities traded in country
the fund is designed to provide a 3x return on this index achievable only through the use of index futures (the nifty 50 futures contract) and options on the index though these options are only liquid enough to trade in reasonable size in the front month
now the nifty 50 is weighted largely toward financial stocks (over 35 % of the index) and of those financial stocks hdfc and hdfc bank account for over 17 % of the index
without going into deeper math despite all the noise of Indian capital markets (it is both commendable and very entertaining) price movement in these 2 stocks (and in a larger sense the banknifty index) are adequate to move the index (no need really to be concerned about the 85 %) and the flows into and out of the msci fund (which is an exchange traded, foreign listed fund) will be refelected by buying and selling in nifty futures.
price discovery and transmission of global views on Indian capital markets will be immediate and exaggerated in both directions
equally interesting will be the now monthly double witching expiry of nifty and banknifty futures and options on the last thursday of each month
enjoy the ride
the fund is designed to provide a 3x return on this index achievable only through the use of index futures (the nifty 50 futures contract) and options on the index though these options are only liquid enough to trade in reasonable size in the front month
now the nifty 50 is weighted largely toward financial stocks (over 35 % of the index) and of those financial stocks hdfc and hdfc bank account for over 17 % of the index
without going into deeper math despite all the noise of Indian capital markets (it is both commendable and very entertaining) price movement in these 2 stocks (and in a larger sense the banknifty index) are adequate to move the index (no need really to be concerned about the 85 %) and the flows into and out of the msci fund (which is an exchange traded, foreign listed fund) will be refelected by buying and selling in nifty futures.
price discovery and transmission of global views on Indian capital markets will be immediate and exaggerated in both directions
equally interesting will be the now monthly double witching expiry of nifty and banknifty futures and options on the last thursday of each month
enjoy the ride
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