MOSt Shares M100 ETF-NFO: Review Analysis & Details of Motilal Oswal MOSt Shares M100 ETF

This article contains info about Motilal Oswal MOSt Shares M100 ETF - Fund NFO, Review, Analysis, Details & Opinion. One more NFO or New Fund Offer from the brokerage and mutual fund house of India has come through - its from motilal Oswal. High on the heels of the Reliance Small Cap Fund (See Review), the Motilal Oswal MF Mutual Fund House has launched its NFO or New Fund Offer for an ETF or Exchange Traded Fund called the Motilal Oswal MOSt Shares M100 ETF . We had earlier provided details about another similar Large Cap ETF from Motilal Oswal called the Motilal Oswal MOSt Shares M50 ETF, which was focussed on large cap stocks. This new offering will add another diversification, as this will be for MidCap stocks and investors who wish to bet their money on midcap stocks through ETFs, can go with Motilal Oswal MOSt Shares M100 ETF
In this article, we will analyse how good is this Motilal Oswal MOSt Shares M100 ETF - Fund NFO, whether this Motilal Oswal MOSt Shares M100 ETF - Fund offers anything new or unique for the investors and whether the investors should invest in Motilal Oswal MOSt Shares M100 ETF - Fund .

Motilal Oswal MOSt Shares M100 ETF - Fund NFO: Review Analysis & Details

Let's begin with some basic details about Motilal Oswal MOSt Shares M100 ETF - Fund.

What are the NFO dates for Motilal Oswal MOSt Shares M100 ETF - Fund ?
The NFO period for Motilal Oswal MOSt Shares M100 ETF - Fund will open on January 12, 2011.

What is so unique about this Motilal Oswal MOSt Shares M100 ETF - Fund?
This ETF will track the CNX Midcap Index as the underlying index.
This will be another ETF or Exchange traded fund which will track the performance of the underlying midcap index listed above. This will provide the midcap investors another opportunity to invest in midcap sector stock basket while still retaining the benefit of trading this basket as a stock or share - that's what ETF offers.
However, some tracking error needs to be accounted for. It is more in Index Funds and less in ETF's as in ETF's the trading happens continously, while the Index funds are mostly End of the Day priced and rebalanced at various intervals of time, varying from few days to months.

Why and how does the tracking error come in?
The underlying index like Nifty or Sensex does not have any brokerage charges or any dependent trading activities. However the index funds/ETF's do have them. As the fund managers try to replicate the performance of the underlying index, they buy and sell securities and try to maintain their fund in similar proportion to the index, they end up paying brokerage charges which affects the returns. The frequency of rebalancing the fund constituents also takes a toll. For more informtion on Index Funds, see Index Funds Explained with Example)

So overall, depending upon the frequency of rebalancing and trading activities of the fund manager, the returns from Motilal Oswal MOSt Shares M100 ETF will be generated for the investors. Continue to Part II -Risks in Motilal Oswal MOSt Shares M100 ETF - Fund and other competitive products