Motilal Oswal Mutual Fund launches S&P BSE financials ex-bank 30 index fund

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NEW DELHI: Motilal Oswal Asset Management Company (MOAMC) has announced the launch of an open-ended scheme replicating the total returns of S&P BSE Financials ex-Bank 30 Total Return Index.

The new fund offer (NFO) for the Motilal Oswal S&P BSE Financials ex-Bank 30 Index Fund will open on 14 July and close on 22 July.

As per the fund house, the scheme would be the first-of-its-kind passive fund that aims to provide exposure to the financial services sector, excluding banks.

The index will include top 30 non-banking financial stocks from S&P BSE 250 Large Midcap Total Return Index with a maximum stock weightage capped at 15%. The index will be rebalanced semi-annually in June and December.

Currently, the index includes stocks of housing finance companies, non-banking financial services companies, exchanges, asset management companies, insurance, card payment and Fintech, etc.

As of June 2022, the index has names such as Housing Development Finance Corp, Bajaj Finance Ltd, Bajaj Finserv Ltd, HDFC Life Insurance Company Ltd and SBI Life Insurance Company Ltd, etc.

The top 10 stocks constitute nearly 72% weight in the index. In terms of industry breakup NBFCs account for majority with weight close to 28%, followed by life insurance at 21% and housing finance companies accounting for 18%.

The index is largely skewed towards large-cap companies accounting for 75% of the weight, while mid-cap companies accounts for the rest.

S&P BSE Financials Ex-Bank 30 Index has outperformed the S&P BSE 250 Large MidCap index over the last 15 years, on total returns basis. The index has noted compounded annual growth rate (CAGR) of 15.3% versus S&P BSE 250 Large MidCap Index 14%, outperforming the broad market by more than 1%.

“With India’s urban population set to grow to 50% from the current 35%, the migration will trigger transfer of money from old assets (term deposits) to new assets (capital markets & insurance) and the rise in consumption economy i.e. high demand for credit. As a result of this, the financial service sector will stand to benefit,” said Navin Agarwal, MD & CEO, Motilal Oswal AMC.

According to the fund house, In India, except banks, the rest of the industries within the financial services sectors are highly under-penetrated when compared globally. These financial services companies operate in the business of consumer credit (personal loans, credit cards, home loans), insurance (life and general) and capital market (exchanges, credit rating agencies).

“The Fund will enable Indian investors to capitalize on the growth of financialization of assets, shifting consumer mindset from saving to investing and benefit from the companies that will gain from the consumption theme,” said Pratik Oswal, head of passive funds, Motilal Oswal AMC.

During the NFO period, investors can invest a minimum amount of 500 and in the multiples of Re 1, thereafter.

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