Motilal Oswal Consumption Fund NFO: Investing in India’s Growing Consumption Story

Motilal Oswal is launching a New Fund Offer (NFO) for its Consumption Fund, with the NFO period scheduled from October 1st to October 15th, 2025. This open-ended equity scheme is designed to focus on the consumption theme, aiming to achieve long-term capital appreciation by investing in companies involved in consumption and related activities.

Here's a quick look at some key details of the new scheme:

• Minimum Application Amount (Lumpsum): ₹500 and in multiples of ₹1 thereafter.
• Minimum Additional Application Amount (SIP): ₹500 and in multiples of ₹1 thereafter.
• SIP Options:
  • Daily SIP: ₹100
  • Weekly, Fortnightly, Monthly SIPs: ₹500
  • Quarterly SIP: ₹1,500
  • Annual SIP: ₹6,000
• Entry Load: Nil.
• Exit Load: 1% if redeemed on or before 3 months from the date of allotment. Nil if redeemed after 3 months.

Motilal Oswal's Current Standing

Motilal Oswal Asset Management Company (AMC) has a strong track record, managing a substantial amount of assets:

• Total Assets Under Management (AUM): Over ₹1,59,900 crore.
• SIP Book Growth: Approximately ₹21,400 crore, marking a 3.5x increase over the last year.
• Active Funds Management: Around ₹90,000 crore.
• Passive Funds: Approximately ₹36,000 crore.
• PMS AUM: Around ₹15,000 crore.
• Category III AIF: Approximately ₹18,000 crore.

Why Invest in Consumption Funds Right Now?

India's consumption sector is experiencing a robust growth phase, making it an attractive investment avenue. Several factors are aligning to support this trend:

• Rising Incomes: As India's per capita GDP continues to grow, so does the disposable income of its citizens, directly fueling increased spending.
• Favourable Demographics: A large, young population combined with increasing participation of women in the workforce creates a strong foundation for sustained consumption growth.
• Untapped Markets: Significant opportunities still exist in various discretionary product categories, indicating potential for future expansion.
• Strong Macroeconomic Environment: A stable economic backdrop, characterised by factors like interest rate cuts, ample liquidity, low inflation, and favourable monsoons, supports consumer confidence and spending.
• Tax Slab Rationalisation: Government initiatives, such as tax slab rationalisation, have injected substantial funds (estimated ₹21 lakh crore boost in FY26) into the economy, further boosting consumer purchasing power.
• GST Reforms: The positive impact of GST reforms, estimated to add 20-30 basis points to GDP, is expected to boost consumption as savings are passed on to consumers.

The Impact of GST 2.0 on Consumption Growth

GST 2.0 has played a crucial role in stimulating consumption by reducing tax rates across various goods and services:

• Reduced from 12% to 5%: This applies to a wide range of products, including leather goods, handicrafts, sports gloves, handmade shawls, textile products, footwear, condensed milk, cheese, butter, milk, beverages, pre-packaged foods, namkeens, medical-grade oxygen, glucometers, and life-saving drugs & medicines.
• Reduced from 28% to 18%: This reduction benefits items such as TVs (>32 inch), ACs, dishwashers, 3-wheelers, motorcycles, and automobiles (small 4-wheelers and larger vehicles also benefit from the removal of cess).
• Reduced from 18% to 5%: This category includes daily essentials and discretionary items like hair oil, shampoo, toothpaste, shaving cream, toilet soap, ice cream, chocolates/cocoa, and insurance.

These tax reductions make products and services more affordable, directly encouraging higher consumer spending.

Asset Allocation and Investment Strategies

The Motilal Oswal Consumption Fund's asset allocation strategy is designed to maximise exposure to the consumption theme:

• Equity & Equity-Related Instruments (Consumption-focused): 80% to 100% of total assets.
• Other Equity & Equity-Related Instruments: 0% to 20%.
• Debt and Money Market Instruments (including cash & equivalents): 0% to 20%.
• Units issued by REITs and InvITs: 0% to 10%.
• Units of Mutual Funds: 0% to 5%.

The fund's primary objective is to generate long-term capital appreciation. Its investment strategy involves:

• Identifying High-Growth Sub-segments: Focusing on areas within the consumption sector that show potential for sustained earnings growth.
• Favouring Luxury and Discretionary Consumption: Given increasing per capita income, the strategy will lean towards categories like consumer durables and automobiles.
• High-Conviction Portfolio: The fund aims for a concentrated portfolio of approximately 20-25 stocks, selected for their quality and growth potential.
• Dynamic Alignment: Portfolio composition will be continuously adjusted based on ongoing market conditions.

Conclusion

The Motilal Oswal Consumption Fund presents an opportunity to participate in India's dynamic consumption growth story. With its focused investment strategy on luxury, premiumization, and discretionary spending, supported by favourable economic conditions and tax reforms, the fund aims to tap into the evolving consumer landscape. As with any investment decision, it is always recommended to consult with a financial advisor to ensure it aligns with your personal financial goals and risk appetite.

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