The Motilal Oswal Mutual Fund has launched a new index fund aimed at recreating the performance of one of India’s widest equity indexes, the BSE 1000 index. By being exposed to 1,000 listed companies across the LARGECAP, MIDCAP, SMALLCAP and MICROCAP segments, the fund promises unparalleled diversification in its Indian equity space. Understand the key features of this new fund offer (NFO).
Motilal Oswal BSE 1000 Index Fund NFO – Details of the problem
- Scheme opens: June 5th, 2025
- Scheme closes: June 19, 2025
- Fund Type: BSE 1000 Index Replication/Tracking Open-Equity Scheme
- benchmark: BSE 1000 TRI (Total Return Index)
- Minimum investment: 500 pounds and then multiples of Re 1
- Fund Manager: Abhiroop Mukherjee
- Please finish: nil
- Cost Ratio: It could be in the range of 0.3%-0.5% in direct planning (exact numbers to be disclosed later)
What is a BSE 1000 index?
The BSE 1000 Index is India’s widest equity index, covering the top 1,000 listed companies based on their full market capitalization. It provides a general representation:
- Large Cup (Top 100)
- Midcap (next 150)
- Smallcap (next 400)
- Microcap (350 left)
The index covers approximately 94% of India’s listed market capitalization and represents 57 industries ranging from finance and manufacturing to specialized chemicals, IT hardware and digital media.
How is the performance of the underlying indexes from the past?
Mutual funds are new, but the performance of the underlying indexes is impressive. Below is a comparison of past Nifty 50 index returns and BSE 1000 index returns.
Why invest in the Motilal Oswal BSE 1000 Index Fund?
- Wide diversification:
The fund offers exposure to 1,000 companies and provides investors with an all-in-one solution that will capture the breadth of the Indian stock market. You’re not only investing in a Large cup, but you’re also taking advantage of the possibilities of mid-caps, small-caps and micro-cups. - Participation in the Indian Growth Story:
As India is poised to become a $5 trillion economy over the next few years, wider participation between sectors and businesses is expected to drive the next growth. The fund allows investors to ride that wave with a single investment. - Passive and low-cost investment:
As this is an index fund, there is no active stock selection by the fund manager. The fund simply replicates the BSE 1000 index, reducing management costs. Historically, passive funds have outperformed many aggressive funds in the long term, particularly due to cost reductions. - Exposure to under-researched microcaps:
Approximately 250 companies in this index are microcups, which tend to be under-researched and have fewer analysts. This provides price discovery and the potential for long-term returns. - A transparent, rules-based approach:
Index funds follow a transparent methodology. Investors can look at the components of the index and understand how the fund behaves under various market conditions.
Risk factors to consider
- Volatility due to small and microcaps:
Exposure to MicroCap and SmallCap companies can provide high returns in bull markets, but can be very unstable during market corrections. The presence of 750 companies beyond the Lagecup space increases the risk of the fund at the bear stage. - Higher tracking errors:
A rebalance of 1,000 shares can result in relatively higher tracking errors compared to narrower index funds (such as the Nifty 50 and Nifty Next 50). - Limited fit for conservative investors:
Due to its high volatility and wide sector exposure, the fund may not be suitable for ultra-conservative investors or investors with short-term horizons.
Who should I invest?
This fund is ideal as follows:
- Investors looking for a single fund exposed to the entire Indian stock market.
- People with long-term investment periods of 5-10 years or more.
- Investors prefer passive investments with diverse exposures.
- Individuals who do not want to manage multiple funds with different market capitalities (large, medium, small).
How do I apply for this NFO?
You can invest in this NFO through the following channels:
- Motilal Oswal Mutual Fund Directly via the website or app.
- Through online platforms such as Zerodha Coin, Grow, Paytm Money, Kuvera, and MF Central.
- via a financial advisor or distributor.
- Through bank mutual fund investment services.
Make sure your KYC is updated before applying.
Should I invest in Motilal Oswal BSE 1000 index fund NFO?
The Motilal Oswal BSE 1000 Index Fund offers a unique opportunity to be exposed to the entire range of Indian stocks, from large established companies to emerging microcups. Its diverse structure, passive low-cost model, and long-term growth potential make it an attractive option for investors who want to participate in India’s growth narrative without actively managing multiple funds.
However, this fund is not without risk. Including SmallCap and MicroCap stocks increases their volatility. Investors should only consider this fund if they are satisfied with short-term fluctuations and have long-term investment views.
If you are a long-term investor looking for a single fund with medium to high risk preferences and offering wide market coverage, this NFO could be the right addition to your portfolio. Conservative investors or those looking for a stable, short-term return may consider other largecap or multi-cap index funds.
Always keep your investment decisions on your financial goals, risk profiles, and time horizons.
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