Motilal Oswal Asset Management Company launched Motilal Oswal 5 Year G-sec Fund of Fund. This FOF will invest in Motilal Oswal 5 Year G-Sec ETF. The NFO opens on September 24, 2021 and closes on September 30, 2021.
“The underlying G-Sec is one of the most liquid security with a cushioning of ‘No default’ risk. Given the duration of Nifty 5 Yr. Benchmark G-Sec Index, it falls in the sweet spot between short and long duration G-Sec,” Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company Ltd.
With no lock-in, indexation benefit, and historical higher pre & post tax returns over Fixed Deposits, the Nifty 5 yr. Benchmark G-Sec Index can be good alternative to traditional Fixed Deposits, said the release.
As per current regulations, the Motilal Oswal 5 Year G-Sec Fund of Fund is treated as a ‘non-equity’ fund and consequently taxed similar to a debt scheme. If the investment is held for more than 3 years it qualifies for long term capital gains tax @ 20%, along with option to avail indexation benefit. Any investment horizon lower than 3 years would attract short term capital gain tax and will be taxed as per the applicable tax bracket.
The minimum application amount during NFO is Rs 500. The indicative total expense ratio of the Regular plan Fund of Fund is 0.10% per annum and of the Direct plan Fund of Fund is 0.03% per annum.
