Motilal Oswal MOSt Shares M50 ETF: Review Analysis & Details

Another mutual fund house has decided to come out with its NFO or New Fund Offer. The Motilal Oswal Mutual Fund House has launched its NFO or New Fund Offer called the Motilal Oswal MOSt Shares M50 ETF
In this article, we will analyse how good is this Motilal Oswal MOSt Shares M50 ETF NFO, whether this Motilal Oswal MOSt Shares M50 ETF offers anything new or unique for the investors and whether the investors should invest in Motilal Oswal MOSt Shares M50 ETF .

Motilal Oswal MOSt Shares M50 ETF NFO: Review Analysis & Details

Let's begin with some basic details about Motilal Oswal MOSt Shares M50 ETF.

What are the NFO dates for Motilal Oswal MOSt Shares M50 ETF ?
The NFO period for Motilal Oswal MOSt Shares M50 ETF will open on 30th June and will close on 19th July 2010.

What is so unique about this Motilal Oswal MOSt Shares M50 ETF?
The Motilal Oswal MOSt Shares M50 ETF claims to be the first ever ETF fund in the Indian Markets, which is "Fundamentally Weighted". Although this ETF or Exchange Traded Fund will track and attempt to mimic the S&P nifty 50 Index, it claims to put different weightage on stocks selection in the Nifty 50 index, based upon the fundamental data details. Say for e.g., earnings, valuations, return on equity, etc. might be a few parameters based upon which the Motilal Oswal MOSt Shares M50 ETF will have weightage in the stocks.
What this new ETF claims is that the Nifty 50 index is based on the free float market cap method. (Here are the details about Free Float Market Capitalization Weighted Methodology). MOSt Shares M50 ETF claims that instead of going by the pure free float market capitalization, they will offer weightage to certain stocks in the Nifty50 category, and that will result in better returns that other Niffty based ETF's which passively follow the index.
Now what exact method will MOSt Shares M50 ETF use and what will be the basis of which fundamentals parameters will be used to assign extra weightage to the stocks, is not known. It is reported that there is some proprietary pre-defined method used by MOSt Shares M50 ETF, and that will be used by this ETF.
So the question about its efficiency and effectiveness still remains.
However, this appears to be something of a new kind of ETF which is said to be assigning weightage to fundamentals. So this will be somewhat different that the passively managed ETF's (ETF- Exchange traded fund -An example). Investors who believe that the timing and trading strategy of the MOSt Shares M50 ETF Fund managers will be able to beat the passively managed ETF's returns, can invest in this Exchange Traded Fund.
Usually, we never recommend anyone going for actively managed funds, but this is a new product altogether. It all ends up at the fund manager's skills and the so called proprietary system which will be used to assign weightage to the stock selection process.

So overall, this Motilal Oswal MOSt Shares M50 ETF seems to be a focussed fund on large cap sector. Although the news claims that this fund stock selection process will use the "proprietary pre-defined method", no one can guarantee anything about the returns.
The money will be invested in the following proportions:
95% to 100% - Large Cap Stocks (Top 50) of S&P Nifty 50
Rest 0-5% in domestic debt and money market instruments

During NFO, the units of this Fund will cost Rs 10 per unit.

Are there any alternatives to Motilal Oswal MOSt Shares M50 ETF?
This appears to be a new products in ETF segment since it claims to be giving weightage based on fundamental factors.
In case investors dont want to go for that active management based on weightage on fundamental factors, they can go for other passive Index tracking ETF

The Motilal Oswal MOSt Shares M50 ETF will be benchmarked to S&P Nifty 50 Index

Minimum Investment:
Purchases : Rs. 10,000/- and in multiple of Re. 1 thereafter.
SIP or Systematic Investment Plan is available? - No Info

No Tax Benefit is available in the Motilal Oswal MOSt Shares M50 ETF

The entry load for Motilal Oswal MOSt Shares M50 ETF is as follows:
Entry Load for Motilal Oswal MOSt Shares M50 ETF :
Zero Entry Load

Exit Load for Motilal Oswal MOSt Shares M50 ETF:
Zero, but brokerage may apply when traded.

Final Thoughts about the Motilal Oswal MOSt Shares M50 ETF?
This fund can be a good investment for investors willing to bet on the skills of the Motilal Oswal Fund Managers and who believe that large cap stock investment story based upon the stock selection skills of fund managers and their proprietary method of fundamentals.