The Motilal Oswal Nifty India Defence Index Fund, launched as the first passively managed fund focusing on Indian defence, had a successful start. During the New Fund Offer (NFO) period from June 13th to 27th, 2024, it raised a record-breaking INR 1,676 crore (about USD 20.6 million). Over 248,000 unique investors from various locations across India participated in the NFO. The fund tracks the Nifty India Defence Index, comprising 15 defence companies, reflecting strong growth rates. This initiative aligns with India's push for defence self-reliance and decreasing reliance on foreign imports. The fund's success signifies growing investor confidence in sector-specific funds within India's mutual fund industry.
Motilal Oswal Nifty India Defence Index Fund, the first domestic passively managed investment fund focused on the Indian defence sector had a successful launch.
The fund raised a record-breaking INR 1,676 crore (approximately USD 20.6 million USD) during its New Fund Offer (NFO) period from June 13th to 27th, 2024. This surpasses the previous record for equity index funds launched in India.
The Motilal Oswal Nifty India Defence Index Fund attracted a diverse group of investors. Over 248,000 unique investors participated in the NFO, representing a wide range of locations across India with contributions from 16,900 different pin codes.
Prateek Agrawal, Managing Director and CEO of Motilal Oswal Asset Management Company, commented on the launch, highlighting the Indian government's focus on self-reliance in defence as a strong foundation for growth and innovation in the sector. He noted that this initiative aims to reduce reliance on foreign imports and emphasised that the fund reflects the trust investors have in Motilal Oswal AMC's products. This trust enables investors to participate in India's growing defence industry, currently valued at INR 80,000 crore (approximately USD 9.8 billion).
The Nifty India Defence Index, which the fund tracks, reflects the overall performance of 15 companies involved in manufacturing and servicing defence projects. These companies are already present in the Nifty total market index. Over the past year and three years, the Nifty India Defence Index has delivered impressive compounded annual growth rates of 177% and 89.5% respectively, as of May 2024.
The Motilal Oswal Nifty India Defence Index Fund offers a unique opportunity for investors to gain exposure to the Indian defence sector. This sector is expected to benefit from ongoing government initiatives focused on modernization and self-reliance in defence equipment, with an aim to increase domestic production and reduce reliance on imports.
The Motilal Oswal fund is the first of its kind in India, although HDFC Defence Fund, launched in June 2023, offers a similar investment strategy. This growing interest in sector-specific funds reflects a broader trend of investor confidence in the Indian mutual fund industry.
Data from ICICI Securities shows a record inflow of INR 1.42 lakh crore (approximately USD 17.4 billion USD) into mutual funds over the last six months (December 2023 to May 2024). Sectoral and thematic funds, like the Motilal Oswal Defence Index Fund, have attracted significant investor interest during this period, contributing INR 54,370 crore (approximately USD 6.7 billion USD) - the highest inflow category within the mutual fund industry.
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