Motilal Oswal Mutual Fund has rolled out a new sector-focused equity scheme, Motilal Oswal Services Fund, aimed at tapping into the structural growth of India’s services economy. The New Fund Offer (NFO), which opened on 20 May 2025 and will remain open until 3 June 2025, is designed as an open-ended equity scheme investing in companies operating within the services sector.
The fund seeks to generate long-term capital appreciation by investing in equity and equity-related instruments of businesses that derive a majority of their revenue from the services domain. These could include industries like finance, healthcare, IT, telecom, consumer services, and more. The scheme will be benchmarked against the Nifty Services Sector Total Return Index, which has grown steadily from around 1,000 in April 2014 to 4,518 in April 2025, reflecting the sector’s strength and momentum over the past decade.
According to the fund's internal research, India’s services sector has consistently been the backbone of the economy. Between FY23 and FY25, the sector recorded a solid 8.3% growth rate, bolstered by a sharp acceleration in services exports, which rose to 12.8% in FY25 from 5.7% in FY24. The services sector's share of India’s Gross Value Added (GVA) increased from 52% in FY16 to 55% in FY24, peaking at 56% in FY23. It now contributes significantly to employment, supporting nearly 30% of the workforce. Globally, India ranks seventh in services exports, holding a 4.3% share. Remarkably, the sector has remained in the expansionary zone for 41 consecutive months since August 2021, underlining its resilience and consistent performance.
Prateek Agrawal, MD & CEO, Motilal Oswal Asset Management Company said, "India’s services sector has consistently demonstrated strong and resilient growth, emerging as a key driver of the country’s economic development. With its rising contribution to GDP, robust export potential, and growing digital and consumer-driven demand, we believe the sector may offer compelling long-term investment opportunities. Our new Sectoral fund is designed to tap into this structural growth story and enable investors to gain exposure to the services-led transformation of India’s economy."
Echoing the sentiment, Bhalachandra Shinde, Associate Fund Manager, noted that the services sector spans a wide array of industries that are benefiting from urbanization, rising disposable incomes, and increasing digital penetration. He stated that the fund would follow a research-driven approach to identify high-quality businesses with scalable models and strong fundamentals positioned to ride the sector's long-term growth wave.
The fund will be managed by a team comprising Bhalachandra Shinde, Ajay Khandelwal, and Atul Mehra for the equity component, Rakesh Shetty for debt, and Sunil Sawant for overseas securities.