Motilal Oswal Enhanced Value Index Fund: A Valuable Proposition?

Over three years ago, in August 2022, Motilal Oswal Mutual Fund came up with - Motilal Oswal Enhanced Value Index Fund. It is the only fund house with this investment proposition.

This fund tracks a strategic, factor-based index that screens companies based on valuation metrics. It's been very recent that the fund has completed a 3-year track record, and hence, in this editorial, we will do a deep-dive review of this fund.

Fund Overview

Motilal Oswal Enhanced Value Index Fund is a passively managed open-ended index fund, tracking the BSE Enhanced Value Total Return Index.

It allocates 95-100% of its total assets in the constituents of the BSE Enhanced Value Index.

The fund aims to hold all the securities that comprise of underlying Index in the same proportion as the index. This is with the expectation that, over a period of time, the tracking error of the scheme relative to the performance of the underlying index will be relatively low.

At times, it also takes exposure to equity derivatives of the index itself, or its constituent stocks may be undertaken when equity shares are unavailable, insufficient or for rebalancing in case of corporate actions for a temporary period.

Further, the fund also invests up to 5% of its total assets in units of liquid schemes/ debt schemes, debt and/or money market instruments for liquidity purposes.

The fund does not invest in or indulge in:

• Structured obligations
• Securitized Debt
• REITs and InvITs
• AT1 and AT2 Bonds
• Repo in corporate debt
• Unrated debt instruments
• Foreign securities
• Credit Default Swaps (CDS)
• Short selling

The Assets Under Management (AUM) of the fund has increased since its launch, but has increased sharply since October 2023. Today, as per its October 2025 portfolio, the fund's AUM is over Rs 10 bn.

The fund has been co-managed by Swapnil Mayekar (since August 2022), Dishant Mehta (since October 2024), and Rakesh Shetty (since November 2022).

Motilal Oswal Enhanced Value Index Fund - Snapshot

Source: ACE MF

What is the Investment Strategy of Motilal Oswal Enhanced Value Index Fund?

By following a passive investment strategy, the fund seeks to invest in the constituents of the BSE Enhanced Value Index.

This means its portfolio replicates the BSE Enhanced Value Index in the same proportion as in the index. The aim is to achieve returns equivalent to the benchmark BSE Enhanced Value - TRI, subject to tracking error.

The BSE Enhanced Value Index was launched on 3 December 2015, and measures the performance of the 30 companies in the BSE LargeMidCap index with the highest valuations based on three fundamental measures:

• Price-to-book value
• Prices-to-earnings
• Price-to-sales

What is the Portfolio of Motilal Oswal Enhanced Value Index Fund?

The portfolio of the fund comprises 30 companies and includes names of the constituents of the benchmark index, such as HPCL, SBI, SAIL, LIC Housing Finance, ONCG, etc.

The top 10 stocks in the underlying portfolio comprise 65.3% of the portfolio, and are from sectors such as oil, gas, banks, metals, and auto & ancillaries.

Portfolio Details

The top 3 sectors of the fund are banks (31.5%), oil (31%), and metals (10.5%).

The fund replicates the securities in the BSE Enhanced Value Index Fund, and hence, the portfolio turnover is subject to rebalancing due to changes in the composition of its index or due to corporate actions of the securities constituting the index.

Theoretically, the corpus of the fund will be fully invested in the securities comprising the underlying Index in the same proportion of weightage as the securities have in the underlying index but may be subject to some tracking error.

The fund endeavours to monitor the tracking error on an ongoing basis, seeking to minimise it. Under normal circumstances, the tracking error is not expected to exceed 2% p.a.

What are the Returns of Motilal Oswal Enhanced Value Index Fund?

Since its inception on 22 August 2022, the fund has clocked a compounded average growth rate of 37.2% (as of 31 October 2025), a bit higher than 33.5% clocked by the benchmark due to the tracking error. The tracking error of the fund as of 31 October 2025 is -1.44%.

Rs 10,000 Invested in Motilal Oswal Enhanced Value Index Fund

If you were to invest Rs 10,000 lump sum in the fund three years ago, it would have become approximately Rs 11,122.

What About the Risk Involved?

To clock returns over the 3 years, the fund has exposed its investors to a higher risk (Standard Deviation of around 18.33) than the benchmark, BSE Enhanced Value - TRI (16.35), due to the tracking error.

However, risk-adjusted returns (sharpe and sortino ratios of around 0.44 and 0.99, respectively) of the fund are also attractive.

In other words, the fund has decently compensated its investors for the risk taken.

Should You Add Motilal Oswal Enhanced Value Index Fund to Your Watchlist?

The fortune of the fund will be closely linked to the BSE Enhanced Value index. Both the scheme and its benchmark command a very high risk.

At present, the trailing PE of the BSE Largecap index is near the 5-year average of 24, while that of the BSE Midcap index is at 32, a bit above the 5-year average of 30 (as of 20 November 2025).

You need to approach this strategy index fund cautiously. Consider your risk appetite, broader investment objective, the financial goal/s you are addressing and investment horizon.

Be a thoughtful investor.

Happy investing.

Disclaimer: This write-up is for information purposes and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully. Registration granted by SEBI, enlistment as IA with Exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.