Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.
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A note on Motilal Oswal Midcap 35 Fund

Blog Blog Details
  • April 03, 2020
  • Akash Singhania|
  • Fund Manger
Portfolio Update:

Motilal Oswal Multicap 35 Fund is an actively managed equity fund with the aim of creating long term wealth for the investors by investing across sectors and size in the Indian equity market. It is a truly active fund with only 36% overlap with the benchmark below the peer average of 41%.We believe in having a meaningful weightage in all the companies in our portfolio to be able to generate alpha for the investors. Our fund holds only 25 stocks versus the peer average of 50. Low turnover ratio of 28% versus peer average of 70% reflects our philosophy of “Buy Right, Sit Tight”. Following these philosophies, we have been able to outperform the benchmark in five of six financial years delivering a CAGR return of 19% since inception, 6% ahead of the benchmark. Our stock picking framework – QGLP, (Q-Quality, G-Growth, L-Longevity, P-Price ) is reflected in the key ratios of the fund. High quality stocks give the fund a weighted ROE of 20.5% versus 10% for the benchmark and Debt to Equity of 0.3 for the Fund (ex- BFSI). High growth stock picks give the fund weighted average PAT growth of 24% for the last 9 quarters whereas it is a mere 2% for the benchmark.
The above portfolio statistics have been computed by considering Multicap peer funds (wherein there is no restriction on number of stocks). The concept is for illustration purpose only and should not be used for development or implementation of an investment strategy and investment advice to any party. (Source: Bloomberg and internal analysis; Data as on 29th Feb 2020; Quality and growth ratios as on December 2019 quarter end)

We believe some exciting themes will play out in the upcoming decade and have appropriately invested in these –

1.   Value Migration – More efficient and effective private players are overturning the legacy of PSUs across industries – Axis Bank, HDFC Life Insurance Company, ICICI Lombard General Insurance Company are our plays on this story.
2.   Consolidation – Leaders in various industries are able to deliver better growth, higher margins while having better financials allowing them to outcompete their peers – Maruti Suzuki India, Tata Consultancy Services, Hindustan Unilever, Larsen & Toubro are our bets.
3.   Demographic – With increasing consumerism and urbanization, there is a drive towards premium consumer products – Jubilant Food, Britannia and Eicher Motors may benefit from this drive.
4.   Reform Driven – As seen from GST, RERA and Demonetisation the government is actively trying to promote business migration from the unorganized market to the organized market – Asian Paints, Titan and United Spirits are likely to make the most of this.

The fund is well diversified across sectors with a focus towards consumer and financial sectors while also giving exposure to information technology, capital goods and healthcare sectors.

The fund should be the go to choice for a moderate risk investor who wants to invest in the broader market. The fund is less volatile than a midcap fund but allows flexibility for greater returns than a pure largecap fund making it well suited for long term wealth creation.

Market crashes are swift and sharp and threats garner more mindshare than opportunities. The same is true this time with a global meltdown triggered by corona virus spread and lockdowns. One needs to assess the duration and impact of this disruption. Directionally major economic impact may last from three months to a year for most companies. The relevant question to ask is whether its affects terminal value of business enterprises. Growth may take a hit for a year but does it alter the longer term earnings trajectory of the broader markets. Does the market correction factors such temporary near term disruption? Are valuations attractive?

  Valuations – Compressed and reasonable now; Nifty is trading at 16x TTM earnings, almost at its long term average valuation. It was trading at 25x in January 2020 and the froth has vanished. (Source: Bloomberg)

  Corona Virus issue – Earnings for companies will take a hit ranging from 3 months to a year. However, this doesn’t alter terminal value of companies; it’s more of a near term disruption and doesn’t alter long term trajectory of earnings.

  Fall in inflation, current account deficits, interest rates due to lower oil prices will benefit the economy making the macros much stronger. Lower oil prices are a long term positive for Indian economic fundamentals.

  Globally, Government is announcing stimulus/steps, in India welfare steps are already announced, stimulus is on the cards.

  Global central banks are on easing mode and RBI has cut rates and injected liquidity into the banking system.

  Lot of panic and fear already witnessed in the markets, sentiment is negative; though market positioning is attractive for long from valuation perspective; the current sentiment reminds me of the famous quote: Be greedy when others are fearful and be fearful when others are greedy.

The recovery begins not when we see light at the end of the tunnel, but when it’s a shade less dark than it was before.

Date of inception: 28-Apr-14. Incase, the start/end date of the concerned period is non business date (NBD), the NAV of the previous date is considered for computation of returns. The NAV per unit shown in the table is as on the start date of the said period. Past performance may or may not be sustained in the future. Performance is for Regular Plan Growth option. Different plans have different expense structure. Mr. Akash Singhania has been appointed as the Fund Manager for equity component with effect from 17-May-2019 vide addendum dated 16-May-2019; Mr. Abhiroop Mukherjee is the Fund Manager for debt component since 28-Apr-2014 and Mr. Herin Visaria for Foreign Securities since 26-July-2019

Performance of the other funds managed by Mr. Akash Singhania are available on www.motilaloswalmf.com

Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing.

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