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Motilal Oswal Mutual Fund is launching a new fund offer (NFO) for Motilal Oswal Asset Allocation Passive Fund of Fund. The NFO will be open for subscription on Groww between February 19, 2021, and March 05, 2021.

The mutual fund will have two variants:

Read on to find out more about the NFO.

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What is an Asset Allocation Passive Fund of Fund?

An asset allocation passive fund of fund is a mutual fund that invests in a diversified portfolio of investments across passive mutual funds focused on different asset classes like equity funds, debt funds, gold funds, etc.

Passive funds are those funds that track a particular index with minimal involvement from the fund manager. Hence it is a passively managed fund and not actively managed. 

A fund of fund is a mutual fund that invests in units of another mutual fund.

These definitions are covered in detail towards the end of the blog.

Investment Objective of Motilal Oswal Asset Allocation Passive Fund of Fund

The Motilal Oswal Asset Allocation Passive Fund of Fund is an open-ended fund of fund scheme that seeks to achieve long-term growth/capital appreciation by offering an asset allocation solution that primarily invests in passive funds like ETFs, Index Funds of equity and equity-related instruments, fixed income, and gold. However, all mutual fund plans are subject to market risk.

Asset Allocation

Here is the proposed asset allocation for the scheme:

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Units of specific schemes of mutual funds*** 95% 100% Medium to High
Units of Liquid Schemes or Money Market Instruments 0% 5% Low to Medium

This is the broad asset allocation of both the variants. However, the proportion of funds allocated to the underlying mutual funds differs between the two variants.

Units of specific schemes of mutual funds-Aggressive

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Domestic Equity

  1. Motilal Oswal Nifty 500 Index Fund; or
  2. Motilal Oswal M50 ETF; or
  3. Similar domestic equity passive funds
40% 90% High
International Equity

  1. Motilal Oswal S&P 500 Index Fund; or
  2. Motilal Oswal Nasdaq 100 ETF
10% 30% High
Debt

  1. Motilal Oswal 5-year G-Sec ETF; or
  2. Similar domestic G-Sec passive funds
0% 40% Low to Medium
Commodities

  • ICICI Prudential Gold ETF; or
  • Similar domestic gold ETFs
0% 20% Medium

 

Units of specific schemes of mutual funds-Conservative

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Domestic Equity

  1. Motilal Oswal Nifty 500 Index Fund; or
  2. Motilal Oswal M50 ETF; or
  3. Similar domestic equity passive funds
0% 40% High
International Equity

  1. Motilal Oswal S&P 500 Index Fund; or
  2. Motilal Oswal Nasdaq 100 ETF
0% 20% High
Debt

  1. Motilal Oswal 5-year G-Sec ETF; or
  2. Similar domestic G-Sec passive funds
40% 90% Low to Medium
Commodities

  • ICICI Prudential Gold ETF; or
  • Similar domestic gold ETFs
0% 20% Medium

Benchmark

Motilal Oswal Asset Allocation Passive Fund of Fund scheme is designed to invest in passive funds across asset classes and with two different variants.

The aggressive variant has a higher exposure towards equity while the conservative variant has a higher exposure towards debt. Hence the benchmark indices are also different for both of them.

Aggressive:

  • 60% Nifty 500 TRI
  • 20% S&P 500 TRI (INR)
  • 5% Domestic Price of Gold
  • 15% Nifty 5-Year Benchmark G-Sec Index

Conservative:

  • 25% Nifty 500 TRI
  • 10% S&P 500 TRI (INR)
  • 5% Domestic Price of Gold
  • 60% Nifty 5-Year Benchmark G-Sec Index

Fund Details

For the Motilal Oswal Asset Allocation Passive Fund of Fund, an investor can choose between an Aggressive and Conservative approach.  

Both regular and direct plan is available for both the variants. Further, investors can only opt for the Growth option under either of these plans.  Dividend option is not available across plans and variants.

Other Details

Scheme Name Motilal Oswal Asset Allocation Passive Fund of Fund (Aggressive/Conservative)
Type of Scheme An open-ended fund of fund scheme investing in passive funds like ETF/Index Funds of equity and equity-related instruments (domestic as well as international), fixed income, and Gold.
Investment Approach The scheme is available in two variants:

  1. Aggressive – where the equity exposure is higher
  2. Conservative – where the debt/fixed income exposure is higher
Benchmark Aggressive Conservative
  • 60% Nifty 500 TRI
  • 20% S&P 500 TRI (INR)
  • 5% Domestic Price of Gold
  • 15% Nifty 5-Year Benchmark G-Sec Index
  • 25% Nifty 500 TRI
  • 10% S&P 500 TRI (INR)
  • 5% Domestic Price of Gold
  • 60% Nifty 5-Year Benchmark G-Sec Index
NFO Dates Opening Date – February 19, 2021

Closing Date – March 05, 2021

Fund Managers Mr. Swapnil Mayekar (For Equity including overseas Index/ETFs & Gold passive funds)

Mr. Abhiroop Mukherjee (For Debt/Fixed Income Component)

Mr. Herin Visaria(For International Equity)

Minimum Amount for Application in the NFO Rs. 500/- and in multiples of Re.1 thereafter
Additional Purchase Rs. 500/- and in multiples of Re.1 thereafter
Minimum Monthly SIP Application Amount Rs. 500/- and in multiples of Re.1 thereafter
SIP Dates Any day of the month except 29th, 30th or 31st
Minimum Instalments for Monthly SIP 12 Instalments
Minimum Redemption Amount Redemptions can be of a minimum amount of Rs. 500/- and in multiples of Re.1/- thereafter or account balance, whichever is lower.
Entry Load Not Applicable
Exit Load The exit load is as follows:

  • 1% if redeemed or switched out on or before the completion of 3 months from the date of allotment of units.
  • Nil, thereafter
Plans Each plan is available as a Regular or Direct plan.
Options Growth option only

Fund Managers

Swapnil Mayekar – For Equities including overseas Index/ETFs and Gold Passive Funds

Swapnil Mayekar has over 11 years of experience in fund management and product development. He is an M.Com from Mumbai University and holds an Advanced Diploma in Business Administration from Welingkar, Mumbai. Swapnil has been working with Motilal Oswal Asset Management Company Limited since 2010. Prior to this, he was working as a Research Associate with Business Standard from 2005 to 2010.

Other funds managed by him are:

Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.

  • Motilal Oswal Nasdaq 100 Fund of Fund
  • Motilal Oswal Nifty Bank Index Fund
  • Motilal Oswal Nifty 500 Fund
  • Motilal Oswal Nifty Midcap 150 Index Fund
  • Motilal Oswal Nifty Smallcap 250 Index Fund
  • Motilal Oswal Midcap 100 ETF
  • Motilal Oswal M50 ETF
  • Motilal Oswal Nifty 50 Index Fund
  • Motilal Oswal Nifty Next 50 Index Fund

Abhiroop Mukherjee – Fund Manager (Fixed Income)

Abhiroop Mukherjee has more than 13 years of experience in Debt and Money Market Instruments Securities trading and fund management. He holds a B.Com from Calcutta University and a PGPBF (Finance) from the National Institute of Bank Management. Abhiroop has been working with Motilal Oswal Asset Management Company Limited since 2011 as a Fund Manager-Fixed Income. Prior to this, he was working as an Assistant Vice President – Fixed Income Trading with PNB Gilts Limited from 2007 to 2011.

Other funds managed by him are:

  • Motilal Oswal Ultra Short Term Fund
  • Motilal Oswal Liquid Fund

He has also been the Fund Manager of the Debt component in the following schemes:

  • Motilal Oswal Focused 25 Fund
  • Motilal Oswal Midcap 30 Fund
  • Motilal Oswal Flexicap Fund
  • Motilal Oswal Long Term Equity Fund
  • Motilal Oswal Dynamic Fund
  • Motilal Oswal Nasdaq Fund of Fund
  • Motilal Oswal Equity Hybrid Fund
  • Motilal Oswal S&P 500 Fund
  • Motilal Oswal Multi Asset Fund

Herin Visaria – Fund Manager (International Equity)

Herin Visaria has more than 11 years of experience in Sales Trading, Derivatives Research, and Dealing. He holds a B.Com Degree and is a CFA-Level 3 candidate. Hiren is currently handling the profile of the Fund-Manager-Foreign Securities with Motilal Oswal Asset Management Company Limited. Prior to this, he was working in the Institutional Derivatives Research department with Motilal Oswal Securities Limited (now Motilal Oswal Financial Services Limited). He has also worked in Sales Trading – Institutional Equities with the Bank of Baroda Capital Markets Limited, and in Sales Trading and Dealing Servicing the Mutual Funds in the Institutional Derivatives Department with Religare Capital Markets Limited.

Other funds managed by him are:

  • Motilal Oswal Nasdaq 100 ETF
  • Foreign Securities under:
    • Motilal Oswal Flexicap Fund
    • Motilal Oswal S&P 500 Fund

What is an Asset Allocation Passive Fund of Fund?

Let’s understand Fund of Funds, Asset Allocation Funds, and Passive Funds first:

Fund of Funds

Mutual funds are designed to invest in multiple securities with a pre-specified risk level and investment objective. They typically invest in equities, bonds, and gold. However, there are certain mutual funds that invest in other mutual fund schemes. These are called Fund of Funds of FoFs. They can invest in various MF schemes like equity schemes, debt schemes, exchange-traded funds, international funds, commodities, etc.

Asset Allocation Fund

As the name suggests, an asset allocation fund invests in multiple asset classes like equity, debt, real estate, gold, etc. The asset classes are chosen based on the risk level and investment objective of the scheme. Also, the fund manager can choose assets dynamically based on the performance of the fund, or in a fixed manner.

Passive Funds

When a mutual fund creates a portfolio of securities, it can design it based on an active or passive management strategy. In an active fund, the fund manager actively chooses the funds to invest in or rebalance them if the markets perform contrary to expectation. Hence, a lot rides on the efficiency of the fund manager and his/her ability to make the right decisions. On the other hand, Passive funds track an index or a portfolio and the fund manager plays a passive role. These funds simply mimic the index they are tracking regardless of the market movement.

Hence, after taking into consideration all the definitions, an asset allocation passive fund of fund (FoF)is a mutual fund which invests in various passive mutual funds. The focus will be across different asset classes like equity funds, debt funds, gold funds, etc.

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