Motilal Oswal Mutual Fund just rolled out its newest offering, the Motilal Oswal Diversified Equity Flexicap Passive Fund of Funds. This open-ended fund of funds focuses on passive investments to deliver broad exposure across large-cap, mid-cap and small-cap stocks through a smart allocation system.
The NFO for this Motilal Oswal Flexicap Passive FoF opened for subscriptions right away and wraps up on January 15. Its main goal is long-term capital appreciation by investing money mainly into passive vehicles like ETFs and index funds covering equity and related instruments across all market cap categories.
Why This Fund Addresses a Major Issue for Investors?
Investors who invest in equity mutual funds (stocks) often find it hard to choose the right size of companies to invest in or the right time to change their focus. The top-performing companies change between large, medium and small ones over different market cycles and no single group stays on top forever. Guessing these changes usually means chasing hot performers or bailing out too soon, as noted in the fund house's press release.
That is where the Motilal Oswal Diversified Equity Flexicap Passive FoF steps in. It kicks off with a straightforward equal split, one-third each to large, mid and small caps. The team reviews allocations every quarter, rebalancing only when any segment drifts by 5% or more from its target.
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The "Buy Low, Sell High" Disciplined Investment Approach
This investment approach naturally sells strong performers & buys weaker ones, following the simple buy-low-sell-high idea without needing to predict the market or make constant changes. By sticking to passive index funds and ETFs, it sidesteps the heavy large-cap tilt that is common in many flexi cap mutual funds. With this fund, investors can get stable companies, new businesses and fast-growing firms all in one package.
The fund measures itself against the Nifty 500 Total Return Index, with Swapnil Mayekar handling equities and Rakesh Shetty on debt.
Who Should Consider This FoF?
This mutual fund suits investors chasing long-term growth via passive equity exposure spread evenly across market caps. You can start your investment in this fund with a minimum of Rs 500 lump sum and can add money in increments of Re 1. Be aware that if you redeem your investment within 15 days of getting it, there will be a 1% exit load. After 15 days, there is no exit load.
On this, Pratik Oswal, Chief of Business- Passive Funds at Motilal Oswal Asset Management Company, explained, "Market-cap rotations are tough to call and chasing them often backfires. Our Motilal Oswal Diversified Equity Flexicap Passive Fund of Funds cuts out the guesswork with equal starting weights across large, mid and small caps. It rides those natural shifts through a clear, rules-based process, though the fund manager holds final say."
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