Motilal Oswal MF Expands Offerings With 4 New Index Funds In Mid & Small-Cap Sectors;Should You Invest?

Motilal Oswal Mutual Fund (MOMF) has introduced a fresh series of sector-specific index funds designed to capture growth opportunities in India's emerging mid and small-cap markets and offer targeted exposure to rapidly expanding sectors like healthcare, technology, consumption, and financial services.

Below are the details of the newly launched funds which are open for subscription from October 29 to November 6, 2024:

Motilal Oswal Nifty MidSmall Healthcare Index Fund

This fund tracks the Nifty MidSmall Healthcare Total Return Index, aiming to mirror the growth in healthcare, which is expected to grow in India's rapidly expanding economy.

Motilal Oswal Nifty MidSmall IT and Telecom Index Fund

This fund replicates the Nifty MidSmall IT and Telecom Total Return Index, focusing on sectors benefiting from digital transformation and rapid mobile and internet expansion.

Motilal Oswal Nifty MidSmall India Consumption Index Fund

Tracking the Nifty MidSmall India Consumption Total Return Index, this fund targets India's growing consumer market, particularly in discretionary spending.

Motilal Oswal Nifty MidSmall Financial Services Index Fund

By following the Nifty MidSmall Financial Services Total Return Index, this fund taps into the fast-evolving financial services sector, which is seeing expansion through fintech and increased digital access.

Mid and Small-Cap Boom In India

In recent years, mid and small-cap segments in India have consistently outperformed large-caps, by giving out good returns. Research by Motilal Oswal Asset Management (MOAMC) shows that, over the last five years, mid and small-cap companies have grown significantly in profitability and market cap. While mid-cap profits surged by 25.2% and small-caps by 35.4%, large-caps saw growth of 22.1%. Market capitalization growth tells a similar story: mid-caps grew 25.7%, small-caps 28.0%, and large-caps 19.1%.

The AUM of the Indian MF Industry has grown from Rs. 9.16 trillion (US$ 110.63 billion) in 2014 to Rs. 64.97 trillion (US$ 780.70 billion) in July 2024, growing 6x in a span of 10 years, showcasing the potential of the industry," said Prateek Agrawal, MD & CEO of Motilal Oswal Asset Management in the . He further emphasized that "mid and small-cap stocks have substantial potential to perform well in the long term."

Why Sector-Specific Funds for Mid and Small-Caps?

The idea behind MOMF's focus on these sectors is because India's economic growth is expected to drive huge demand in healthcare, IT and telecom, consumption, and financial services, making these areas particularly attractive for investors. According to Pratik Oswal, Chief of Business, Passive Funds at MOMF, "India benefits from a large cross-utilization of channels to expand the reach of financial services. With 2,100 fintechs currently operating, India is positioned to become one of the largest digital markets, driven by rapid mobile and internet expansion. As the economy grows, so does consumer spending, particularly in discretionary sectors, with the healthcare market expected to reach $638 billion and IT and telecom, consumption, and financial services sectors each set for significant growth by 2025."