Motilal Oswal Asset Management Company (MOAMC) has announced the launch of Motilal Oswal Nifty 500 ETF. The AMC said in a statement today that this exchange-traded fund aims to offer investors exposure to more than 90% of India’s listed market capitalization and an opportunity to participate in India’s growth story. The ETF is expected to list on NSE on 6th October 2023; the trading symbol is ‘MONIFTY500’. 

According to the statement, the Motilal Oswal Nifty 500 ETF seeks to replicate/track the total returns of the Nifty 500 Index, which is designed to measure the performance of the top 500 companies based on market capitalization. Compared to the Nifty 50  Index, the Nifty 500 Index is well-diversified, with its top 10 holdings accounting for only 37%, as opposed to 58% in the Nifty 50 Index. 

Furthermore, it provides diversified exposure to 21 sectors, including textiles, consumer services, media, and forest materials that are not present in the Nifty 50 Index, offering an excellent blend of Largecap (75%), Midcap (16%) and Smallcap (9%). 

Over the last 3 years. the Nifty 500 Index has delivered 25% on an annualized basis, as of the end of August 31, 2023.  Over the medium to long term Nifty 500 Index has historically outperformed the Nifty 50 Index aided by strong performance from the mid and smallcap segments. It is important to note that the Nifty 500 Index has exhibited less or similar risk (measured by standard deviation) despite the inclusion of midcap and smallcap stocks that are generally considered more volatile.  

Nifty 500 – A gateway to ‘India’s growth story 

Investing in India’s burgeoning economy has never been more promising. As the country embarks on a journey towards becoming the world’s third-largest economy, the Motilal Oswal Nifty 500 ETF offers a unique opportunity to participate in this growth story. 

Nifty 500 – Features

  • Diversification: With exposure to top 500 stocks and 21 sectors of the Indian economy, this fund helps in diversification resulting in mitigation of concentration risk. 
  • Performance: The Nifty 500 Index has outperformed the Nifty 50 over the long term. Notably, the Nifty  500 Index has achieved remarkable growth by growing 30x as compared to Nifty 50 which grew by 23 times since inception.  

Why Choose Motilal Oswal Nifty 500 ETF? 

The AMC said it has demonstrated a strong track record in managing the Motilal Oswal Nifty 500  Index Fund for the past 4 years. It noted a low 1-year tracking error of just 4 basis points (bps) as of August 31 2023, which is lower than the tracking error observed by the Index Funds and ETFs tracking Nifty 50 Index. 

“Building on our successful track record in Managing Motilal Oswal Nifty 500 Index Fund, we are excited to announce our new offering Motilal Oswal  Nifty 500 ETF expanding our commitment to pioneering in the realm of passive funds in India. This new offering expands our extensive range of passive funds and provides investors with a valuable addition to our suite of broad-based index funds & ETFs,” said  Navin Agarwal, MD & CEO, Motilal Oswal AMC.

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Investment Objective 

The investment objective of the scheme is to provide returns that, before expenses, correspond to the total returns of the securities as represented by Nifty 500 Total Return Index, subject to tracking error. However, there is no guarantee or assurance that the investment objective of the scheme will be achieved. 

“Investors seeking diversification across market caps, sectors, and stocks to mitigate risk will find this ETF to be an ideal choice. With over 90% market capitalization coverage, it offers a blend of stability, diversification, and growth potential, making it an appealing option for those looking to capitalize on India’s promising future. With a proven track record of managing the Motilal Oswal Nifty 500 Index Fund for four years and recognizing the growing demand for ETFs, we  are proud to introduce the Motilal Oswal Nifty 500 ETF. The success of the Motilal Oswal Nifty 500 Index Fund further  underscores its appeal as an important product for investors, whether new or seasoned,” said Pratik Oswal, Head of Passive Funds, Motilal Oswal AMC. 

The Minimum Application amount for Motilal Oswal Nifty 500 ETF is Rs. 500/- and in multiples of Re. 1/- thereafter. On ongoing basis, investor can purchase/redeem units of the Scheme through a financial advisor or by log-in to the Motilal Oswal Mutual Fund website.

Disclaimer: The above content is for informational purposes only, based on a press release by Motilal Oswal AMC. Mutual Fund/ETF investments are subject to market risks. Please consult your financial advisor before investing.