Motilal Oswal Asset Management Company offers 5-year G-sec ETF

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Motilal Oswal Asset Management Company launched first-of-its kind Motilal Oswal 5 Year G-sec ETF. Nifty 50 ETF, Nifty Midcap 100 ETF, and NASDAQ 100 ETF are other ETF funds offered by Motilal Oswal AMC. The NFO for the fund is open and investors can subscribe till December 2nd. The fund invests in securities of Nifty 5 yr Benchmark G-Sec Index.

The benchmark index is a single bond index that tracks the most liquid 5-year benchmark security issued by the Government of India. September 03, 2001, is the base date of the index and it has a base value of 1000. It is reviewed every month. The ETF is a low-cost alternative to fixed deposits for investors because it has no lock-in period and no default risk. The fund measures the performance of the most liquid Government of India bond with 5-year maturity. Historical data shows that ETFs have attractive pre and post returns when compared to fixed deposits but there is no assurance that the investment objective will be achieved.

Navin Agarwal, MD & CEO Motilal Oswal Asset Management Company Ltd, said that the launch of Motilal Oswal 5 Yr G-Sec ETF added to the company’s investor centric products portfolio and expands its product offering. The ETF is a key part of the AMC’s effort to offer investors building blocks for asset allocation. By investing in the scheme, investors get the opportunity to invest in most liquid G-sec in the 5 year segment. The overall volatility of the scheme will be low as the benchmark index has low correlation with equities, offering a diversified portfolio to the investor.

Motilal Oswal AMC is known for launching passive funds. Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company Ltd., said that the fund would invest in the underlying constituent of Nifty 5 Yr Benchmark G-sec Index. The underlying constituent was 5.22% GS 2025, as of October 31, 2020. The fund has an approximate 4 years duration. He added that the ETF is suitable for investors who want to park their money in safer instruments and seek tax benefits. The minimum application amount for NFO is Rs. 500.

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