Motilal Oswal NIFTY 500 Mutual Fund NFO – Should you invest?
Motilal Oswal MF has come up with a multi-cap fund, Motilal Oswal NIFTY 500 Fund where it would invest in NIFTY 500 stocks. This fund would open for subscription on 19th August, 2019 and would close by 30th August, 2019. Motilal Oswal MF already has existing Multicap Fund i.e. Motilal Oswal Multicap 35 Fund, which invests in NIFTY500 stocks and it is coming with one more fund in this segment. What are the features of Motilal Oswal NIFTY 500 Mutual Fund? Should you invest in Motilal Oswal NIFTY500 New Fund Offer (NFO)?
Also Read: BNP Paribas Global Innovative Technology Fund – Should you invest or avoid?
Features of Motilal Oswal NIFTY 500 Mutual Fund NFO
This is an open-ended mutual fund equity scheme.
This scheme would open for subscription on 19th August, 2019
This scheme would close for subscription on 30th August, 2019.
Since this is an open ended scheme, it would again open for subscription after 5 business days from the date of allotment of Mf units after the NFO period.
This scheme is available in both regular and direct plans.
This plan offers both growth option and dividend option.
This scheme is available for lump sum and SIP investment.
Minimum investment is Rs 500 and in multiples of Rs 1 there-off for lump sum investments.
Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 12 months.
The NAV of the NFO is Rs 10 per unit now during initial subscription.
There is no entry load to invest in this mutual fund scheme.
There is an exit load of 1% if the mutual fund units are redeemed within 90 days.
This scheme is classified as MODERATELY HIGH risk scheme.
Scheme total expense ratio (TER) is estimated 1% to 1.35% of the total assets on any day.
Motilal Oswal NIFTY 500 Mutual Fund NFO details can be downloaded from here.
What is the investment objective and strategy of this Motilal Oswal NIFTY 500 Mutual Fund NFO?
The mutual fund scheme seeks an investment return that corresponds to the performance of Nifty 500 Index subject to tracking error. However, there can be no assurance or guarantee that the MF investment objective of the Scheme would be achieved.
Who can invest in this mutual fund scheme?
The following can invest in this scheme.
1) Resident adult individuals, either singly or jointly.
2) Minors through Parents/Lawful Guardian.
3) Hindu Undivided Family (HUF) through its Karta.
4) Partnership Firms in the name of any one of the partners.
5) Proprietorship in the name of the sole proprietor.
6) Companies, Body Corporate, Societies, Association of Persons, Body of Individuals, Clubs and Public Sector Undertakings registered in India if authorized and permitted to invest under applicable laws and regulations.
7) Banks
Complete list of eligible participants who can invest can be checked in prospectus of this new fund offer.
Who is the Fund Manager of Motilal Oswal NIFTY 500 Mutual Fund NFO?
The Fund Manager is Mr. Swapnil P Mayekar.
What is the benchmark for this scheme?
The benchmark for this scheme is NIFTY 500 TRI.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
1) It invests 95% to 100% in equity and equity related securities that are part of Nifty 500 Index. The risk profile in this segment is high.
2) It invests 0% to 5% in debt, money market instruments, G-Secs, Cash and Cash at call. This risk profile in this segment is low to medium.
Can NRI invest in this MF scheme?
Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.
Why to invest in the Motilal Oswal Fund?
Here are a few reasons to invest in this fund.
1) This mutual fund is classified as a multicap mutual fund that invests in NIFTY500 stocks which is across various market capitalization of stocks (Large cap, midcap and small cap).
2) Investment in multi-cap mutual funds provides an opportunity to invest in one or more market cap stocks in case any of them are not performing (large cap or midcap or small cap). Currently we are seeing that midcap and small cap stocks have not performed well in the last 2 years, hence such funds which invest even in large cap funds and still be able to deliver moderate returns.
3) Motilal Oswal has a strong brand name in the mutual fund business.
Some key risk factors you should consider before you invest in such funds
One should consider some of these risk factors / negative factors before investing.
1) This invests like ETF in particular index, i.e. invests in all stocks in NIFTY500 except for tracking error. Means this fund would invest in all stocks in equal weight-age in NIFTY500 even if the underlying stock is performing well or not.
2) It invests up to 95% in equity and equity related instruments that are high risk. In case of stock market correction, its performance would be pathetic.
3) This fund management fees is between 1% 1o 1.35% which is high as there is no analysis required to pick stocks for investment as it invests in equal weight-age in NIFTY 500 stocks.
How is the Performance of Multicap Mutual Funds in India?
Now, let us look at some of the best multi-cap mutual funds in India. One should note that though this fund is classified as multi-cap, in reality it invests equally among all NIFTY500 stocks based on weight-age.
#1 – Motilal Oswal Multicap 35 Fund: This mutual fund gave 15% annualized returns in the last 5 years and 8% annualized returns in the last 3 years and 10% negative returns in the last 1 year.
#2 – Axis Focus 25 Fund: This mutual fund gave 13% annualized returns in the last 5 years and 12% annualized returns in the last 3 years and 6% negative returns in the last 1 year.
#3 – Kotak Standard Multicap 35 Fund: This mutual fund gave 13% annualized returns in the last 5 years and 10% annualized returns in the last 3 years and 3% negative returns in the last 1 year.
#4 – SBI Magnum Multicap Fund: This mutual fund gave 12% annualized returns in the last 10 years, 13% annualized returns in the last 5 years and 8% annualized returns in the last 3 years and 3% negative returns in the last 1 year.
#5 – SBI Focused Equity Fund: This mutual fund gave 18% annualized returns in the last 10 years, 12% annualized returns in the last 5 years and 10% annualized returns in the last 3 years and 2% negative returns in the last 1 year.
Should you invest in the Motilal Oswal NIFTY 500 Mutual Fund NFO?
Motilal Oswal NIFTY 500 is a multi-cap fund, however, invests in equal amount in NIFTY500 based on weight-age. The performance of NIFTY500 would reflect in this mutual fund scheme. Mutual Fund performance is poor in the last 2 years in midcap/small cap segments. Hence, most of the multicap mutual funds are seeing negative returns in the last 1-2 years. If you like to experiment with a new fund in this segment, you can invest in Motilal Oswal NIFTY 500 fund. Otherwise, you can invest in any other best multicap fund that is outperforming now in the last 5-10 years.
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Suresh KP
Motilal Oswal NIFTY 500 Mutual Fund NFO Review
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Well they could charge 1% or more for regular plans and much less for direct plans. Their actively managed funds are not too costly, so don’t think they will go with high charges on direct plans.
I like your comment on High fund management charges as the fund manager is not required to do any analysis.
Thank you Ramakrishna
I didn’t understand.. If the fund manager isn’t doing any analysis then why there are high fund charges