Motilal Oswal MF’s Defence Index Fund garners Rs 1,676 crore in NFO; highest ever for equity index fund

Over the one-year and three-year period, Nifty India Defence Index has shown a compounded annual growth rate of 177 percent and 89.5 percent, respectively.

Motilal Oswal Nifty India Defence Index Fund, the first domestic passive fund on the sector, has collected Rs 1,676 crore during its New Fund Offer (NFO) period, the asset management company said on July 4.

This is the highest collection ever by an equity index fund during the NFO period.

The open-ended fund tracking the total returns of the Nifty India Defence Index saw participation by 2,48,000 unique investors from across 16,900 pin codes in India.

The NFO of Motilal Oswal Nifty India Defence Index Fund was open from June 13-27, and the units were allocated on July 3. The scheme will reopen for further subscription and redemption from July 9.

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Prateek Agrawal, Managing Director and Chief Executive Officer, Motilal Oswal Asset Management Company, said, “India’s strides towards Atmanirbharta (Self-Reliance) in defence is paving the way for significant growth and innovation. This fund is a testament of the faith that investors have in Motilal Oswal AMC’s products. This fund is poised to benefit from India's increasingly robust advancements in defence technology and infrastructure, and our investors will be an active part of India’s defence growth story.”

The collection numbers show investors’ bullish stance on the domestic defence theme and the passive fund category.

The Nifty India Defence Index is designed to reflect the performance of Defence companies operating in manufacturing and servicing Defence projects. The index comprises 15 companies which also form a part of the Nifty total market.

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Over the one-year and three-year period, Nifty India Defence Index has shown a compounded annual growth rate of 177 percent and 89.5 percent, respectively, as of the end of May end.

To be sure, there’s only one more scheme based on the defence theme in India, the HDFC Defence Fund, which was launched in June 2023.

Data shows that Indian investors have been bullish on sectoral/thematic funds in recent times.

According to a report by brokerage ICICI Securities, in the last six months the mutual fund industry has seen the highest-ever inflows for any six-month period. Total inflows received from December 2023 till May 2024 stood at Rs 1.42 lakh crore.

Notably, sectoral/thematic funds saw significantly higher inflows on the back of continuous NFOs.

Sectoral/Thematic mutual fund category saw Rs 54,370 crore inflows in the last six months followed by Large & Mid Cap Fund at Rs 16,077 crore and Small Cap Fund at Rs 14,877 crore.

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