Motilal Oswal Asset Management Company (MOAMC) has introduced the Motilal Oswal Nifty 500 ETF, aiming to provide investors with exposure to over 90% of India’s listed market capitalization and the opportunity to participate in the country’s growth trajectory. This ETF is scheduled to be listed on the NSE on October 6, 2023, with the trading symbol ‘MONIFTY500.’
The Motilal Oswal Nifty 500 ETF is designed to replicate the total returns of the Nifty 500 Index, which tracks the performance of the top 500 companies based on market capitalization. Unlike the Nifty 50 Index, the Nifty 500 Index is more diversified, with its top 10 holdings accounting for only 37%, compared to 58% in the Nifty 50 Index. Additionally, it offers exposure to 21 sectors, including textiles, consumer services, media, and forest materials, not covered by the Nifty 50 Index, providing a balanced mix of Largecap (75%), Midcap (16%), and Smallcap (9%) stocks.
Over the past three years, the Nifty 500 Index has delivered an annualized return of 25% as of August 31, 2023. Historically, the Nifty 500 Index has outperformed the Nifty 50 Index over the medium to long term, thanks to the strong performance of mid and small-cap segments. Remarkably, the Nifty 500 Index has exhibited similar or lower risk (measured by standard deviation) despite the inclusion of potentially more volatile midcap and smallcap stocks.
The Motilal Oswal Nifty 500 ETF offers diversification across 500 stocks and 21 sectors, helping to mitigate concentration risk. It has a strong track record, with a 1-year tracking error of just 4 basis points (bps) as of August 31, 2023, which is lower than the tracking error observed in Index Funds and ETFs tracking the Nifty 50 Index.
The investment objective of the scheme is to provide returns that correspond to the total returns of the Nifty 500 Total Return Index, subject to tracking error. However, there is no guarantee of achieving this objective.
This ETF is suitable for investors seeking diversification across market caps, sectors, and stocks to manage risk effectively while capitalizing on India’s promising economic future. The minimum application amount for the Motilal Oswal Nifty 500 ETF is Rs. 500/-, with subsequent multiples of Re. 1/-. Investors can purchase or redeem units through a financial advisor or the Motilal Oswal Mutual Fund website.
