Motilal Oswal Mutual Fund has introduced India's first Nifty 500 ETF, an open-ended scheme designed to replicate the performance of the Nifty 500 Total Return Index. This new fund offer (NFO) is now open for subscription and will remain so until September 29, 2023. Afterward, it will reopen for continuous sale and repurchase within five business days from the allotment date.

Live TV

Loading...

The primary objective of this scheme is to deliver returns that, before accounting for expenses, mirror the total returns of the securities represented in the Nifty 500 Total Return Index, while considering tracking error. This makes it a suitable choice for investors looking for returns corresponding to the Nifty 500 Total Return Index's performance, with a focus on long-term capital growth, the fund house said.

Minimum investment

Investors can participate in this scheme with a minimum investment of Rs 500 per plan/option, with the flexibility to invest in multiples of Re 1. There is no upper limit for investment, providing accessibility to a wide range of investors.

Asset allocation

Under normal circumstances, the scheme's asset allocation will primarily consist of constituents of the Nifty 500 Index, ranging from 95-100 percent of total assets. Additionally, it may allocate up to 5 percent in units of liquid schemes and money market instruments, indicating a relatively low-risk component.

Benchmarking performance

The scheme will benchmark its performance against the Nifty 500 Total Return Index. Given that this is an exchange-traded fund (ETF) scheme, it will primarily invest in securities that constitute the Nifty 500 Index, making it a suitable choice for investors looking to track this particular index, experts say.

Entry and exit loads

This scheme imposes no entry load, meaning there are no charges for investing. Furthermore, there is no exit load, providing investors with flexibility in managing their investments.

Fund managers

The fund will be managed by Swapnil Mayekar and Rakesh Shetty.

Risk profile

It's important to note that this scheme carries a "very high risk" profile, as indicated in the Scheme Information Document. Investors should carefully assess their risk tolerance and consider consulting with financial advisors if they have doubts about the suitability of this product for their investment portfolio.

Investment considerations

Investing in a NFO like the Motilal Oswal Nifty 500 ETF or any other mutual fund scheme requires careful consideration. First, investors should assess if the NFO aligns with their goals. In the case of the Motilal Oswal Nifty 500 ETF, it aims to replicate the Nifty 500 Total Return Index. Investors should understand the risk associated with the NFO and assess how it complements the existing portfolio.

Diversification is key to managing risk, so ensure the NFO doesn't lead to an over-concentration of assets in one area, experts say.

(Edited by : Shoma Bhattacharjee)