scorecardresearchMotilal Oswal AMC launches S&P BSE Financials ex Bank 30 Index Fund; All

Motilal Oswal AMC launches S&P BSE Financials ex Bank 30 Index Fund; All you want to know

Updated: 14 Jul 2022, 03:42 PM IST
TL;DR.

The new fund offer (NFO) for the Motilal Oswal S&P BSE Financials ex-Bank 30 Index Fund will open today i.e 14 July and close on 22 July.

NFO is the process through which an AMC)creates a new fund on a first-subscription basis to facilitate the purchase of securities.

NFO is the process through which an AMC)creates a new fund on a first-subscription basis to facilitate the purchase of securities.

Motilal Oswal Asset Management Company (MOAMC) has announced the launch of Motilal Oswal S&P BSE Financials ex Bank 30 Index Fund. It is an open-ended scheme replicating the total returns of S&P BSE Financials ex Bank 30 Total Return Index.

The new fund offer (NFO) for the Motilal Oswal S&P BSE Financials ex-Bank 30 Index Fund will open today i.e 14 July and close on 22 July.

Before we proceed, let us first deconstruct the concept of a new fund offer.

New Fund Offer

A New Fund Offer (NFO) is the process through which an asset management company (AMC) creates a new fund on a first-subscription basis to facilitate the purchase of securities.

The fund house collects funds from the general public through an NFO in order to buy securities such as equity shares, bonds, and other financial instruments on the market. As a newcomer to the market, NFO is less expensive than the current funds.

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What is NFO?

The mutual fund company that is introducing a new plan must make sure that at least 20 investors contributed to the money raised during the NFO.

Additionally, to prevent the investment amount from being concentrated among a small number of investors, no one individual may own more than 25% of the scheme's corpus. Every NFO is required to abide by this guideline, which is also known as the 20-25 rule in the mutual fund industry.

READ MORE: Should new investors park their earnings in passive index funds to create wealth?

Fund Overview

The fund will be the first of its kind passive fund that aims to provide exposure to the financial services sector, excluding banks.

According to the press release, the index will include top 30 non-banking financial stocks from S&P BSE 250 large, midcap Total Return Index with a maximum stock weight capped at 15%.

The index will be rebalanced semi-annually in June and December. Currently, the index includes stocks of Housing finance companies, NBFCs, Exchanges, Asset Management Companies, Insurance, Card Payment & Fintech etc.

At present, the index includes stocks of housing finance companies, non-banking financial services companies, exchanges, asset management companies, insurance, card payment and Fintech, etc.

As of June 2022, the index has names such as Housing Development Finance Corp, Bajaj Finance Ltd, Bajaj Finserv Ltd, HDFC Life Insurance Company Ltd and SBI Life Insurance Company Ltd, etc.

The top 10 stocks constitute nearly 72% weight in the index. In terms of industry breakup NBFCs account for the majority with weight close to 28%, followed by life insurance at 21% and housing finance companies accounting for 18%.

The index is largely skewed towards large-cap companies accounting for 75% of the weight, while mid-cap companies account for the rest.

READ MORE: Is the market fall the right time to invest in index funds?

Navin Agarwal, MD & CEO, Motilal Oswal Asset Management Company Ltd said, “With an objective to bring new investment opportunities through innovative products, we built a new concept to leverage wealth creation opportunities beyond just banks within the financial services sector.”

He added “With India’s urban population set to grow to 50% from the current 35%, the migration will trigger transfer of money from old assets (term deposits) to new assets (capital markets & insurance) and the rise in consumption economy i.e. high demand for credit. As a result of this, the financial service sector will stand to benefit.”

Ten banking index funds that demonstrated best performance in past three years

 

Name of the schemes3- Year return (%)
Sundaram Fin Serv Opp Fund(G)8.14
Sundaram Fin Serv Opp Fund(IDCW)7.85
SBI Banking & Financial Services Fund-Reg(G)7.47
SBI Banking & Financial Services Fund-Reg(IDCW-Payout)7.47
Invesco India Financial Services Fund(IDCW)6.28
Invesco India Financial Services Fund(G)6.27
Taurus Banking & Fin Serv Fund-Reg(IDCW)6.19
Taurus Banking & Fin Serv Fund-Reg(G)6.16
Tata Banking & Financial Services Fund-Reg(IDCW)6.05
Tata Banking & Financial Services Fund-Reg(G)6.04

(Source - FundsIndia, July 13, 2022)

During the NFO investors can invest minimum Rs. 500 and in multiples of Re. 1 thereafter. On an ongoing basis - Lump sum and SIP 500 and in multiples of Re 1 thereafter. Investors can purchase or redeem units of the scheme through financial advisor or by log-in to www.motilaloswalmf.com.

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First Published: 14 Jul 2022, 03:42 PM IST