India is undergoing a digital transformation at an unprecedented rate, positioning its digital sector as a key driver of economic growth. With projections suggesting the digital economy could contribute up to 10% of GDP by 2025, the opportunities for investors are immense. To capture the potential of this revolution, Motilal Oswal is launching its Digital NFO, open for investment from October 11 to October 25, 2024.
Why Invest in the Motilal Oswal Digital NFO?
The Motilal Oswal Digital India Fund is designed as a thematic fund, aiming to achieve long-term capital appreciation by investing in equity and equity-related instruments of companies harnessing the power of digital transformation. The focus is on businesses that are navigating and benefiting from various stages of business cycles, particularly those thriving due to digitization.
Name of Scheme
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Motilal Oswal Digital India Fund
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Category of Scheme
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Thematic Fund
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Benchmark
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BSE Teck Total Return Index
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Entry/Exit Load
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Entry: Nil
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Exit: 1% - If redeemed on or before 3 months from the date of allotment
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Nil - If redeemed after 3 months from the date of allotment. No exit load will be charged on a switch-out from Regular to Direct plan within the same scheme.
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Plans
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Regular Plan & Direct Plan
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Options (Under each plan)
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IDCW Option & Growth Option
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Minimum Application Amount
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Rs. 500/- and in multiples of Re. 1 thereafter
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Minimum Redemption Amount
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Rs. 500/- and in multiples of Re. 1 thereafter or account balance, whichever is lower
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Investment Strategy & India’s Digital Story
The Motilal Oswal Digital NFO focuses on technology-driven companies in sectors like hardware, software, telecom, media, e-commerce, and businesses benefiting from digitization, including FinTech and IT services. Using the QGLP framework (Quality, Growth, Longevity, and Price), the fund diversified across up to 35 stocks, ensuring strong exposure to companies driving India's digital growth. With digital retail penetration rising from 0% in 2010 to 5% in 2022 (projected to reach 10% by 2027), and e-commerce expected to grow exponentially, India’s digital economy is set to surge to $900-1000 billion by 2030, fueled by increasing internet and smartphone usage.
Investing in India’s Digital Leaders
The success stories of companies like MapmyIndia, Affle India, Zomato, and Policybazaar illustrate the powerful impact of digital disruption. These companies, across sectors like SaaS, FinTech, FoodTech, and Insurance, have outperformed their industry averages. For instance, Zomato saw a revenue growth of 56% compared to the industry's 12.2% from 2018 to 2023. Similarly, companies like Nykaa and Delhivery have emerged as key players in the digital space, while global leaders like Amazon, DoorDash, and PayPal continue to dominate in established markets.
The Motilal Oswal Digital NFO is positioned to invest in such companies, ensuring that investors can ride this wave of digital transformation as India's digital economy continues to expand.
India’s IT Sector: A Long Runway for Growth
India’s IT sector has been a pivotal contributor to its economic growth. However, it currently represents only 10.2% of the BSE 500 Index, compared to 31% in the S&P 500 and 24.2% in MSCI Emerging Markets. This suggests significant untapped potential in India’s tech industry, presenting an exciting opportunity for future growth.
Interestingly, only two IT companies, TCS and Infosys, rank among the top 10 Indian companies by market capitalization, while industries like banking, telecom, and FMCG dominate the list. This limited representation of digital companies at the top hints at the vast runway for expansion in India’s tech and digital sector.
A Legacy of Growth in IT
The past 25 years have demonstrated the power of IT services to shape India's business landscape. Companies like TCS, Infosys, HCL Technologies, and Mphasis have shown impressive growth over the years. The 20-year CAGR for these companies is between 14.3% and 21.9%, with HCL and Mphasis achieving notable success. As the digital revolution continues, today's digital enterprises are well-positioned to experience similar robust growth, supported by India's evolving digital infrastructure.
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Why the Motilal Oswal Digital NFO?
The Motilal Oswal Digital NFO offers a unique opportunity to invest in India's rapidly growing digital economy. With sectors like e-commerce, IT services, and FinTech booming, this fund is well-positioned to capture value from companies driving digital transformation. As India leads global digital adoption, fuelled by increasing internet access and smartphone usage, this NFO provides a chance to stay ahead in the technological revolution.
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