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.
Motilal Oswal Dynamic Fund (Div-A) - 10.8318Motilal Oswal Dynamic Fund (Div-Q) - 10.4004Motilal Oswal Dynamic Fund (G) - 11.5152Motilal Oswal Dynamic Fund-Dir (Div-A) - 11.01Motilal Oswal Dynamic Fund-Dir (Div-Q) - 10.3361Motilal Oswal Dynamic Fund-Dir (G) - 11.9938Motilal Oswal Equity Hybrid Fund - Direct (G) - 10.2039Motilal Oswal Equity Hybrid Fund - Regular (G) - 9.9379Motilal Oswal Focused 25 Fund - Direct (D) - 14.7041Motilal Oswal Focused 25 Fund - Direct (G) - 21.4197Motilal Oswal Focused 25 Fund (D) - 13.4165Motilal Oswal Focused 25 Fund (G) - 19.471Motilal Oswal Large and Midcap Fund - Dir (D) - 8.1458Motilal Oswal Large and Midcap Fund - Dir (G) - 8.1458Motilal Oswal Large and Midcap Fund (D) - 8.0608Motilal Oswal Large and Midcap Fund (G) - 8.0607Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0082Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0564Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0669Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0086Motilal Oswal Liquid Fund - Direct (G) - 10.7665Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0081Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0563Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.4184Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.0156Motilal Oswal Liquid Fund - Regular (G) - 10.7433Motilal Oswal Long Term Equity Fund (D) - 12.2208Motilal Oswal Long Term Equity Fund (G) - 13.792Motilal Oswal Long Term Equity Fund -Dir (D) - 13.201Motilal Oswal Long Term Equity Fund -Dir (G) - 14.8209Motilal Oswal Midcap 30 Fund (D) - 13.8979Motilal Oswal Midcap 30 Fund (G) - 19.4543Motilal Oswal Midcap 30 Fund-Dir (D) - 14.2152Motilal Oswal Midcap 30 Fund-Dir (G) - 21.0138Motilal Oswal Multicap 35 Fund (D) - 17.9201Motilal Oswal Multicap 35 Fund (G) - 20.3404Motilal Oswal Multicap 35 Fund-Dir(D) - 17.9243Motilal Oswal Multicap 35 Fund-Dir(G) - 21.5508Motilal Oswal Nasdaq 100 FOF - Direct (G) - 15.3869Motilal Oswal Nasdaq 100 FOF - Regular (G) - 15.2955Motilal Oswal Nifty 50 Index Fund - Direct (G) - 7.4321Motilal Oswal Nifty 50 Index Fund (G) - 7.4193Motilal Oswal Nifty 500 Fund - Direct (G) - 8.3784Motilal Oswal Nifty 500 Fund (G) - 8.3393Motilal Oswal Nifty Bank Index Fund - Direct (G) - 6.3821Motilal Oswal Nifty Bank Index Fund (G) - 6.3528Motilal Oswal Nifty Midcap 150 Index Fund (G) - 8.7116Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 8.7523Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 8.1582Motilal Oswal Nifty Next 50 Index Fund (G) - 8.1359Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 7.6648Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 7.701Motilal Oswal S&P 500 Index Fund - Direct (G) - 10.1802Motilal Oswal S&P 500 Index Fund (G) - 10.1745Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 9.5855Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 9.6034Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 9.5923Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 9.7302Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 9.5961Motilal Oswal Ultra Short Term Fund - Dir (G) - 13.5819Motilal Oswal Ultra Short Term Fund (Div-D) - 9.589Motilal Oswal Ultra Short Term Fund (Div-F) - 9.5992Motilal Oswal Ultra Short Term Fund (Div-M) - 9.5894Motilal Oswal Ultra Short Term Fund (Div-Q) - 9.7289Motilal Oswal Ultra Short Term Fund (Div-W) - 9.5924Motilal Oswal Ultra Short Term Fund (G) - 13.2072

Investors should expect subdued benchmark returns this year

Blog Blog Details
  • May 10, 2017
  • Mr. Gautam Sinha Roy|
  • Fund Manager, MF

Markets are at an all-time high. What is driving this rally?

The market rally can be ascribed to high inflows coming into markets and chasing asset prices up. This is happening as inflation/ risk-free rates have come down thus resetting return expectations down across the risk curve. In other words, PE multiples of all securities have gone up.  Both domestic and foreign inflows are driving this liquidity surge.

 I cannot see anything that could derail domestic inflows for now.

Equity has a low allocation of ~4% in Indian households’ financials savings. At the margin, this is improving. There are many factors, which are contributing to domestic inflows into equities. First, inflation has come down and so has repo rates. This has reduced the returns of bank saving products, making them less attractive. Another factor is lacklustre performance of physical assets, like gold and real estate. People are now moving to equity to get better returns to achieve their financial goals.

Then there are the foreign inflows. India will continue to attract foreign inflows.  The country’s GDP growth is one of the highest in the world, making it an attractive investment destination for foreign institutional investors.

What is your outlook on the markets?

Currently, Nifty trailing PE is high at 22.5x. Clearly, there is scope for a correction in this, especially in the absence of earnings growth. We have been lived with no earnings growth for the past three years.

However, we believe the worst of earnings growth cycle is behind us. We expect earnings growth to pick up and turn around in beaten down sectors, like commodity and metal. Commodity prices have, in fact, started to recover. In addition, we believe PSU banks will contain their NPAs from deteriorating further. All these are cyclical factors which should lead to a recovery in earnings.

But the sustainable earnings growth will happen only when we have widespread recovery in demand across sectors. This, we are yet to see happening. The government push for affordable housing and prospects of good monsoon will drive demand growth in the economy going forward.

Keeping all these factors in mind, investors should expect subdued returns from the benchmark in FY 2017-18.

What could spoil this party?  What risks does the market have currently?

We are structurally in a lower inflation-and-moderate growth environment. We do not foresee drying up of inflows to equity market, as the causes remain in place, i.e., poor performance of physical asset prices and low interest rates.

On the other hand, it is difficult to predict foreign inflows, but then inflows from this channel are not now smaller as compared to domestic inflows.

Continued disappointment in earnings growth is the key medium term risk to the market.

How have you changed your tactics in light of the sharp run-up?

There is no change in the way we are managing our portfolio. We continue to follow a focussed strategy. Diversified portfolios aim to mitigate risk by increasing the number of stocks. Studies have shown, though, incremental risk reduction is immaterial beyond 20-22 stocks.

Hence, there is no point in holding too many stocks if the purpose is risk reduction. In addition, an investor should know that every fund manager has a bandwidth. It is difficult to track too many stocks.

We continue to remain invested in stocks with high structural growth potential. We believe that while current multiples are expensive, they get somewhat compensated by the high growth in earnings.

Which sectors do you think will play out well in the next three to five years?

With the government’s push for affordable housing, we continue to bet on the housing finance sector. We are bullish on NBFCs and banks that are in the business of housing and personal loans. In the medium term, the growth will come from this sector. We are also confident on prospects of the insurance sector, which is underpenetrated and will benefit from shift from physical to financial savings (much of insurance sold in India is a hybrid protection and savings product).

Other sectors we are bullish on are aviation, two-wheelers and pharmaceuticals, but in select pockets only, i.e., only two-three companies in each sector are worth investing in.

How can buy right-sit tight be termed as active fund management if the philosophy is to hold the stock long term?

Active fund management is not about frequent churning or Activity. Active management is to manage equity assets by selecting a few stocks from a broad index, with the ultimate objective of outperforming the index consistently. The stock might be changed only when their prospects of delivering superior returns disappears.

Our job is to predict stock return potential over a long-term period based on fundamental analysis. We have to select pockets of winners from the entire economy.

Basic fund management strategies are more or less similar across fund houses. How difficult is it to stand out from the crowd, especially when it comes to fund management?

We have a very well defined and documented investment philosophy, which helped us differentiate ourselves in a crowded market place.

We believe in the buy right-and-sit tight approach, i.e., to invest with great conviction and stay the course as long as the stock offers enough returns to be made for investors.

I believe there is space for all sorts of players – right from day traders to real long-term investors – in the equity markets. The choice is for the participant to make.

Which category of equity funds would you recommend investors to invest in at this juncture?

Given the high valuations prevailing in the market, investors should go for dynamic asset allocation fund category, where fund managers can rebalance the portfolio based on prevailing market conditions and prospective returns.

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