Motilal Oswal Asset Management Company (AMC) announced the launch of Motilal Oswal Nifty India Defence Index Fund, the first index fund in India providing exposure to domestic defence stocks. The open-ended fund will be available for subscription from 13 June to 24 June 2024.
This fund offers investors a chance to capitalize on the projected growth of the Indian defence sector, estimated to reach $100-$120 billion over the next six years. The Nifty India Defence Index, which the fund tracks, comprises 15 leading companies in defence manufacturing and services. The index has delivered strong returns, with a 1-year and 5-year CAGR of 177.67% and 55.52% respectively, as of 31 May 2024.
The Nifty India Defence Index picks companies from the broader Nifty Total Market that are either classified in defense-related industries or derive at least 10% of their revenue from defense. These selections are based on a company's average market value (free-float market capitalization) over the past 6 months, with each company's influence within the index capped at 20%.
The Indian government's focus on self-reliance (Atmanirbhar Bharat) in defence is driving this sector's growth. Initiatives like import curbs on defence equipment and a push for exports are creating opportunities for domestic companies. This is further supported by increasing foreign direct investments (FDI) in the sector.
"This fund is poised to benefit from India''s robust advancements in defence technology and infrastructure," said Prateek Agrawal, MD & CEO of Motilal Oswal AMC. "As the fourth largest defence spender globally, India's focus onself-reliance and modernisation offers substantial opportunities for domestic defence companies."
The fund comes with a minimum investment of Rs 500 and offers investors a chance to participate in the potential long-term growth of the Indian defence sector.