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Best Passive Mutual Fund 2026: Motilal Oswal Flexicap FoF NFO
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Motilal Oswal Flexicap FoF NFO targets the best passive mutual fund of 2026 because of its broad-based flexicap fund and diversified passive fund approach. Being a new fund, it focuses on long-term flexibility for investors looking for a simple approach and investment in the Indian market.
What is Motilal Oswal Flexicap FoF NFO?
Motilal Oswal Flexicap FoF NFO is the Fund offer of Motilal Oswal Diversified Equity Flexicap Passive Fund of Funds, a new open-ended scheme for passive investing. It invests 95-100% of its corpus in domestic equity passive mutual funds comprising ETFs and index funds covering large, mid, and small-cap funds.
This flexicap FoF India strategy begins with a 1/3 investment in each of the three market cap segments. It is rebalanced quarterly if any segment deviates by 5% or more, ensuring no active stock selection and disciplined exposure.
The NFO is new for 2026 Motilal Oswal investors. It commenced on 2 January 2026 and is closing on 15 January 2026. The minimum investment amount is Rs 500 for a lump sum with additional investments of Re 1, suitable for SIP beginners. An exit load is set at 1% if redeemed within 15 days, then nil, encouraging long-term holding.
Why Opt for a Passive Flexicap Fund in 2026?
The Motilal Oswal passive Flexicap Fund NFO is one such fund. It tracks wider indices, including Nifty 500 TRI. It aims to provide lower than market returns, i.e. market returns minus the fund management costs. It aspires to deliver steady low-cost returns to investors over the long term.
In contrast, actively managed funds attempt to outperform the broader market (alpha) by making predictions, often leading to increased emotional decision-making and volatility. Given the anticipated market volatility in 2026 resulting from global economic shifts, this passive Flexicap Fund will provide a steady risk profile across the market segments, i.e. large cap for stability, mid & small cap for growth.
Motilal Oswal Flexicap Fund NFO is one of the best passive mutual fund picks for 2026, as the Flexicap NFO avoids the large-cap bias characteristic in many Flexicap funds, providing genuine diversification. It is well-known that broad market indices such as Nifty 500 outperform the market over the longer duration of 5 to 10 years, making it suitable for investor patience.
Additionally, the Fund of Funds (FoF) structure allows for direct investments into the best ETFs/index funds of the various AMCs, thereby providing liquidity even during tight market conditions.
Motilal Oswal Flexicap Passive FoF Main Features
The Flexicap NFO fund structure prioritises liquidity simply and effectively.
- - Allocation Strategy: Initially divides 33% into each of the large, mid, and small-cap passive funds. Dynamically adjusts via rules-based rebalancing quarterly, or via triggers like +35% gain/-25% drop.
- - Benchmark: Tracking the Nifty 500 Total Returns Index.
- - Risk Profile: High risk and equity focus. More suitable for 5+ year horizons.
- - Expense Ratio: Passive FoFs' expense ratios are relatively competitive and it is good for net returns as it keeps the costs low.
- - Investment Objective: Seeking capital appreciation over the long run by providing exposure to equity via passive funds.
Pratik Oswal from Motilal Oswal noted the differentiator: equal weights offer no market-cap timing and provide a manager's discretion for last flex. This makes it a unique option among flexicap fund FoFs in India for the 2026 market.
Benefits for Long-Term Investors
Investors are provided with extensive market exposure without involvement. The passive flexicap fund reduces costs, providing a 0.2-0.5% expense ratio compared to 1-2% from active funds, enhancing compounding. Rebalancing in bull-bear cycles automatically realizes profits, which is a critical feature.
Beginners in equities are provided with a simplified option in the Motilal Oswal Flexicap FoF NFO. The minimum SIP of Rs 500 is convenient for salaried people, especially in cities like Prayagraj, Uttar Pradesh, as they are starting SIPs during India's growth. Broad market passive funds have historically provided a CAGR of 12-15% over the last decade, which exceeds inflation.
Diversification is notable: mid/small caps cushion the fall that large caps experience. While looking for the best passive mutual funds in 2026, we see the trends in AUM for passive funds rising in India, forecasted to be 20% in 2027.
How It Differs from Active Flexicaps and Other Passives
|
Feature |
Motilal Oswal Flexicap FoF NFO |
Typical Active Flexicap |
Pure Index Flexicap |
|
Strategy |
Passive FoF with equal cap allocation & rebalancing mysiponline |
Active stock selection, manager bias |
Single index track, often large-cap heavy |
|
Costs |
Low expense ratio |
Higher fees (1-2%) |
Lowest, but less diversified |
|
Market Exposure |
Large/Mid/Small balanced (motilaloswalmf) |
Flexible but prediction-based |
Narrower scope |
|
Suitability |
Long-term passive investors |
Alpha seekers |
Pure index purists |
|
2026 Edge |
NFO freshness, broad TRI benchmark |
Variable performance |
Limited cap diversity |
This comparative table shows Motilal Oswal NFO stands out in the industry as an excellent passive flexicap fund-balanced and economical.
Who Is Ideal to Invest in This Best Passive Mutual Fund 2026?
People looking for 5 to 10 years of wealth creation and do not want to keep track daily. This fund is suitable for a beginner as it has a low entry point and is a completely passive fund. For seasoned investors, it offers good diversification beyond the Nifty 50. Best avoided if short-term liquidity is needed because of the potential volatility. Equity funds are best for risk-takers and in a growth phase.
As the equity culture continues to strengthen in the country, this flexicap FoF India is post-2025 re-election stability under Trump, which will improve global flows. This is a great option for families in Uttar Pradesh to achieve their goals of funding children's education or retirement.
Equity funds have the highest risk involved. They have market risk, liquidity risk, and concentration risk. The funds are rated “Very High.” Previous fund performance is not always a good indicator of future performance and this is a new fund.
The future is always unknown. With a new fund, there are always uncertainties, and 2026 may see market corrections. Rebalancing triggers designed to protect gains may cause a loss if the market goes a little higher. The fund is equity-based, which means it has the potential for great ups and downs, which is referred to as volatility. Make sure to consult an advisor and determine your risk appetite.
Investing has to be a long-term hold, and there is no guarantee of future outcomes. Invest post NFO through a lump sum or a systematic investment plan. Taxation on the fund will follow equity norms - if there are long-term gains of over 1.25 lakhs after 1 year, there will be 12.5% LTCG on the fund.
After the NFO Investment Process
Subscriptions after January 15, 2026, will be available through Groww, ET Money, and Motilal Oswal. The Direct-Growth plan is preferable as it has a lower expense ratio, and the NAV will start at Rs 10.
- - AMC/app log in.
- - Look for “Motilal Oswal Diversified Equity Flexicap Passive FoF”.
- - KYC is required, and the minimum amount is Rs 500 to invest.
- - Go with SIPs for rupee-cost averaging.
Monitor your fact sheets every quarter to track your allocations. Thematic investing through Motilal Oswal may also be possible.
Performance Outlook for 2026
As a new fund, it depends on its constituent indices. The Nifty 500 TRI has a 14%+ CAGR track record, which gives us confidence for a positive return expectation considering India’s projected GDP growth of 7%. The equal weighting of the indices will likely favour mid & small cap outperformance.
Retained analyst expectations, positioned the fund as the best passive mutual fund for 2026, as it most likely will capture the 2026 opportunities, especially in infrastructure and consumption.
Final Thoughts on Motilal Oswal Flexicap FoF NFO
Motilal Oswal Flexicap FoF NFO, with its innovative approach to passive investing through smart flexicap exposure, positions it as the best passive mutual fund for 2026 for diversified growth. Pair it with SIP discipline for the best outcome in an evolving Indian market.
DISCLAIMER: This blog is NOT any buy or sell recommendation. No investment or trading advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.
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Frequently Asked Questions
The Motilal Oswal Flexicap Passive FoF is a new open-ended scheme that invests in a diversified portfolio of domestic equity passive funds (ETFs and Index Funds). It maintains a balanced exposure across large-cap, mid-cap, and small-cap segments, aiming for long-term capital appreciation with a low-cost, rules-based approach
New Fund Offer (NFO) opened on January 2, 2026, and is scheduled to close on January 15, 2026. After this period, the fund will reopen for continuous sale and repurchase at NAV-based prices.
The fund starts with an equal allocation (33.3%) across large, mid, and small-cap segments. It uses a disciplined rebalancing trigger: if any segment deviates by more than 5% from its original weight, the portfolio is rebalanced quarterly to maintain the 1/3rd distribution across market caps
Investors can start with a minimum lump sum investment of Rs 500, with additional investments in multiples of Re 1. This low entry barrier makes it highly accessible for SIP beginners and retail investors
Yes, there is an exit load of 1% if units are redeemed or switched out within 15 days from the date of allotment. If redeemed after 15 days, the exit load is nil, encouraging a slightly longer-term holding period.
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