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) - 10.6741Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive-Dir (G) - 10.6893Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative (G) - 10.5364Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative-Dir(G) - 10.5532Motilal Oswal Dynamic Fund (Div-A) - 13.5064Motilal Oswal Dynamic Fund (Div-Q) - 12.0966Motilal Oswal Dynamic Fund (G) - 14.9036Motilal Oswal Dynamic Fund-Dir (Div-A) - 13.6715Motilal Oswal Dynamic Fund-Dir (Div-Q) - 12.2594Motilal Oswal Dynamic Fund-Dir (G) - 15.7315Motilal Oswal Equity Hybrid Fund - Direct (G) - 14.9593Motilal Oswal Equity Hybrid Fund - Regular (G) - 14.3119Motilal Oswal Flexi Cap Fund(D) - 24.9521Motilal Oswal Flexi Cap Fund(G) - 33.1944Motilal Oswal Flexi Cap Fund-Dir(D) - 24.9694Motilal Oswal Flexi Cap Fund-Dir(G) - 35.5144Motilal Oswal Focused 25 Fund - Direct (D) - 20.4246Motilal Oswal Focused 25 Fund - Direct (G) - 34.8895Motilal Oswal Focused 25 Fund (D) - 18.3723Motilal Oswal Focused 25 Fund (G) - 31.3034Motilal Oswal Large and Midcap Fund - Dir (D) - 15.0008Motilal Oswal Large and Midcap Fund - Dir (G) - 15.0008Motilal Oswal Large and Midcap Fund (D) - 14.57Motilal Oswal Large and Midcap Fund (G) - 14.57Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0068Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0442Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0694Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0083Motilal Oswal Liquid Fund - Direct (G) - 11.1042Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0066Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0434Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.0663Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.0154Motilal Oswal Liquid Fund - Regular (G) - 11.0628Motilal Oswal Long Term Equity Fund (D) - 18.9673Motilal Oswal Long Term Equity Fund (G) - 24.1448Motilal Oswal Long Term Equity Fund -Dir (D) - 22.5586Motilal Oswal Long Term Equity Fund -Dir (G) - 26.3202Motilal Oswal Midcap 30 Fund (D) - 21.9396Motilal Oswal Midcap 30 Fund (G) - 35.9137Motilal Oswal Midcap 30 Fund-Dir (D) - 22.6487Motilal Oswal Midcap 30 Fund-Dir (G) - 39.3237Motilal Oswal Multi Asset Fund - Direct (G) - 10.7049Motilal Oswal Multi Asset Fund (G) - 10.5652Motilal Oswal Nasdaq 100 FOF - Direct (G) - 21.7182Motilal Oswal Nasdaq 100 FOF - Regular (G) - 21.4982Motilal Oswal Nifty 50 Index Fund - Direct (G) - 13.1123Motilal Oswal Nifty 50 Index Fund (G) - 13.0304Motilal Oswal Nifty 500 Fund - Direct (G) - 15.2785Motilal Oswal Nifty 500 Fund (G) - 15.1033Motilal Oswal Nifty Bank Index Fund - Direct (G) - 12.6493Motilal Oswal Nifty Bank Index Fund (G) - 12.505Motilal Oswal Nifty Midcap 150 Index Fund (G) - 17.9037Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 18.1149Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 13.6955Motilal Oswal Nifty Next 50 Index Fund (G) - 13.5607Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 18.3538Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 18.5688Motilal Oswal S&P 500 Index Fund - Direct (G) - 14.0875Motilal Oswal S&P 500 Index Fund (G) - 13.9767Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 9.91Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 9.9314Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 9.9171Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 10.0598Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 9.921Motilal Oswal Ultra Short Term Fund - Dir (G) - 14.0415Motilal Oswal Ultra Short Term Fund (Div-D) - 9.8772Motilal Oswal Ultra Short Term Fund (Div-F) - 9.8877Motilal Oswal Ultra Short Term Fund (Div-M) - 9.8777Motilal Oswal Ultra Short Term Fund (Div-Q) - 10.0212Motilal Oswal Ultra Short Term Fund (Div-W) - 9.8807Motilal Oswal Ultra Short Term Fund (G) - 13.6038

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

Blog Blog Details
  • January 09, 2021
  • Akash Singhania|
  • Fund Manager
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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