Motilal Oswal Asset Management Company (MOAMC) has introduced the Motilal Oswal Nifty 500 ETF, a significant addition to India’s exchange-traded fund landscape. This newly launched ETF is designed to provide investors with exposure to more than 90% of India’s listed market capitalization, offering a unique opportunity to participate in the country’s growth story. Scheduled for listing on the National Stock Exchange (NSE) on October 6, 2023, the ETF will bear the trading symbol ‘MONIFTY500.’
The Motilal Oswal Nifty 500 ETF aims to replicate the total returns of the Nifty 500 Index, which encompasses the performance of the top 500 companies based on market capitalization. Notably, this index offers a well-diversified investment option, with its top 10 holdings accounting for only 37%, in contrast to the Nifty 50 Index, where the top 10 holdings represent 58% of the total weight.
Additionally, the ETF provides diversified exposure to 21 sectors, including textiles, consumer services, media, and forest materials, sectors that are not included in the Nifty 50 Index. This diversification results in an optimal blend of Largecap (75%), Midcap (16%), and Smallcap (9%) stocks within the ETF.
Over the past three years, the Nifty 500 Index has delivered an impressive annualized return of 25% as of August 31, 2023. Its historical performance demonstrates its outperformance compared to the Nifty 50 Index, driven by strong performance in the mid and small-cap segments. It’s noteworthy that the Nifty 500 Index has exhibited either similar or lower risk (measured by standard deviation) despite its inclusion of midcap and smallcap stocks, which are generally considered more volatile.
Investing in India’s Growth Story
Investing in India’s rapidly growing economy presents a promising opportunity. As India strides toward becoming the world’s third-largest economy, the Motilal Oswal Nifty 500 ETF allows investors to participate in this growth story. This ETF offers several compelling features:
1. Diversification: With exposure to the top 500 stocks and 21 sectors of the Indian economy, this fund mitigates concentration risk and enhances diversification.
2. Performance: The Nifty 500 Index has a strong track record of outperforming the Nifty 50 over the long term, showcasing remarkable growth.
Why Choose Motilal Oswal Nifty 500 ETF?
Motilal Oswal Asset Management Company has a proven track record of managing the Motilal Oswal Nifty 500 Index Fund for the past four years. Notably, the fund has maintained a low 1-year tracking error of just 4 basis points (bps) as of August 31, 2023, which is even lower than the tracking error observed in Index Funds and ETFs tracking the Nifty 50 Index.
Navin Agarwal, MD & CEO of Motilal Oswal AMC, expressed excitement about this new offering, emphasizing the company’s commitment to pioneering in the realm of passive funds in India. He highlighted the expansion of their passive funds range and the valuable addition of the Motilal Oswal Nifty 500 ETF.
Investment Objective
The scheme’s investment objective is to provide returns that correspond to the total returns of the securities represented by the Nifty 500 Total Return Index, subject to tracking error. However, it’s essential to note that there is no guarantee or assurance that the scheme will achieve its investment objective.
Pratik Oswal, Head of Passive Funds at Motilal Oswal AMC, underlined the appeal of this ETF for investors seeking diversification across market caps, sectors, and stocks to mitigate risk. With over 90% market capitalization coverage, the Motilal Oswal Nifty 500 ETF offers stability, diversification, and growth potential, making it an attractive choice for those looking to capitalize on India’s promising future.
The Motilal Oswal Nifty 500 ETF is now available for investors, with a minimum application amount of Rs. 500 and subsequent investments in multiples of Re. 1. Investors can conveniently purchase or redeem units through a financial advisor or by logging into the Motilal Oswal Mutual Fund website.
In summary, this newly launched ETF provides a strategic investment opportunity for those looking to participate in India’s growth trajectory while benefiting from diversification and strong historical performance.
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