Motilal BSE Enhanced Value ETF

About Motilal Oswal BSE Enhanced Value ETF

• Motilal Oswal BSE Enhanced Value ETF is an open-ended scheme belonging to Motilal Oswal Mutual Fund House. It is used as an Exchange Traded Fund (ETF).
• Mumbai-registered Motilal Oswal Asset Management Company Limited is the controlling company of the ETF. Motilal Oswal Trustee Company Limited is the trustee while the fund managers are Swapnil Mayekar and Rakesh Shetty.
• The scheme was launched on August 22, 2022. The ETF is listed on the National Stock Exchange of India (NSE) and BSE.
• Motilal Oswal BSE Enhanced Value ETF tracks and mirrors the S&P BSE Enhanced Value Total Return Index (TRI). It tries to ensure the ups and downs of the underlying index are reflected as far as practicable in the fund values.
• Since its commencement, the scheme has yielded Compounded Annualised Growth Return (CAGR) of 68.36% as of July 31, 2024.
• The ETF has netted 87.99% CAGR in the past one year as of July 31, 2024, according to the ETF factsheet.
• The Assets Under Management (AUM) of Motilal Oswal BSE Enhanced Value ETF stood at ₹112.558 crore as of July 31, 2024.

Investment Objective and Benchmark

• The scheme’s investment objective is to “provide returns that, before expenses, correspond to the total returns of the securities as represented by BSE Enhanced Value Total Return Index, subject to tracking error.”
• The BSE Enhanced Value Total Return Index (TRI) comprises the top 30 stocks in the BSE Large MidCap Index picked based on their composite value score. The equal-weighted score of book value-to-price, sales-to-price and earnings-to-price determines the composite value score.
• The weightage of each constituent stock is decided by calculating the product of its float-adjusted market capitalisation (FAMC) and value score. The FAMC is obtained by multiplying the company’s then share price with the number of shares open for public trading.
• The weightage of a particular sector in the BSE Enhanced Value TRI is capped at 30% and that of an individual stock at 5%.
• The rebalancing of the index is undertaken semi-annually in March and September.
• The Motilal Oswal BSE Enhanced Value ETF, generally speaking, holds all the securities making up the underlying index in a proportion that is identical to the index, subject to tracking error.

Asset Allocation and Portfolio Composition

• The asset allocation under the scheme is 95%-100% in components of the BSE Value Index .The fund can source the remaining 0-5% from liquid/ debt scheme units, debt and money market instruments including treasury and commercial bills, as also commercial papers, securities held by the government, and certificates of deposit and treasury bill repurchase (TREPS).
• Going by the company website, as of July 31, 2024, the top 10 equity holdings in the ETF comprised around 66.71 % of its assets. According to the scheme factsheet, the top three sectors (oil gas and consumable fuels; financial services; metals & mining) constituted 86.7% of the assets.

Top 10 holdings of Motilal Oswal BSE Enhanced Value ETF (as of July 31, 2024):

• Hindalco Industries Limited- 9.68%
• Grasim Industries Limited- 9.48%
• Oil & Natural Gas Corporation Limited- 9.1%
• State Bank of India- 8.5%
• Indian Oil Corporation Limited- 6.88%
• Bharat Petroleum Corporation Limited- 6.12%
• Vedanta Limited- 5.34%
• GAIL (India) Limited- 3.93%
• Power Finance Corporation Limited- 3.93%
• Hindustan Petroleum Corporation Limited- 3.75%