Motilal Oswal Nifty India Defence Index Fund is India’s first Index Fund that is offering exposure to defence stocks listed in stock markets. Baroda BNP Paribas Manufacturing Fund is an open-ended equity scheme predominantly investing in manufacturing themes.
Motilal Oswal Asset Management Company has announced the launch of the Motilal Oswal Nifty India Defence Index Fund, which is India’s first Index Fund offering exposure to defence stocks listed in India. Motilal Oswal Nifty India Defence Index Fund is an open-ended fund replicating/tracking the total returns of the Nifty India Defence Index. The NFO will open on June 13, 2024, and close on June 24, 2024. The fund aims to provide investors an opportunity to participate in the growth potential of the defence sector.
Investment objective
The investment objective of Motilal Oswal Nifty India Defence Index Fund is to provide returns that, before expenses, correspond to the total returns of the securities as represented by the Nifty India Defence Total Return Index, subject to tracking error. However, there is no guarantee or assurance that the investment objective of the scheme will be achieved.
Investment amount
The minimum application amount for Motilal Oswal Nifty India Defence Index Fund is Rs 500/- and in multiples of Re 1/- thereafter. On ongoing basis, investor can purchase/redeem units of the Scheme through financial advisor or by log-in to www.motilaloswalmf.com.
Key features
The Nifty India Defence Index is designed to reflect the performance of defence companies operating in the manufacturing and servicing defence projects. The index comprises 15 companies, which is a part of the Nifty total market.
Over the 1 year and 3-year CAGR, of Nifty India Defence Index has been 177% and 89.5%, respectively, as of end of May 31, 2024. While defence sector exhibits strong performance potential, it may also experience higher volatility.
Why invest in defence sector?
As per Nomura research, the defence sector highlights a significant opportunity for India, estimating a pipeline of $138 billion over FY24-FY32F. As India continues to prioritise national security and technological advancement, investors are presented with a unique opportunity to participate in this strategic growth.
The recent stellar performance this sector can be attribute to various changes in government policies and prioritixing the defence sector. The Centre has put import embargo on 4600+ Defence item by December 2027 to reduce imports and increase sefence manufacturing in India, moving towards ‘Atmanirbhar Bharat’ (self-reliance). The government is also actively aiming to increase exports of Defence goods and services which is estimated to double in coming 3-4 years according to Nomura Research.
Market experts added that companies in this sector have improved their balance sheets and also their profitability through the continued increase in exports and increase in Defence expenditure by the government. This makes investing in the India Defence Index Fund an attractive investment proposition.
“India’s strides towards Atmanirbharta in defence is paving the way for significant growth and innovation. With the Motilal Oswal Nifty India Defence Index Fund, we aim to capitalise on the projected $100 billion to $120 billion expansion in the defence sector over the next six years. As the fourth largest defence spender globally, India’s focus on self-reliance and modernisation offers substantial opportunities for domestic defence companies. This fund is poised to benefit from India’s robust advancements in defence technology and infrastructure,” said Prateek Agrawal, MD & CEO, Motilal Oswal Asset Management Company Ltd.
“Since the Covid era, the Nifty India Defence TRI Index has outperformed the Nifty 50 TRI four times in the last six calendar years. This is the outcome of the government’s unwavering concentration on fostering bilateral ties between nations in order to boost exports and lower imports as a part of strategic changes in government policies. As a result, India’s capabilities in the manufacturing sector is growing at a rapid pace. Made in India initiatives have resulted in a notable 74% increase in FDI flows, which is driving the defence sector’s expansion. Investors seeking long-term capital growth with returns commensurate with the performance of the Nifty India Defence Total Return Index can consider the Motilal Oswal Nifty India Defence Index Fund,” said Pratik Oswal, Chief of Business Passive Funds, Motilal Oswal Asset Management Company Ltd.
Baroda BNP Paribas Manufacturing Fund
Baroda BNP Paribas Manufacturing Fund is an open-ended equity scheme predominantly investing in manufacturing themes. This is an open-ended sectoral/thematic equity scheme following a manufacturing theme. The scheme will be benchmarked against Nifty India Manufacturing TRI.
The fund is open for subscription and will close on June 24. The scheme will be managed by Jitendra Sriram.
The portfolio seeks to invest in companies that : directly engage in manufacturing activity, aim to replace India’s imports by manufacturing domestically, export goods produced in India, invest in new manufacturing plants and facilities, support the development of new-age technology solutions, offer allied services related to the entire manufacturing lifecycle, and are listed in India while having manufacturing facilities outside the country or vice versa.
Manufacturing has been a key driver of economic growth worldwide, significantly aiding the development of emerging economies. Government initiatives are significantly boosting the manufacturing sector, with a target to expand the manufacturing base from 17% to 25% of GDP.
Additionally, positive Foreign Direct Investment (FDI) flows and India’s low manufacturing costs, combined with a large pool of educated young talent, make India a competitive option for global companies. These factors position India to become a leading manufacturing hub.
“We are thrilled to launch the Baroda BNP Paribas Manufacturing Fund. The scheme offers a compelling investment opportunity as the manufacturing sector is poised for multi-decade growth fuelled by growing consumption, investments, exports, changing geopolitical dynamics and favourable government policy,” said Suresh Soni, CEO, Baroda BNP Paribas Mutual Fund.
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