New Tech-Themed Mutual Fund NFOs Launched: Should Investors Consider?
Two mutual fund houses have introduced new fund offers (NFOs) focused on the rapidly growing Information technology (IT) and software sector. The latest offerings are the Motilal Oswal Digital India Fund and the White Oak Capital Digital Bharat Fund. The former is scheduled to open for public subscription on October 11, with the offer closing on October 25. In contrast, the White Oak Capital Digital Bharat Fund opened on September 20 and concluded on October 4.
Motilal Oswal Digital India Fund Review
This new thematic mutual fund launching next week targets investments into sectors closely related to technology. Such fields include telecom, media, entertainment, and various ancillary industries.
Investment Objective of the Fund
The general objective of this fund is to deliver long-term capital appreciation through investments primarily into companies that are engaged in digital and technological advancements. Companies in hardware, peripherals, software, telecom, media, internet, e-commerce, and other types with digitization trends will comprise the corpus of the fund.
Investment Details
Investors can invest in the NFO with a minimum investment in the amount of Rs.500. Subsequent investments are available in multiples of Re 1. For those seeking to invest a one-time amount, the minimum amount still stands at Rs.500, and there are similar incremental options. In SIP, investors can contribute any amount, that is, Rs.100 daily, Rs.500 weekly/fortnightly or monthly or Rs.1,500 quarterly. If the SIP date is not specified, transactions will be done on the seventh of each month. There is no set end date to the SIP, and it continues till the investor gives a termination notice.
Comparison with Similar Funds
This is not the first technology play from Tata Mutual Fund. It has already Tata Digital India Fund. Furthermore, White Oak Capital also recently launched its Digital Bharat Fund. So, there is a growing thematic fund space.
Benchmark and Asset Allocation
The performance of the fund will be benchmarked to the BSE Teck TRI index. A minimum of 100% equity and equity-related instruments of a technology-focused company, while other companies outside the sector will have 0 and 20% respectively. The investments in units issued by REITs and InvITs will fall between 0-10%, and all other mutual fund investments will not exceed 5%.
Entry Load and Exit Load
There is an exit load of 1% if redeeming within three months from the date of allotment. Otherwise, it will not have any exit load.
Fund Management and Risk Assessment
A team of experienced fund managers will administer the scheme. According to the risk-o-meter, the scheme is highly speculative in terms of risk, hence, it would best serve those investors who are ready to invest for long-term capital appreciation.
This new scheme is of technology and digitization that would benefit an investor through growth in the digital economy. However, because of its high risk, aspiring investors should first assess their level of risk tolerance before investing in this scheme.
