Upcoming NFO: Motilal Oswal Mutual Fund Files Draft for Contra Fund with SEBI

Motilal Oswal Mutual Fund has filed a draft scheme information document for its proposed Contra Fund. The scheme is structured as an open-ended equity fund and will follow a contrarian investment approach, focusing on stocks that may be currently out of favour.  

The stated objective is to generate long-term capital appreciation by investing predominantly in equity and equity-related instruments. The scheme does not guarantee returns and is subject to market risks.  

Investment Strategy and Allocation 

As per the draft, 80-100% of the portfolio will be allocated to equities aligned with the contrarian strategy. Up to 35% may be invested in other equities or debt and money market instruments. Exposure to REITs and InvITs is capped at 10%, while overseas investments may go up to 15% of net assets.  

The fund intends to identify companies with strong fundamentals but lower valuations due to temporary factors such as market sentiment or macroeconomic conditions. Both top-down and bottom-up approaches are expected to be used in stock selection.  

Key Features and Structure 

The scheme will offer direct and regular plans, each with growth and income distribution options. Units will be issued at ₹10 during the New Fund Offer (NFO) period. Minimum investment is set at ₹500 for lump sum contributions, with systematic plans starting at ₹100 for daily frequency.  

Redemptions will be processed on business days, with proceeds to be dispatched within 3 working days. An exit load of 1% applies if units are redeemed within 1 year of allotment.  

Risk Framework and Deployment 

The draft document states that the scheme will not invest in instruments such as credit default swaps, unrated debt, or structured obligations. It may engage in stock lending within specified limits and use derivatives primarily for hedging purposes.  

Funds raised during the NFO are required to be deployed within 30 business days, extendable by another 30 days with internal approvals. The scheme currently has no performance history.  

Read More: Upcoming NFO: Zerodha Fund House Launches Mid-Small Cap Index Fund! 

Conclusion 

The filing outlines the structure, allocation limits and operational details of a new equity scheme based on contrarian investing, with standard features applicable to open-ended mutual funds. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Mutual Fund Investments are subject to market risks, read all the related documents carefully before investing.