October 3, 2023
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Motilal Oswal Nifty 500 ETF launched. Investors to get exposure to 90% of India’s listed companies
Motilal Oswal Asset Management Company has announced the launch of Motilal Oswal Nifty 500 ETF. The AMC said in a statement today that this exchange-traded fund aims to offer investors exposure to more than 90% of India’s listed market capitalization and an opportunity to participate in India’s growth story. The ETF is expected to list on NSE on 6th October 2023; the trading symbol is ‘MONIFTY500’.
According to the statement, the Motilal Oswal Nifty 500 ETF seeks to replicate/track the total returns of the Nifty 500 Index, which is designed to measure the performance of the top 500 companies based on market capitalization. Compared to the Nifty 50 Index, the Nifty 500 Index is well-diversified, with its top 10 holdings accounting for only 37%, as opposed to 58% in the Nifty 50 Index.
Furthermore, it provides diversified exposure to 21 sectors, including textiles, consumer services, media, and forest materials that are not present in the Nifty 50 Index, offering an excellent blend of Largecap (75%), Midcap (16%) and Smallcap (9%).
Over the last 3 years. the Nifty 500 Index has delivered 25% on an annualized basis, as of the end of August 31, 2023. Over the medium to long term Nifty 500 Index has historically outperformed the Nifty 50 Index aided by strong performance from the mid and smallcap segments. It is important to note that the Nifty 500 Index has exhibited less or similar risk (measured by standard deviation) despite the inclusion of midcap and smallcap stocks that are generally considered more volatile.
The AMC said it has demonstrated a strong track record in managing the Motilal Oswal Nifty 500 Index Fund for the past 4 years. It noted a low 1-year tracking error of just 4 basis points (bps) as of August 31 2023, which is lower than the tracking error observed by the Index Funds and ETFs tracking Nifty 50 Index.
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