Motilal Oswal NFO: This thematic fund is for tech-savvy high-risk investors

Motilal Oswal Asset Management Company (MOAMC) on Friday announced the launch of its new fund offer (NFO), the "Motilal Oswal Digital India Fund". The fund is for investors seeking long-term capital growth by investing predominantly in companies related to digital and technology sectors. 

"India's internet economy is expected to grow rapidly, similar to what we see in the US and China. With this fund, we're specifically targeting digital and technology-related investments for long-term capital appreciation," Prateek Agrawal, managing director and CEO of Motilal Oswal Asset Management Company said.

The NFO will run until October 25, 2024.

What is the Motilal Oswal Digital India Fund?

The Motilal Oswal Digital India Fund is an open-ended equity scheme targeting sectors such as technology, telecom, media, entertainment, and related industries. Investors looking to benefit from long-term capital appreciation in the digital space can consider this fund.

According to the fund's details, its primary investment objective is to generate long-term capital growth by investing in digital and technology companies, including those in software, hardware, e-commerce, telecom, media, and related fields. The fund’s benchmark is the BSE Teck Total Return Index, and it is tailored for those aiming to focus on the growth potential of digital and technology sectors.

Risk involved

The riskometer for the Motilal Oswal Digital India Fund indicates a "very high" risk level. This suggests that the fund is suited for investors who are willing to accept higher levels of risk in exchange for the potential of long-term capital appreciation, primarily through investments in the digital and technology sectors.

Investment strategy and risk management

"The Motilal Oswal Digital India Fund has employed a focused portfolio strategy using the Quality, Growth, Longevity, and Price (QGLP) framework. It also integrates various risk management techniques to maintain consistent performance. The fund managers will assess stock weightage, sector distribution, and diversification strategies to make data-driven investment decisions," the firm said in a press release.

Management team for Motilal Oswal Digital India Fund

The fund management team consists of experienced professionals:

Niket Shah, Chief Investment Officer and Fund Manager

Ajay Khandelwal, Fund Manager

Santosh Singh, Fund Manager

Atul Mehra, Fund Manager

Rakesh Shetty, Fund Manager (Debt Component)

Sunil Sawant, Fund Manager (Overseas Component)

Focus on technology

"India is poised to lead the global digital infrastructure space, with e-retail penetration projected to hit 10% by 2027. Despite this, the representation of tech stocks in India’s market remains relatively low compared to global standards, signalling a significant opportunity for growth", Niket Shah, Chief Investment Officer at Motilal Oswal AMC said.

According to internal research by MOAMC, India's digital ecosystem continues to expand at a rapid pace:

— Around 38% of rural Indians now use digital payments.

— The average Indian spends approximately 6 hours and 45 minutes online daily.

— Sectors such as e-commerce, SaaS, fintech, food tech, and digital logistics have seen considerable growth in recent years.

"With India’s digital ecosystem pillars firmly in place, we expect native digital companies across industries like e-commerce, fintech, and health tech to grow exponentially. The digital ecosystem could reach $900-$1000 billion by 2030, compared to its current valuation of $155-175 billion," Varun Sharma, Executive Group Vice President of MOAMC said.

What to know about NFOs

If you're new to investing in mutual funds, understanding how a new fund offer (NFO) works can be essential. An NFO is essentially the first time a mutual fund is open for subscription by investors. This is the phase where the fund begins raising capital.

Here are some key points to consider:

Subscription period: NFOs typically offer a subscription window of 10–15 days.

Minimum requirement: The minimum investment for NFOs can range from Rs 500 to Rs 5,000, depending on the fund.

Expense: NFOs have an expense ratio, which is the annual cost of managing the fund. Lower expense ratios are considered more attractive as they can improve returns over time.

Risk: Some NFOs might have tax implications

Investment goals: Make sure the fund’s investment goals align with your financial objectives.

Fund manager’s expertise: It's always a good idea to assess the experience of the fund manager before investing.