Motilal Oswal: Motilal Oswal’s NFO, a bold bet on finance beyond banking

Mumbai: Savvy investors seeking high-growth businesses in non-banking segments – insurance, asset management, non-bank financial companies (NBFCs) and housing finance, and equity brokerage – which have low penetration in the country may consider a small allocation to Motilal Oswal S&P BSE Financials ex Bank 30 Index Fund New Fund Offering (NFO), a passive offering.

Cautious investors or first-time investors should, however, stay away from these thematic funds which carry higher risk and high volatility.

This passively managed fund will give exposure to the financial services sector, excluding banks.

The index will comprise the top 30 non-banking financial stocks of the S&P BSE 250 Large-Midcap Total Return Index with a maximum weighting for a stock capped at 15%.

The index will be rebalanced semi-annually in June and December. Currently, the index includes stocks of housing finance companies, NBFCs, exchanges, asset management companies, insurance, card payments and fintech, among others.

The NFO is currently open and closes July 22. Investors can place a minimum of ₹500 and multiples of ₹1 thereafter.

“There are huge long-term opportunities in financial services given the low penetration in areas such as insurance, asset management, equity brokerage, card payments and financing. housing,” said Nirav Karkera, head of research at Fisdom.

For example, insurance penetration in India is 4.2% compared to 17.4% in Taiwan, while the per capita premium for life insurance is $59 and $19 for non-insurance in India, compared to a global average of US$360 and US$449, respectively.

Only 3% of the Indian population invests in stocks compared to 13% in China and 55% in the United States, while mutual fund assets as a percentage of GDP represent 13% compared to 125% in the United States.

With rapid urbanization and rising income levels, more people are expected to use these financial services, which could lead to strong growth for businesses in these sectors. Karkera said investors could allocate 5-7% of their equity portfolio to such a fund and spread their investments over five years.

Some financial planners think such a fund might be a tactical game for savvy investors, but conservative investors might steer clear. “Conservative and beginner investors are better off with diversified mutual funds. These funds work for investors willing to take tactical bets and understand the nuances of thematic games,” said Rupesh Bhansali, head of distribution at GEPL. Capital.


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