Motilal Oswal AMC launches multi-asset passive funds

Our Bureau Mumbai | Updated on February 18, 2021

Motilal Oswal Asset Management Company has launched two new fund of fund offers that will invest in actively managed schemes of its own domestic and international equities and debt market schemes, while also investing in ICICI Mutual Fund’s gold fund.

The Motilal Oswal Asset Allocation Passive FoFs come in two variants — aggressive and conservative. The NFO opens on Friday and closes on March 5. The fund house has also filed papers with SEBI for launching two passive index funds on emerging markets and developed markets, with focus on Europe and Japan. Currently, the fund house’s passive funds asset under management is worth ₹6,500 crore.

The multi-asset passive fund offers investors an opportunity to take exposure in low-cost and diversified assets as per risk appetite or investment goal. Investors looking for a moderate portfolio could invest 50 per cent each in both funds.

The fund will follow strategic rebalancing, eliminating market-timing risk. There is no fund manager risk or credit risk involved. The equity portion (Nifty 500) also removes size and sector bias out of the portfolio since it captures 95 per cent of the entire equity market. The FoFs will be taxed as debt instruments and long-term investors can claim indexation benefits, which significantly brings down the overall tax implication.

Pratik Oswal, Head - Passive Funds, Motilal Oswal Asset Management Company, said the FoFs offer a complete portfolio solution in a single fund with periodical rebalancing and this single fund is sufficient for investors’ needs. The multi-asset FoF is a low-risk way of deploying capital when equity is at all-time highs, debt yields at lows, and gold being highest performing asset class last year, he added.

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Published on February 18, 2021
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