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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Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive (G) - 11.3846Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive-Dir (G) - 11.4181Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative (G) - 10.9654Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative-Dir(G) - 11.0015Motilal Oswal Dynamic Fund (Div-A) - 14.1399Motilal Oswal Dynamic Fund (Div-Q) - 12.664Motilal Oswal Dynamic Fund (G) - 15.6026Motilal Oswal Dynamic Fund-Dir (Div-A) - 14.3632Motilal Oswal Dynamic Fund-Dir (Div-Q) - 12.8792Motilal Oswal Dynamic Fund-Dir (G) - 16.5268Motilal Oswal Equity Hybrid Fund - Direct (G) - 16.4362Motilal Oswal Equity Hybrid Fund - Regular (G) - 15.6555Motilal Oswal Flexi Cap Fund(D) - 27.2528Motilal Oswal Flexi Cap Fund(G) - 36.2551Motilal Oswal Flexi Cap Fund-Dir(D) - 27.3405Motilal Oswal Flexi Cap Fund-Dir(G) - 38.8868Motilal Oswal Focused 25 Fund - Direct (D) - 22.5111Motilal Oswal Focused 25 Fund - Direct (G) - 38.4537Motilal Oswal Focused 25 Fund (D) - 20.1781Motilal Oswal Focused 25 Fund (G) - 34.3801Motilal Oswal Large and Midcap Fund - Dir (D) - 17.3261Motilal Oswal Large and Midcap Fund - Dir (G) - 17.3408Motilal Oswal Large and Midcap Fund (D) - 16.7609Motilal Oswal Large and Midcap Fund (G) - 16.761Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0043Motilal Oswal Liquid Fund - Direct (Div-M) - 10.03Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0034Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0058Motilal Oswal Liquid Fund - Direct (G) - 11.2006Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0042Motilal Oswal Liquid Fund - Regular (Div-M) - 10.03Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.0034Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.013Motilal Oswal Liquid Fund - Regular (G) - 11.1541Motilal Oswal Long Term Equity Fund (D) - 21.5046Motilal Oswal Long Term Equity Fund (G) - 27.3747Motilal Oswal Long Term Equity Fund -Dir (D) - 25.6699Motilal Oswal Long Term Equity Fund -Dir (G) - 29.9503Motilal Oswal Midcap 30 Fund (D) - 25.6227Motilal Oswal Midcap 30 Fund (G) - 41.9429Motilal Oswal Midcap 30 Fund-Dir (D) - 26.5417Motilal Oswal Midcap 30 Fund-Dir (G) - 46.083Motilal Oswal Multi Asset Fund - Direct (G) - 10.944Motilal Oswal Multi Asset Fund (G) - 10.7567Motilal Oswal Nasdaq 100 FOF - Direct (G) - 23.6638Motilal Oswal Nasdaq 100 FOF - Regular (G) - 23.398Motilal Oswal Nifty 50 Index Fund - Direct (G) - 14.8351Motilal Oswal Nifty 50 Index Fund (G) - 14.726Motilal Oswal Nifty 500 Fund - Direct (G) - 17.1524Motilal Oswal Nifty 500 Fund (G) - 16.925Motilal Oswal Nifty Bank Index Fund - Direct (G) - 13.701Motilal Oswal Nifty Bank Index Fund (G) - 13.5202Motilal Oswal Nifty Midcap 150 Index Fund (G) - 19.7725Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 20.0505Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 15.0847Motilal Oswal Nifty Next 50 Index Fund (G) - 14.9091Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 20.4288Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 20.7098Motilal Oswal S&P 500 Index Fund - Direct (G) - 14.865Motilal Oswal S&P 500 Index Fund (G) - 14.7245Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 10.0029Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 10.0263Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 10.0099Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 10.1541Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 10.014Motilal Oswal Ultra Short Term Fund - Dir (G) - 14.173Motilal Oswal Ultra Short Term Fund (Div-D) - 9.9475Motilal Oswal Ultra Short Term Fund (Div-F) - 9.9582Motilal Oswal Ultra Short Term Fund (Div-M) - 9.948Motilal Oswal Ultra Short Term Fund (Div-Q) - 10.0925Motilal Oswal Ultra Short Term Fund (Div-W) - 9.951Motilal Oswal Ultra Short Term Fund (G) - 13.7006

Flexi-cap funds: Will the flexibility given to fund managers yield result?

Blog Blog Details
  • January 09, 2021
  • Akash Singhania|
On November 6 last year, the Securities and Exchange Board of India (Sebi) came out with a circular which announced a new category of equity funds: Flexi-cap. This announcement came at an opportune time. It served both investors and fund houses well. Investors heaved a sigh of relief, as a new category of equity scheme provided exposure to companies of varied sizes.

But the journey to the creation of the flexi-cap category of equity schemes was not smooth and quick. It started with the rationalisation and categorisation of schemes announced in October 2017, wherein Sebi allowed one scheme each category — defined by market capitalisation along with other parameters. The regulator not only provided the definition of largecap, midcap and smallcap stocks, but also carved out the universe for largecap, midcap and smallcap equity funds.

Take for instance, the largecap equity fund. According to Sebi, a largecap fund is required to invest a minimum of 80 per cent into equity and equity-related instruments of top 100 companies by market capitalisation. This definition provided clarity to investors and fund managers and addressed the problem of duplication of schemes.

Investors began investing in multicap funds — schemes that invested in largecap, midcap and smallcap stocks. Multicap funds emerged as the largest category of equity mutual funds. As on March 31, 2020, multicap funds had assets under management of Rs 1.13 lakh crore.

Investors’ preference for multicap funds was not by chance, but a conscious choice. A well-managed diversified equity portfolio is a good prescription for long term wealth creation.

Since few have the skills or time to build one, many seek professional help and turn towards cost efficient means of mutual fund. Further, many wanted their fund managers to decide on allocation to sub-segments such as largecap, midcap and smallcap equities. And that is where the multicap became the preferred choice, as it offered fund managers the flexibility to invest in companies of varied sizes.

However, this heightened interest in multicap funds was shortlived.

On September 11, 2020, Sebi changed the allocation structure of multicap funds. It said that a multicap scheme must invest a minimum of 25 per cent each in largecap, midcap and smallcap stocks. The deadline for implementing this is January 31, 2021. The move was triggered by a disproportionate tilt of most multicap portfolios in favour of largecap stocks.

Midcap and smallcap stocks were grossly under-owned. This was not a true multicap portfolio. This change in asset allocation of these funds necessitated the creation of an equity fund category, wherein fund managers had the flexibility to invest in companies of varied sizes. To address this, Sebi introduced flexi-cap category on November 6, 2020.

A flexi-cap fund works in several ways. It allows a fund manager to invest in companies of all sizes without any restrictions. Fund managers can invest in high-growth, small-sized companies to benefit from high growth. But at the same time, it is not binding to do so, which helps manage liquidity better whenever required.

Even though the classification of stocks held changes, it does not impact fund managers’ investment decisions. A fund manager can stick to his conviction bets and benefit in the long term. In the grand scheme of things, a flexi-cap scheme helps fund managers gauge the relative attractiveness of markets’ sub-segments and allocate investments accordingly. Hence, it is vitally important that a flexi-cap scheme find its due place in a long-term investor’s equity portfolio.

Akash Singhania is Fund Manager of Motilal Oswal AMC. Views are his own

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