Motilal Oswal BSE Enhanced Value Index Fund – Direct Plan – Growth has emerged as one of the strongest performers among index funds over the past three years. With a 3-year return of 30.71% CAGR, the fund has delivered more than double the returns of its benchmark. Notably, it has also turned out to be the best-performing equity fund across categories, excluding international funds.
Launched in August 2022 by Motilal Oswal Mutual Fund, the fund follows a value-based index strategy and has benefited from the strong rally in select value and PSU-heavy sectors such as banking, energy and metals.
Consistent performance across timeframes
Over the three-year period, the fund has delivered a robust 30.71% CAGR, while its return since launch stands at 35.24%. This kind of performance is rare for an index fund, which typically aims to track its benchmark rather than significantly outperform it.
Even on a shorter-term basis, the fund has held up well. Over the last one year, it generated a return of 23.10%, sharply outperforming the BSE 500 TRI, which delivered 6.35% during the same period. This translates into an outperformance of nearly 17 percentage points, underlining the strength of the value-led strategy in the recent market cycle.
Risk profile
Risk category: Very High Risk
Standard deviation: 19.28%, indicating relatively high volatility
Sharpe ratio: 1.26, suggesting healthy risk-adjusted returns
Sortino ratio: 2.26, highlighting strong performance relative to downside risk
Beta: 1.26, meaning the fund is more volatile than the broader market
These metrics indicate that while the fund has rewarded investors well, it has also experienced sharper ups and downs, making it suitable mainly for investors with a higher risk appetite.
Portfolio exposure
The portfolio has a clear value and cyclical bias, with exposure concentrated in a few sectors:
Financials: 41.69% – the largest allocation, driven mainly by banking stocks
Energy & Utilities: 39.75% – strong exposure to PSU energy and oil & gas companies
Materials: 14.77% – adds cyclical and commodity-linked exposure
Consumer Discretionary: 3.77% – limited exposure to consumption-focused stocks
This sector concentration has worked in the fund’s favour during the recent rally in PSU, banking and energy stocks.
Key stock holdings
Some of the top stocks in the fund’s portfolio include Bharat Petroleum, State Bank of India, Hindalco Industries, Indian Oil Corporation, ONGC, Hindustan Petroleum, GAIL (India), Bank of Baroda, Canara Bank and Tata Motors Passenger Vehicles. Many of these stocks have benefited from improving balance sheets, earnings recovery and favourable valuation re-rating.
What is an index fund and why investors consider it
An index fund is a mutual fund that aims to replicate the performance of a specific market index by investing in the same stocks and in the same proportion as the index. Unlike actively managed funds, index funds do not depend on fund managers’ stock-picking skills.
Key advantages of index funds include:
Lower costs, due to minimal fund management and research expenses
Transparency, as portfolios closely track a known index
Reduced fund manager risk, since performance largely mirrors the market
However, index funds are also exposed to full market risk. When markets fall, index funds fall too, as there is no active strategy to protect downside risk.
A word of caution for investors
While the recent performance of the Motilal Oswal BSE Enhanced Value Index Fund has been impressive, investors must remember that past returns do not guarantee future performance. Market cycles change, sector leadership rotates, and value-based strategies can go through extended periods of underperformance.
Given its Very High Risk profile and sector concentration, this fund may be better suited for investors with a long-term investment horizon and the ability to handle volatility, rather than those looking for short-term stability or capital protection.
As always, investment decisions should be aligned with individual financial goals, time horizon and risk tolerance—not driven solely by recent returns.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.