Publish Date:
Motilal Oswal Mutual Fund has launched Motilal Oswal Nifty MidSmall India Consumption Index Fund
It is an open ended fund replicating / tracking the Nifty MidSmall India Consumption Total Return Index
[Read: Best FMCG Mutual Funds: SBI Consumption Opportunities Fund vs. Mirae Asset Great Consumer Fund ]
The investment objective of the scheme is to provide returns that, before expenses, correspond to the total returns of the securities as represented by Nifty MidSmall India Consumption Total Return Index, subject to tracking error.
However, there can be no assurance or guarantee that the investment objectives of the scheme will be achieved.
India's Consumption Sector
India's consumption sector is a dynamic force within the country's economy, driven by a vast and diverse population, rising disposable incomes, and a youthful demographic eager to spend on both essential and aspirational goods.
India's consumption expenditure is expected to grow at USD 4 trillion by 2030, positioning the country as the world's third-largest consumer market after the U.S. and China. This growth reflects both expanding access to goods and services and a shift in spending patterns, with a growing middle class fueling demand for everything from essentials to aspirational goods and services.
The government's focus on infrastructure and digitalization further supports this transformation, as increased connectivity brings more consumers into formal markets.
Looking ahead, India's consumption sector holds a positive outlook, underpinned by its demographic strength and economic expansion. However, potential risks like inflation, global economic fluctuations, and policy changes could impact the growth trajectory.
How will the scheme allocate its assets?
Under normal circumstances, Motilal Oswal Nifty MidSmall India Consumption Index Fund will hold an allocation of 95% to 100% in Constituents of Nifty MidSmall India Consumption Index, and 0% to 5% in Units of Liquid schemes and Money Market instruments.
Exit Load: 1% if redeemed on or before 15 days of allotment, nil thereafter.
What is the investment strategy of Motilal Oswal Nifty MidSmall India Consumption Index Fund?
The Motilal Oswal Nifty MidSmall India Consumption Index Fund is a passively managed index fund designed to track the Nifty MidSmall India Consumption Index. This index focuses on mid-cap and small-cap companies in India's consumption sector, aiming to capture growth in consumer demand within a developing economy.
The investment strategy would be Passive in nature offering investment returns that are similar to the total returns of Nifty MidSmall India Consumption Index before fees / expense and subject to tracking error.
About Nifty MidSmall India Consumption Index
The Nifty MidSmall India Consumption Index aims to represent the consumption-driven growth story in India, tracking companies from various consumption-related industries, including consumer goods, food & beverages, retail, lifestyle, and leisure.
Unlike broader consumption indices, this index specifically targets mid- and small-cap companies within the consumption space. Mid- and small-cap companies have historically offered higher growth potential, as they are often in an expansion phase.
The index includes upto 30 stocks selected from the parent Nifty MidSmallcap 400 index based on the stock's six-month average freefloat market capitalization. Companies with domestic operating revenues of more than 50% are considered eligible to be the part of the index.
Data as of September 30, 2024
(Source: NSE – Nifty MidSmall India Consumption Index)
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Motilal Oswal Nifty MidSmall India Consumption Index Fund is benchmarked against the Nifty MidSmall India Consumption Total Return Index
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Motilal Oswal Nifty MidSmall India Consumption Index Fund will be managed by Mr Swapnil Mayekar and Mr Rakesh Shetty
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Motilal Oswal Nifty MidSmall India Consumption Index Fund is open for subscription from October 29, 2024 to November 06, 2024. The fund will reopen for continuous sale and repurchase on November 19, 2024
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The minimum subscription amount is Rs 500/- and in multiples of Re. 1 thereafter. For Additional Purchase, Rs 500/- and in multiples of Re. 1/- thereafter.
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The fund offersDirect Plan and Regular Plan. Under each plan the fund offers Growth and Income Distribution cum Capital Withdrawal (IDCW) option.
Should investment in Motilal Oswal Nifty MidSmall India Consumption Index Fund be considered?
Motilal Oswal Nifty MidSmall India Consumption Index Fund offers exposure to mid- and small-cap companies in India's consumption sector, which is expected to grow as consumer spending rises with increasing disposable incomes and urbanization.
It is a unique opportunity to tap into sectors like retail, consumer goods, food & beverages, and other discretionary categories that stand to benefit from India's expanding middle class.
With its focus on consumption, the fund provides a cost-effective way to gain exposure to a theme that's expected to grow over time without incurring high management fees. However, this sectoral focus also implies concentrated risk; if the consumption sector faces downturns, the fund's performance could be affected more significantly than that of a diversified portfolio.
Do note, mid and small cap companies are more sensitive to economic cycles. As such, this fund is ideally suited for investors with a high-risk tolerance and a long-term investment horizon, as it may experience significant price fluctuations in the short term.
Investors should consider the fund as part of a larger, diversified portfolio rather than as a standalone investment. While it provides focused exposure to a promising sector, balancing this with other asset classes and sectors can mitigate risks.