The Motilal Oswal Nifty India Defence Index Fund is a unique investment offering that provides exposure to India’s growing defence sector. Launched by Motilal Oswal Asset Management Company (MOAMC), this is the first index fund in India focused solely on defence stocks. The fund aims to replicate the performance of the Nifty India Defence Index, which includes 15 top companies involved in defence manufacturing and services.
Key Features:
- Type: Open-ended index fund.
- Benchmark: Nifty India Defence Total Return Index.
- Investment Objective: To provide returns corresponding to the total returns of the securities in the Nifty India Defence Index, subject to tracking errors.
- Minimum Investment: ₹500 and in multiples of ₹1 thereafter.
- Exit Load: 1% if redeemed within 15 days; no exit load after 15 days.
Sector Growth Drivers:
- Government Policies: Significant policy changes and government initiatives, such as import embargoes on over 4600 defence items by 2027 and an emphasis on ‘Atmanirbhar Bharat’ (self-reliance), are expected to boost domestic defence manufacturing and exports.
- Strategic Importance: The defence sector’s growth is driven by India’s prioritization of national security and technological advancement, presenting substantial opportunities for investors.
- Performance Metrics: The Nifty India Defence Index has shown impressive returns, with a 1-year CAGR of 177% and a 3-year CAGR of 89.5% as of May 31, 2024.
Investment Rationale:
Investing in the Motilal Oswal Nifty India Defence Index Fund offers potential benefits from the robust growth of the defence sector, driven by strong government support and favorable policy initiatives. This fund provides a targeted approach to capitalize on the sector’s strategic importance and technological innovations, aligning with the nation’s long-term priorities.
For more details and to invest, you can visit the Motilal Oswal Mutual Fund website or consult with a financial advisor.
Why Invest in the MOTILAL OSWAL NIFTY INDIA DEFENCE INDEX FUND?
1. Exposure to a High-Growth Sector
The defence sector in India is poised for significant growth due to government initiatives aimed at enhancing self-reliance and boosting domestic manufacturing. The government’s policies, such as the import embargo on defence items and the push for ‘Atmanirbhar Bharat’, create a favourable environment for domestic defence companies. This sector is expected to see a substantial pipeline of projects worth USD 138 billion over FY24-FY32.
2. Strong Historical Performance
The Nifty India Defence Index has demonstrated impressive returns, with a 1-year CAGR of 177% and a 3-year CAGR of 89.5% as of May 31, 2024. This performance indicates the sector’s potential for high returns, making it an attractive investment option for those seeking long-term capital growth.
3. Diversified Portfolio
The fund tracks the Nifty India Defence Index, which includes 15 leading companies involved in defence manufacturing and services. This diversification reduces the risk associated with investing in individual stocks and provides broad exposure to the sector.
4. Government Support and Strategic Importance
India’s focus on enhancing its defence capabilities and reducing dependency on imports aligns with national security priorities. The government’s commitment to increasing defence expenditure and fostering bilateral ties to boost exports further supports the sector’s growth.
5. Technological Advancements and Innovation
The Indian defence sector is witnessing robust advancements in technology and infrastructure. Investing in this fund allows investors to benefit from innovations and the sector’s modernization efforts, which are crucial for maintaining competitive advantage and achieving self-reliance in defence.
6. Attractive Entry Points
With a minimum investment amount of ₹500, the fund provides an accessible entry point for investors looking to capitalize on the defence sector’s growth potential. This makes it suitable for a wide range of investors, from retail to institutional.
7. Experienced Fund Management
Managed by Motilal Oswal Asset Management Company, a reputable name in the asset management industry, investors can trust the fund’s management to replicate the performance of the Nifty India Defence Index accurately, subject to tracking errors.
Investment Strategy
The Scheme follows a passive investment strategy and seeks to invest in the constituents of Nifty India Defence Total Return Index. The scheme aims to achieve returns equivalent to the benchmark subject to tracking error. The scheme would also invest in units of Liquid schemes and money market instruments as stated in the asset allocation table.
MOTILAL OSWAL NIFTY INDIA DEFENCE INDEX FUND (NFO) Details
| Particular | Details |
| NFO Open | 13 June 2024 |
| NFO Close | 24 June 2024 (extended till 27 Jun 2024) |
| NFO Re-Open | 03 July 2024 (Tentative) |
| Scheme TYPE | Open-Ended |
| Purchase Mode | Lumpsum & SIP both |
| Minimum Application Amount | ₹500/- and any amount thereafter |
| Benchmark | Nifty India Defence TRI |
| Fund Manager | Mr. Swapnil Mayekar (for Equity) Mr. Rakesh Shetty (for Debt Component) |
| Risk-o-meter | Very High |
MOTILAL OSWAL NIFTY INDIA DEFENCE INDEX FUND (NFO) contact us…
Benefits for Investors
1. High Growth Potential
The defence sector in India is experiencing rapid growth driven by government initiatives and increased defence expenditure. The sector’s projected pipeline of USD 138 billion over FY24-FY32 presents substantial growth opportunities.
2. Strong Historical Performance
The Nifty India Defence Index has shown remarkable returns, with a 1-year CAGR of 177% and a 3-year CAGR of 89.5% as of May 31, 2024. This strong historical performance suggests the potential for attractive future returns.
3. Strategic Government Support
The Indian government’s policies to reduce import dependence and boost domestic defence manufacturing, such as the import embargo on over 4600 defence items by 2027, create a favorable environment for growth. Additionally, initiatives to increase defence exports further enhance the sector’s prospects.
4. Diversification
The fund provides exposure to a diversified portfolio of 15 companies involved in the defence sector, reducing the risk associated with investing in individual stocks. This diversification helps in mitigating sector-specific risks and enhances the stability of returns.
5. Low Entry Point
With a minimum investment amount of ₹500, the fund is accessible to a wide range of investors, including retail investors. This low entry point allows more investors to participate in the growth of the defence sector without requiring a large initial capital outlay.
6. Technological Advancements and Innovation
The defence sector is at the forefront of technological advancements and innovation. Investing in this fund allows investors to benefit from the sector’s continuous improvements in technology and infrastructure, which are crucial for maintaining a competitive edge and achieving self-reliance.
7. Experienced Management
Managed by Motilal Oswal Asset Management Company, which has a strong track record and expertise in managing index funds, investors can trust the fund’s ability to effectively track the performance of the Nifty India Defence Index with minimal tracking error.
8. Alignment with National Priorities
The fund aligns with India’s national priorities of enhancing defence capabilities and achieving self-reliance. By investing in this fund, investors are indirectly supporting the country’s strategic objectives, which are critical for long-term national security and economic stability.
The MOTILAL OSWAL NIFTY INDIA DEFENCE INDEX FUND is an open-ended equity scheme launched by MOTILAL OSWAL MUTUAL FUND, An open-ended equity scheme is a unique investment offering that provides exposure to India’s growing defence sector.
SIPs are good but even better when markets are HIGH
To Invest in MOTILAL OSWAL NIFTY INDIA DEFENCE INDEX FUND (NFO) contact us…
MOTILAL OSWAL NIFTY INDIA DEFENCE INDEX FUND (NFO) Objectives
- Return that corresponds to the performance of Nifty India Defence Total Return Index subject to tracking error
- Long-term capital growth
Conclusion
Investing in the Motilal Oswal Nifty India Defence Index Fund offers a unique opportunity to participate in the growth of India’s strategically important defence sector. The combination of government support, strong historical performance, and technological advancements makes this fund an attractive proposition for long-term investors seeking to diversify their portfolios and capitalize on the sector’s potential.
Considering the high valuations at the current juncture, we recommend systematic investing via Systematic Investment Plan (SIP).
For Details Reports Please download the Presentation, SID, KIM from below…
Risk Discloser – MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. The Scheme being sectoral in nature carries higher risks versus diversified equity mutual funds on account of concentration and sector specific risks. Investors should consult their financial advisers, if in doubt about whether the product is suitable for them. The product labeling assigned during the NFO is based on internal assessment of the scheme characteristics or model portfolio and the same may vary post NFO when the actual investments are made.
