Motilal Oswal Launches BSE 1000 Index Fund

The latest NFO by Motilal Oswal Mutual Fund is an open-ended index fund that seeks to replicate the performance of the BSE 1000 Total Return Index. This NFO aims to provide investors with exposure to a broad-based equity benchmark, covering large-, mid, and small-cap companies. The strategy is completely passive, meaning it does not involve active stock picking or market timing. Instead, the fund aims to mirror the performance of the BSE 1000 Index while keeping tracking error to a minimum. With a low entry point of ₹500 and transparent costs, the fund suits investors looking for long-term capital growth through diversified equity exposure.

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Key Features of NFO

• Opening Date: June 5, 2025
• Closing Date: June 19, 2025
• Exit Load: 1% if redeemed on or before 15 days from allotment
• Minimum Investment: ₹500

Objective of the NFO

The primary objective of the Motilal Oswal BSE 1000 Index Fund - Direct (G) - NFO is to offer returns that, before expenses, correspond to the total returns of the BSE 1000 Total Return Index. It aims to track the index as closely as possible while minimising tracking errors. However, there is no assurance or guarantee that the objective will be fully achieved.

Investment Strategy of NFO

• Follows a passive strategy; aims to replicate the BSE 1000 Total Return Index.
• Invests 95%–100% in the index’s constituent stocks
• May invest 0%–5% in liquid/debt instruments for liquidity and asset allocation
• No active fund management or sectoral bets
• May participate in securities lending as permitted by SEBI
• Deploys NFO proceeds in triparty repo before fund closure to optimise returns
   

Risks Associated with NFO

• Tracking error risk due to corporate actions, liquidity, and fund expenses
• Market risk is the fund mirrors equity market movements across market caps.
• Limited flexibility as the fund must replicate the index irrespective of the market outlook
• Interest rate and credit risk for the small debt portion (up to 5%)
• High volatility during broad market corrections or economic downturns

Check Upcoming NFOs

Risk Mitigation Strategy by NFO

The NFO seeks to reduce risk by maintaining strict adherence to passive management. It aims to minimise tracking error by maintaining a portfolio that mirrors the index in terms of stock weightage. Investments are also spread across 1,000 companies, reducing concentration risk. Furthermore, any surplus during the NFO period is deployed only in secure triparty repos backed by government securities or treasury bills. The fund does not charge investment management fees on these pre-launch deployments, ensuring cost efficiency for investors.

What Type of Investor Should Invest in NFO?

• Investors seeking long-term capital growth through diversified equity exposure
• Those preferring a passive investment style over active fund management
• Individuals with a moderate to high risk appetite
• Beginners looking for a low-cost, simple way to invest in a broad index
• Investors aiming to complement actively managed portfolios with index funds