Motilal Oswal launches India’s first index fund tracking BSE 1000 Total Return Index - should investors jump in?

Motilal Oswal Mutual Fund has rolled out a first-of-its-kind investment product—a passive index fund based on the BSE 1000 Total Return Index. This new fund, which opened for subscription on June 5 under a New Fund Offer (NFO), will remain open until June 19, 2025, offering investors a fresh route to gain exposure across India’s full equity spectrum.

What makes the Motilal Oswal BSE 1000 Index Fund unique?

Designed to mirror the performance of the BSE 1000 Total Return Index, the fund represents nearly 94% of India's listed equity market by capitalization. It spans a wide swathe of sectors and company sizes—from dominant blue-chip firms to fast-growing micro-caps—making it one of the most comprehensive passive investing tools in India today.

The fund comprises stocks across 22 distinct sectors, carefully weighted to ensure diversification. A cap of 33% on the combined weight of the top 10 constituents helps avoid overexposure to large-cap giants, limiting concentration risk. Micro-cap inclusion adds further depth, especially as market cap and liquidity in this segment have grown roughly fivefold and fourteenfold, respectively, in recent years.

Key product details

NFO Period: June 5 to June 19, 2025

Objective: To generate returns in line with the BSE 1000 Total Return Index, before expenses, subject to tracking error

Benchmark: BSE 1000 Total Return Index

Investment Type: Passively managed index fund

Weighting Method: Free-float market cap

Rebalancing: Twice a year

Minimum Investment Requirements

Lump Sum: Rs 500 minimum, in multiples of Re 1

SIP: Varies by frequency and plan details as specified in the Scheme Information Document

Exit Load Structure

1% if redeemed within 15 days of allotment

No exit load post the 15-day window

Why this index fund matters

The BSE 1000 Index Fund gives investors an easy, low-cost way to access India’s largest pool of listed companies under one roof. By covering the full market-cap curve—large, mid, small, and micro—it offers a diversified approach aligned with India’s ongoing economic transformation.

Key benefits include:

Extensive Diversification: Exposure to 1,000 companies across all cap segments

Lower Risk of Overexposure: Concentration capped for top stocks

Cost-Effective Investing: Passive structure avoids active management fees

Sectoral Breadth: Reflects trends across infrastructure, energy, technology, finance, and manufacturing

Economic backdrop and growth thesis

Motilal Oswal Asset Management Company (MOAMC) believes India is entering a period of sustained growth, driven by structural reforms, robust domestic demand, and proactive policymaking. The IMF estimates GDP growth at 6.2% in 2025 and 6.3% in 2026.

“The vision for a ‘Viksit Bharat’ by 2047 underpins India’s long-term development roadmap,” MOAMC said. “With goals of a $23–$35 trillion GDP and per capita income of $15,000–$20,000, we expect major strides in sectors like tech, infra, clean energy, and industrial production. A diversified index like the BSE 1000 allows investors to ride these multi-decade themes.”

Who should consider this fund?

This fund may appeal to:

Investors seeking long-term wealth creation through passive investing

Individuals looking to align their portfolios with India’s growth journey

Market participants preferring broad-based, sector-spanning exposure with lower fees

Pratik Oswal, Head of Passive Business at MOAMC, noted, “This fund is a milestone for India’s passive investment landscape. It captures the breadth of the Indian market through 1,000 companies across sectors and capitalizations. For investors looking to be part of India’s growth story, this fund offers one of the most diversified vehicles available.”

Motilal Oswal’s BSE 1000 Index Fund is built for investors who want to participate in India’s future without the guesswork of picking individual stocks. Its broad reach, low cost, and passive structure make it a compelling choice for long-term capital appreciation in a transforming economy.