Motilal Oswal Mutual Fund has launched a new index fund that aims to replicate the performance of one of the broadest equity indices in India – the BSE 1000 Index. With exposure to 1,000 listed companies across largecap, midcap, smallcap, and microcap segments, this fund promises unparalleled diversification in the Indian equity space.Let’s understand the key features of this new fund offer (NFO), why one may consider investing in it, associated risks, and whether this should be a part of your investment portfolio.
Motilal Oswal BSE 1000 Index Fund NFO – Issue Details
- Scheme Opens: 5th June 2025
- Scheme Closes: 19th June 2025
- Fund Type: Open-ended equity scheme replicating/tracking the BSE 1000 Index
- Benchmark: BSE 1000 TRI (Total Return Index)
- Minimum Investment: ₹ 500 and in multiples of Re 1 thereafter
- Fund Manager: Abhiroop Mukherjee
- Exit Load: Nil
- Expense Ratio: Likely to be in the range of 0.3%-0.5% for the direct plan (exact figure to be disclosed later)
What is the BSE 1000 Index?
The BSE 1000 Index is India’s broadest equity index, covering the top 1,000 listed companies based on full market capitalization. It offers representation across:
- Largecap (Top 100)
- Midcap (Next 150)
- Smallcap (Next 400)
- Microcap (Remaining 350)
The index covers approximately 94% of India’s listed market capitalization and represents 57 industries, ranging from financials and manufacturing to specialty chemicals, IT hardware, and digital media.
How is the performance of underlying index in the past?
While the mutual fund is new, the underlying index performance is impressive. Here is the comparison between Nifty 50 index returns Vs BSE 1000 Index Returns in the past.
Why to Invest in Motilal Oswal BSE 1000 Index Fund?
- Extensive Diversification:
This fund provides exposure to 1,000 companies, offering investors an all-in-one solution that captures the breadth of the Indian equity market. You’re not just investing in largecaps but also tapping into the potential of midcaps, smallcaps, and microcaps. - Participation in India’s Growth Story:
With India poised to become a $5 trillion economy in the coming years, broader participation across sectors and companies is expected to drive the next leg of growth. This fund allows investors to ride that wave with a single investment. - Passive, Low-Cost Investing:
Since this is an index fund, there is no active stock selection by a fund manager. The fund simply replicates the BSE 1000 Index, thereby reducing management costs. Historically, passive funds have outperformed many active funds in the long run, especially due to lower expenses. - Exposure to Under-Researched Microcaps:
About 250 companies in this index are microcaps, which tend to be under-researched and less followed by analysts. This provides potential for price discovery and long-term returns. - Transparent and Rule-Based Approach:
Index funds follow a transparent methodology. Investors can see the index constituents and understand how the fund will behave under various market conditions.
Risk Factors to Consider
- Volatility Due to Small and Microcaps:
While exposure to microcap and smallcap companies can provide high returns in bull markets, they can also be highly volatile during market corrections. The presence of 750 companies beyond the largecap space increases the fund’s risk during bear phases. - Higher Tracking Error:
Rebalancing 1,000 stocks could result in relatively higher tracking error compared to narrower index funds (like Nifty 50 or Nifty Next 50). - Limited Suitability for Conservative Investors:
Due to the high volatility and wider sectoral exposure, this fund may not be suitable for ultra-conservative investors or those with a short-term horizon.
Who Should Invest?
This fund is best suited for:
- Investors looking for a single fund that gives exposure to the entire Indian equity market.
- Those with a long-term investment horizon of 5 to 10 years or more.
- Investors preferring passive investing with a diversified exposure.
- Individuals who do not want to manage multiple funds across different market caps (large, mid, small).
How to Apply for This NFO?
You can invest in this NFO through the following channels:
- Directly via Motilal Oswal Mutual Fund website or app.
- Through online platforms like Zerodha Coin, Groww, Paytm Money, Kuvera, or MF Central.
- Via your financial advisor or distributor.
- Through your bank’s mutual fund investment service.
Ensure your KYC is updated before applying.
Should You Invest in Motilal Oswal BSE 1000 Index Fund NFO?
Motilal Oswal BSE 1000 Index Fund offers a unique opportunity to gain exposure to the full spectrum of Indian equities – from large established companies to emerging microcaps. Its diversified structure, passive low-cost model, and long-term growth potential make it an attractive option for investors who want to participate in India’s growth story without actively managing multiple funds.
However, this fund is not without risks. The inclusion of smallcap and microcap stocks increases its volatility. Investors should only consider this fund if they are comfortable with short-term fluctuations and have a long-term investment view.
If you are a long-term investor with moderate to high risk appetite and looking for a single fund that offers wide market coverage, this NFO could be a worthy addition to your portfolio. Conservative investors or those looking for stable short-term returns may consider other largecap or multi-cap index funds.
Always align your investment decision with your financial goals, risk profile, and time horizon.
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