Motilal Oswal Surges into Thematics with New Active Fund of Funds Targeting Long-Term Growth

Motilal Oswal Surges into Thematics with New Active Fund of Funds Targeting Long-Term Growth​

Motilal Oswal Asset Management Company Limited (MOAMC) has announced the launch of its new flagship product: the Motilal Oswal Multi Thematic Active Fund of Funds (FOF). This open-ended scheme is designed for investors seeking significant capital appreciation by gaining diversified, focused exposure across multiple high-growth thematic equity areas. The fund structure aims to identify and capitalize on emerging economic drivers within Indian markets over the long term.

The new FOF represents a strategic entry into actively managed thematic investment, allowing unitholders to benefit from sector trends without needing to select specific themes or underlying funds themselves. The primary objective of this scheme is generating substantial long-term returns by investing in units of specialized domestic equity-oriented schemes across various market caps.

Investment Mandate and Core Strategy​

The fund’s core strategy centers on actively selecting, monitoring, and rebalancing a portfolio of thematic domestic equity schemes. This allows the manager to capture emerging opportunities while managing risk and enhancing diversification. The scheme is mandated to invest predominantly in units of Thematic Domestic Equity-Orient Schemes, targeting 95% to 100% of total assets.

While concentrating on high-growth themes, the fund maintains a balanced approach by allotting up to 5% of net assets into Liquid, overnight, debt schemes and associated instruments. This allocation provides essential liquidity management and buffers against short-term volatility in the equity markets. The portfolio is backed by experience from senior management, including Mr. Bhalchandra Shinde (Associate Fund Manager) and Mr. Rakesh Shetty (Fund Manager - Debt Components).

Where Will the Scheme Invest?​

The MOAMC FOF will invest primarily in units of actively managed thematic domestic equity-oriented schemes offered by Motilal Oswal Mutual Fund and other reputable funds. The underlying portfolio is highly diverse, potentially spanning themes such as Consumption, Manufacturing, Infrastructure, Digital India, Business Cycle, and Active Momentum.

Beyond the core focus on theme-based equity, the scheme also maintains investment restrictions to ensure prudence. For instance, the fund will not invest in unrated debt instruments, structured obligations, or any overseas securities. The scheme adheres strictly to regulatory guidelines, maintaining a maximum exposure limit of 10% of NAV in equity shares or equity related instruments of any single company.

Risk Profile and Regulatory Compliance​

The investment is categorized with a Very High Risk rating, reflecting the aggressive nature and concentrated focus on thematic growth areas. Investors are cautioned that the returns from this specialized fund may materially impact or be lower than those achieved by direct investments in underlying schemes. The scheme specifically bears costs at both the Fund of Funds level and within the component schemes.

Regulatory compliance is paramount to the design. The performance of the scheme will be benchmarked against the Nifty 500 Total Return Index, a measure mandated by SEBI for funds investing in sector-based domestic equity-oriented schemes. Furthermore, the AMC ensures all disclosures are fair and adequate, emphasizing that the fund does not provide any guaranteed or assured returns.

Fund Mechanics and Offer Details​

The Motilal Oswal Multi Thematic Active FOF offers units at an initial price of ₹10 per unit during the New Fund Offer (NFO). The scheme is open-ended, with continuous offering available at NAV based pricing after the NFO period concludes. Investors can subscribe to the fund via Lumpsum investments starting from a minimum of ₹500/- or through SIP plans ranging from Daily to Annual options.

The product carries a clear Exit Load structure: 1% is applicable if the units are redeemed on or before 365 days from the date of allotment, and this load applies to switches among schemes within MOMF. The annual recurring expenses for the scheme are managed with careful oversight, targeting a maximum Base Expense Ratio (BER) of up to 2.10%, which encompasses investment management, audit fees, and marketing costs.

Investor Considerations​

Prospective investors should thoroughly review the Scheme Information Document (SID) and Statement of Additional Information (SAI), as these documents outline critical risk factors specific to fund of funds structures. Key risks include the dependence on underlying scheme performance, tracking error (where a FOF’s returns deviate from its underlying scheme due to expense or timing issues), and concentration risk inherent in thematic investing.

The AMC also confirms that it operates under strict compliance protocols, including having designated staff and systems to mitigate operational and market risks. The fund offers specialized services, such as the option for investors to conduct transactions online through official platforms like KfinKart or via MF utility platforms (NSE/BSE StAR MF).