In India’s growing economy, thematic funds offer targeted exposure to sectors with long-term growth potential. With distinct approaches, the LIC MF Manufacturing Fund and the Motilal Oswal Digital India Fund allow investors to capitalise on India’s evolving manufacturing and digital economies. This comparison will help you decide which fund aligns better with your investment goals.
What Are Thematic Funds?
Thematic funds are equity-oriented mutual funds that concentrate on specific themes, industries, or sectors. By investing in companies directly tied to a particular theme, these funds aim for high returns driven by targeted growth.
However, thematic funds are often high-risk, so they may suit investors with a higher risk tolerance and longer investment horizons.
Investment Objective of the Funds
Both the LIC MF Manufacturing Fund and Motilal Oswal Digital India Fund seek long-term capital appreciation, but each focuses on a distinct theme:
- LIC MF Manufacturing Fund: The fund aims to benefit from India’s manufacturing growth, fueled by the “Make in India” initiative and production-linked incentive (PLI) schemes. It invests in companies involved in manufacturing, with potential for import substitution and export growth.
- Motilal Oswal Digital India Fund: This fund focuses on India’s digital transformation, targeting technology-driven sectors like telecommunications, media, entertainment, and e-commerce. It aims to capture growth from increasing digitization across various industries.
Comparison of Key Fund Details
Here’s a quick look at the essential features of each fund:
| Attribute | LIC MF Manufacturing Fund | Motilal Oswal Digital India Fund |
| Fund House/AMC | LIC Mutual Fund | Motilal Oswal Asset Management |
| Category | Thematic Fund (Manufacturing) | Thematic Fund (Digital Economy) |
| Risk Profile | Very High | Very High |
| Fund Manager | Yogesh Patil, Mahesh Bendre | Ajay Khandelwal, Niket Shah, Santosh Singh, Atul Mehra, Rakesh Shetty, Sunil Sawant |
| Benchmark Index | Nifty India Manufacturing Index (TRI) | BSE Teck TRI |
| Minimum Investment | Lumpsum: ₹5,000 SIP: ₹1,000 | Lumpsum: ₹5,000 |
| Exit Load | 1% (exits within 90 days over 12%) | 1% if redeemed on or before 3 months; Nil after 3 months |
Asset Allocation of Funds
Here’s how the funds allocate the assets:
LIC MF Manufacturing Fund
Primarily invests in companies in the manufacturing sector, with up to 20% allocated to non-manufacturing companies for added diversification.
| Instruments | Indicative Allocations (% of total assets) |
| Equity of companies following the manufacturing theme | 80 – 100% |
| Equity of companies outside the manufacturing theme | 0 – 20% |
| Debt and Money Market instruments | 0 – 20% |
| Units issued by REITs and InvITs | 0 – 10% |
Motilal Oswal Digital India Fund
Focuses on companies tied to digital transformation across technology, telecom, media, and e-commerce sectors. A small portion of the portfolio may go toward debt instruments for liquidity management.
| Instruments | Indicative Allocation (%) |
| Equity of digital-focused companies | 80-100% |
| Equity of non-digital-focused companies | 0-20% |
| Debt & money market instruments | 0-20% |
| Units issued by REITs and InvITs | 0-10% |
| Units of mutual funds | 0-5% |
Understanding Risks and Returns
Both funds have a high-risk profile and may experience substantial fluctuations due to their thematic focus:
- LIC MF Manufacturing Fund: Exposed to risks in the manufacturing sector, influenced by economic changes, government policies, and global manufacturing trends. Its benchmark, Nifty India Manufacturing Index, offers a basis for measuring performance.
- Motilal Oswal Digital India Fund: Heavily tied to the tech sector, this fund can be volatile, particularly with rapid shifts in technology and consumer preferences. The BSE Teck TRI, tracking technology and telecom sectors, serves as its benchmark, with potential for strong returns as seen in prior performance.
Here’s how the benchmark of both the schemes performed in the past 1 year and 5 year respectively.
| Years | Nifty India Manufacturing Index | BSE Teck TRI |
| 1 | 51.57% | 32.2% |
| 5 | 25.52% | 21.6% |
Asset Management Company
LIC Mutual Fund
The Life Insurance Corporation of India (LIC) is a prominent financial institution in India, best known for its strong presence in the insurance industry. Recently, LIC announced a partial sale of its stake to private companies, signaling some changes in its structure.
Although LIC’s involvement in Mutual Funds is relatively small, its management has ambitious plans to achieve an Assets Under Management (AUM) of ₹1 lakh crore by FY27. As of June 30, 2024, LIC Mutual Fund manages an AUM of ₹32,423.29 crore and offers about 38 different schemes. Investors can easily check out the details of LIC MF’s offerings, compare their past performances, and choose funds that align with their investment goals and risk tolerance.
Motilal Oswal Asset Management
Motilal Oswal Asset Management Company (MOAMC) is a portfolio manager registered with SEBI and operates the Motilal Oswal Mutual Fund (MOMF). It is supported by Motilal Oswal Financial Services Limited (MOFSL), a company listed on both the BSE and NSE. MOAMC obtained its SEBI registration in 2009.
In addition to asset management, MOAMC offers advisory services for offshore funds, which include portfolio management, business consulting, and research. As of June 30, 2024, Motilal Oswal Mutual Fund oversees assets exceeding ₹66,452.27 crore and provides more than 40 mutual fund schemes.
Who Should Invest?
LIC MF Manufacturing Fund may be suitable for investors who:
- Are interested in India’s manufacturing sector growth.
- Seek long-term capital appreciation in a high-risk thematic fund.
- Can stay invested for 5+ years and handle market volatility.
Motilal Oswal Digital India Fund is ideal for those who:
- Want exposure to India’s growing digital economy.
- Have a high-risk appetite and long-term investment horizon.
- Are comfortable with the tech sector’s inherent volatility.
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