NFO alert: Motilal Oswal BSE 1000 Index Fund launched — here's all you need to know
Motilal Oswal Mutual Fund has announced the launch of 'Motilal Oswal BSE 1000 Index Fund', an open-ended fund that tracks the BSE 1000 Total Return Index.
Notably, this is the first fund to replicate the BSE 1000 Total Return Index, which covers approximately 94 per cent of the country's listed market capitalisation. It offers investors a wide equity market representation within a single index, the company said in a press release.
According to the company, the new fund offer ( NFO) will open for subscription from June 5 to June 19, 2025. Investors can put in a minimum lump sum amount of ₹ 500, with subsequent multiples of ₹ 1.
The company also mentioned that an exit load of 1 per cent will be applicable if the investment is redeemed within 15 days of allotment. No exit load will be charged after this period.
The NFO is suitable for investors who are seeking long-term capital growth and return that corresponds to the BSE 1000 Total Return Index, although its performance may vary due to tracking error, the company said.
The Motilal Oswal BSE 1000 Index Fund includes companies across large, mid, small, and micro-cap segments, representing diverse sectors and industries - from traditional industries to cutting-edge technology.
This index provides a blend of established companies and emerging companies across 22 sectors, reducing dependence on a few large stocks. To minimise risk, the top 10 stocks are capped at around 33 per cent of the total weightage.
'It offers exposure to a mix of established market leaders and emerging companies across 22 sectors, with the top-10 stock weight capped at ~33%, thereby helping to reduce concentration risk. The index also includes micro-cap companies, whose market capitalisation and liquidity have grown approximately 5× and 14× respectively over the past five years. All within a passive, free-float weighted structure with semi-annual rebalancing,' the company said in the statement.
Delving into the asset allocation of the fund and associated risks, Pratik Oswal, Head of Passive Funds at Motilal Oswal, said BSE 1000 TRI is primarily a large and mid-cap index, which makes it 'relatively less risky'.
'Approximately 75 to 80 per cent of the index will be large and mid-cap. 60 per cent is large cap. So relatively, it's not a very risky fund. But, however, it's a 100 per cent equity fund,' Oswal said, adding that this fund will benefit investors who are looking at a long-term approach to investing.
'An investor should not look at it from a one or two-year perspective. It should be a minimum five-year perspective. That's important when you look at these sorts of funds.'
He also mentioned that investors who are concerned about the returns getting diluted due to the over-diversification in the fund should note that this fund follows the 'Darwinism' approach in the stock market. 'If a stock is performing well in the current market, its weightage in the fund increases and if the opposite happens, the weightage of the fund will automatically go down.'
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