Motilal Oswal AMC has filed with SEBI for the Motilal Oswal Nifty 250 Index Fund (MOFN250). The new index fund will operate as an open-ended equity scheme that tracks the Nifty LargeMidcap 250 index. As, a result, units of this passively managed scheme will be available for buying or redeemed on all days the market is open.
MOFN 250 will track the Nifty 250 LargeMidcap Index which implies that its equity investments will be limited to the 250 largest NSE-listed companies based on their market capitalisation. As of 31st July 2018, this index had recorded 1 year and 5 year returns of 9.74% and 20.50% along with a high P/E ratio of 38.41%, which may indicate possible overvaluation. Focus sectors of the Nifty 250 LargeMidcap Index are financial services (32.26%), consumer goods (13.74%), energy (10.53%), IT (8.21%) and automobile (7.95%).
The Motilal Oswal Nifty 250 Index Fund will invest between 95 and 100% of its assets in equities and equity-derivatives of companies constituting the Nifty LargeMidcap 250 Index. The scheme’s remaining assets of up to 5% will be maintained as cash at call and/or be invested in various money market and debt schemes. Some key individual investments of this scheme will be HDFC Bank, Reliance Industries, Infosys and ITC – which are individual securities with highest weight in the scheme’s chosen index (as of 31 July, 2018).
This index fund will be managed by Ashish Agrawal, who currently manages other schemes of Motilal Oswal including Motilal Oswal M50 ETF and Motilal Oswal Midcap 100 ETF. Though the scope of a fund manager to impact performance of a passively managed fund is limited, the Midcap 100 ETF has been among the top performers in its category and posted 5 year returns of 24.67% as per 31st July 2018 data.