NFO: Motilal Oswal S&P BSE Financials ex Bank 30 Index Fund

It will be the first of its kind passive fund offered in India that aims to provide exposure to the financial services sector, excluding banks

Ritika Kapoor   /   July 18, 2022
Motilal Oswal S&P BSE Financials ex Bank 30 Index Fund

Motilal Oswal Asset Management Company has launched the new fund offer (NFO) named “Motilal Oswal S&P BSE Financials ex Bank 30 Index Fund”. The fund opened for subscription on July 14 and will be open till July 22. It is an open-ended fund replicating/tracking S&P BSE Financials ex Bank 30 Total Return Index.

The index selects 30 Non-banking financial stocks that are part of the S&P BSE 250 large midcap index also it will be the first of its kind passive fund offered in India that aims to provide exposure to the financial services sector, excluding banks.

Motilal Oswal Asset Management Company (MOAMC) is one of the fastest growing asset management companies in India with one investment philosophy driving all their equity products be it mutual funds or portfolio management services (PMS). The company has an AUM of Rs.25,763 crore.

Industries forming part of this index are life insurance, Non- banking financial institutions, housing finance company, holding company and asset-management company.

Investment objectives

The investment objective of the scheme is to provide returns that, before expenses, correspond to the total returns of the securities as represented by the S&P BSE financials ex bank 30 total return index.

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.

The minimum investment needed for the scheme is Rs.500 and in multiple of Re.1 and thereafter. Also the scheme has an exit load of 1% if redeemed on or before 15 days from allotment date, NIL after 15 days of allotment. The scheme has two plans Regular and Growth.

The scheme objectives are:

  • To capitalise on the growth of financialization of assets.
  • Shifting consumer mind from saving to invest.
  • Long-term historical outperformance vs market.
  • Benefit from the companies that will gain from the consumption theme.

Portfolio positioning:

  • Consumer Finance -63.1%
  • Insurance-27%
  • Capital Markets-6.4%
  • Corporate credit- 3.5%

Should you invest in the scheme?

In India, except banks, the rest of the industries within the financial services sectors are highly under-penetrated when compared globally. These financial services companies operate in the business of Consumer Credit (Personal loans, Credit cards, Home loans), Insurance (Life & General) and Capital market (Exchanges, Credit rating agencies). With rapid urbanisation & rising income levels, more people are expected to tap into these financial services, leading to the growth of these companies.

On a total returns basis, the S&P BSE financials Ex-Bank 30 Index has outperformed the S&P BSE 250 Large Midcap Index over the last 15 years. The index has recorded a compounded annualised growth rate (CAGR) of 15.3% vs S&P BSE 250 Large Midcap Index of 14%, thus outperforming the broad market by more than 1%. It has also been observed that the index tends to do well during a bull and recovery cycle.

This product is suitable for the investors who are seeking long-term capital appreciation, exposure in the highly under-penetrated insurance/credit/capital market industries and looking to complement their banking exposure with financial services.

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