These new fund offerings (NFOs) are now open for subscription from October 29 to November 6. These new fund offerings (NFOs) are now open for subscription from October 29 to November 6. These new fund offerings (NFOs) are now open for subscription from October 29 to November 6. Motilal Oswal Mutual Fund (MOMF) has introduced four new index funds catering to investors seeking growth in mid and small-cap sectors. The new funds include Motilal Oswal Nifty MidSmall Healthcare Index Fund, Motilal Oswal Nifty MidSmall IT and Telecom Index Fund, Motilal Oswal Nifty MidSmall India Consumption Index Fund, and Motilal Oswal Nifty MidSmall Financial Services Index Fund.
These new fund offerings (NFOs) are now open for subscription from October 29 to November 6. Recent market research conducted by Motilal Oswal Asset Management Company (MOAMC) suggests a rising trend in the market. According to the research, midcaps and smallcaps have shown faster growth rates over the past 5 years when compared to largecaps.
Market capitalization data indicates an upward trajectory, with mid-cap companies experiencing a 25.7% increase, small-cap firms growing by 28.0%, and large-cap companies showing a more modest growth rate of 19.1%.
Index funds designed for investors with a higher risk tolerance seek to capitalize on the potential for greater returns in the mid and small-cap sectors. While these sectors may be more volatile compared to large-cap companies, they offer substantial growth opportunities.
The data further shows the profitability of mid-cap companies has increased by 25.2%, while small-cap companies have seen a growth of 35.4%. In comparison, Large-cap companies have only experienced a growth of 22.1%. Additionally, the market cap of Mid-cap companies has risen by 25.7% and Small-cap companies by 28.0%, while Large-cap companies have seen a growth of 19.1% during the same period.
The new index fund offerings are suitable for investors desiring higher returns through investing in mid and small-cap sectors. While they may be more volatile compared to large-caps, they present significant growth opportunities for those willing to navigate market fluctuations.
Key details
The Motilal Oswal Nifty MidSmall Healthcare Index Fund is an open-ended fund that closely follows the Nifty MidSmall Healthcare Total Return Index. The primary goal of this scheme is to achieve returns that mirror the total returns of the securities within the Nifty MidSmall Healthcare Total Return Index, taking into account any tracking errors. This fund is compared against the Nifty MidSmall Healthcare Total Return Index as its benchmark.
Similarly, the Motilal Oswal Nifty MidSmall IT and Telecom Index Fund is an open-ended fund that tracks the Nifty MidSmall IT and Telecom Total Return Index. The investment objective of this scheme is to deliver returns that align with the total returns of the securities represented by the Nifty MidSmall IT and Telecom Total Return Index, while considering any tracking errors. This fund is also benchmarked against the Nifty MidSmall IT and Telecom Total Return Index.
The Motilal Oswal Nifty MidSmall India Consumption Index Fund is an open-ended fund designed to mirror the performance of the Nifty MidSmall India Consumption Total Return Index. The primary goal of this scheme is to deliver returns that align with the total returns of the securities included in the Nifty MidSmall India Consumption Total Return Index, allowing for a margin of error in tracking. The fund is compared against the Nifty MidSmall India Consumption Total Return Index.
Similarly, the Motilal Oswal Nifty MidSmall Financial Services Index Fund operates in the same manner, aiming to replicate the Nifty MidSmall Financial Services Total Return Index. Its objective is to generate returns that correspond to the total returns of the securities within the Nifty MidSmall Financial Services Total Return Index, considering potential tracking discrepancies. The fund is evaluated against the Nifty MidSmall Financial Services Total Return Index.
All the four NFOs will be managed by Swapnil Mayekar (for equity component) and Rakesh Shetty (for debt component).
Prateek Agrawal, MD & CEO, Motilal Oswal Asset Management Company Ltd, said, “The AUM of the Indian MF industry has grown from Rs. 9.16 trillion (US$ 110.63 billion) in 2014, to Rs. 64.97 trillion (US$ 780.70 billion) in July 2024, growing ~6x in a span of 10 years, showcasing potential of the industry. We believe Mid and Small cap stocks have potential to perform well in long term considering that the market cap of Mid-Small companies has grown at a faster rate as compared to large cap companies.”
Pratik Oswal, Chief of Business Passive Funds, Motilal Oswal Asset Management Company Ltd, said, “India benefits from a large cross-utilization of channels to expand the reach of financial services. With 2,100 fintechs currently operating, India is positioned to become one of the largest digital markets, driven by rapid mobile and internet expansion. As the economy grows, so does consumer spending, particularly in discretionary sectors, with the healthcare market expected to reach $638 billion and IT and telecom, consumption, and financial services sectors each set for significant growth by 2025. While these sectors offer high growth potential, mid and small-cap investments in these areas come with heightened volatility, making them ideal for risk-tolerant investors prepared for market fluctuations.”