Motilal Oswal is planning to launch a new scheme which has a similar investment objective as those of other schemes. With so many similar schemes to choose from, investors would opt for a scheme with a proven track record

Moneylife Digital Team

Motilal Oswal Mutual Fund plans to launch an open-end equity mutual fund scheme—Motilal Oswal MOSt Prime Equity Fund. This scheme would invest around 65% to 100% of its assets in blue chip companies. There are a minimum of 30 schemes with the same objective and this scheme from Motilal Oswal will add to the list. The new scheme of Motilal Oswal may find it difficult to lure in investors considering there are other large-cap oriented schemes with a proven track record, having a similar investment objective.

Recently, Indiabulls Mutual Fund launched its first equity scheme—Indiabulls Blue Chip Fund in February this year. The scheme has been able to accumulate an asset size of just Rs5.70 crore as on 31 October 2012. However, a scheme from India Infoline Mutual Fund—IIFL Dividend Opportunities Index Fund, which was launched four months later in June 2012, has accumulated a fund corpus of Rs22.86 crore. Though there are other similar dividend schemes available in the market, this scheme maps the CNX Dividend Opportunities Index, offering something new for investors.

Motilal Oswal, a new comer to the fund industry, has a couple of exchange traded funds (ETFs) under its belt, both having a track record of less than three years. The two schemes, put together, have accumulated assets under Rs250 crore. How have they performed over the past year? Both the schemes have a track record of less than three years and hence we cannot comment much on the fund management performance. The table shows their performance over the one year period ended 15 November 2012.

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How have other large–cap oriented schemes performed in the past? For large-cap oriented schemes investing in blue chip stocks, the returns tend to be stable and less volatile compared to other multi-cap equity diversified schemes. Therefore over a long-term one can expect reasonable returns from the scheme depending on the stocks picked by the fund manger. Another important factor to keep an eye on is the expense ratio. A high expense ratio may eat into the returns of a scheme. Below is how some of the schemes with a similar investment objective have performed in the past (arranged alphabetically):

The new scheme from Motilal Oswal also has an high minimum investment amount of Rs10,000. The scheme which has kept its expense ratio at 2.50% will be benchmarked to the S&P CNX Nifty. Rajnish Rastogi who manages the other two ETFs would be the fund manager of the scheme.