Motilal Oswal AMC announces launch of Motilal Oswal S&P BSE Low Volatility ETF and Index Fund
MOAMC recommends to use the fund to protect themselves from market volatility
Mumbai: Motilal Oswal Asset Management Company (MOAMC) has announced the launch of its Low Volatility factor-based ETF and Index Fund – Motilal Oswal S&P BSE Low Volatility ETF (Exchange Traded Fund) and Motilal Oswal S&P BSE Low Volatility Index Fund. These are open ended scheme replicating/tracking the S&P BSE Low Volatility Total Return Index. The low volatility strategy involves buying stocks which have higher stability in price movements based on past returns.
The S&P BSE Low Volatility Index selects 30 least volatile companies as defined in index methodology. The constituents need to be part of S&P BSE LargeMidCap Index with a minimum listing history of one year. The maximum weight of stock is capped at 5% and index gets rebalanced semi-annually in March and September.
The S&P BSE Low Volatility Total Return Index (TRI) has significantly outperformed the S&P BSE LargeMidCap TRI over the last 15 years; in fact, the index has outperformed the S&P BSE LargeMidCap TRI in 9 out of last 16 calendar years. As compared to Nifty 50, the S&P BSE Low Volatility TRI tends to fall less during market crashes, which more than compensates for relative underperformance during recovery phase after these events. Basis average 3 year rolling returns, S&P BSE Low Volatility TR Index (+16.5%) has outperformed S&P BSE LargeMidCap TR Index (+11.3%) by 5.2%. (All performance numbers as of 28-Feb-2022, sourced from Asia Index Private Limited.)
The NFOs of Motilal Oswal S&P BSE Low Volatility ETF (Exchange Traded Fund) and Motilal Oswal S&P BSE Low Volatility Index Fund will open for subscription on March 04, 2022 and closes on March 16, 2022.
In terms of index composition as of Feb 28, 2022, the top 10 stocks constitute nearly 39.3% of the S&P BSE Low Volatility Index weight, indicating good stock-level diversification1.
S&P BSE Low Volatility Index has historically been overweight on the Consumer sector
From the macro-economic sector coverage, Consumer constitutes 45.9% of the overall composition, followed by Healthcare (16.6%), Financial Services (8.9%), IT (7.5%), Commodities (6.6%), Manufacturing (5.4%), Energy (5.7%), and Utilities (3.3%)2.
S&P BSE Low Volatility Index has largely been skewed towards Large-caps
Historically index has not experienced significant size weight shifts. The index composition has been predominantly large caps stocks with index weight in excess of 66% while mid-caps govern rest of the index.
Navin Agarwal, MD & CEO, Motilal Oswal Asset Management Company Ltd said, “Motilal Oswal AMC is one amongst the largest AMC in India to have passive funds across major key segments. We will continue to increase our product basket with wide variety of options for investors. The Motilal Oswal S&P BSE Low Volatility Index Fund is a good starting point for an investor who’s looking for maximum wealth creation with minimal risk in highly volatile market.”
Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company Ltd said, “Research has shown that the strategy of buying low-volatility stocks tends to outperform the broad mar over the long-term. The low volatility strategy tends to be the most effective during weak market conditions. Investors that are worried about the volatility in equity markets could consider investing in our low-cost Low Volatility ETF & Index Fund.”
Key things that investors should know about the Low volatility based investing:
– Good starting point for someone worried about market volatility
– Lower volatility than market
– Long-term historical outperformance vs market
– More effective during market crashes
– Low cost Index Fund and ETF
The Minimum Application amount For Index Fund is Rs. 500/- and in multiples of Re. 1/- thereafter. On ongoing basis investor can purchase/redeem units of the scheme through financial advisor or by log-in to www.motilaloswalmf.com
Further, the minimum application amount for ETF is Rs 500/- & in multiples of Re.1/- thereafter. On Exchange – Investors can buy/sell units of the Scheme in round lot of 1 unit and in multiples thereafter; directly with Mutual Fund – Buy/sell units of the Scheme in unit size of 30,000 units and in multiples thereafter.
