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 5 Year G-Sec Fund of Fund (G) - 10.0277Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive (G) - 11.5825Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive-Dir (G) - 11.6214Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative (G) - 11.0987Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative-Dir(G) - 11.1404Motilal Oswal Dynamic Fund (Div-A) - 14.2282Motilal Oswal Dynamic Fund (Div-Q) - 12.345Motilal Oswal Dynamic Fund (G) - 15.7Motilal Oswal Dynamic Fund-Dir (Div-A) - 14.4666Motilal Oswal Dynamic Fund-Dir (Div-Q) - 12.5737Motilal Oswal Dynamic Fund-Dir (G) - 16.6457Motilal Oswal Equity Hybrid Fund - Direct (G) - 16.4498Motilal Oswal Equity Hybrid Fund - Regular (G) - 15.6495Motilal Oswal Flexi Cap Fund(D) - 27.1399Motilal Oswal Flexi Cap Fund(G) - 36.1049Motilal Oswal Flexi Cap Fund-Dir(D) - 27.2458Motilal Oswal Flexi Cap Fund-Dir(G) - 38.7521Motilal Oswal Focused 25 Fund - Direct (D) - 22.5303Motilal Oswal Focused 25 Fund - Direct (G) - 38.4866Motilal Oswal Focused 25 Fund (D) - 20.1758Motilal Oswal Focused 25 Fund (G) - 34.3763Motilal Oswal Large and Midcap Fund - Dir (D) - 17.1791Motilal Oswal Large and Midcap Fund - Dir (G) - 17.1936Motilal Oswal Large and Midcap Fund (D) - 16.5971Motilal Oswal Large and Midcap Fund (G) - 16.5971Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0043Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0528Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.026Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0058Motilal Oswal Liquid Fund - Direct (G) - 11.2259Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0042Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0515Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.025Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.013Motilal Oswal Liquid Fund - Regular (G) - 11.178Motilal Oswal Long Term Equity Fund (D) - 21.2113Motilal Oswal Long Term Equity Fund (G) - 27.0014Motilal Oswal Long Term Equity Fund -Dir (D) - 25.3449Motilal Oswal Long Term Equity Fund -Dir (G) - 29.5712Motilal Oswal Midcap 30 Fund (D) - 26.462Motilal Oswal Midcap 30 Fund (G) - 43.3168Motilal Oswal Midcap 30 Fund-Dir (D) - 27.4366Motilal Oswal Midcap 30 Fund-Dir (G) - 47.6367Motilal Oswal Multi Asset Fund - Direct (G) - 11.0357Motilal Oswal Multi Asset Fund (G) - 10.8345Motilal Oswal Nasdaq 100 FOF - Direct (G) - 24.2465Motilal Oswal Nasdaq 100 FOF - Regular (G) - 23.9667Motilal Oswal Nifty 50 Index Fund - Direct (G) - 15.0498Motilal Oswal Nifty 50 Index Fund (G) - 14.9346Motilal Oswal Nifty 500 Fund - Direct (G) - 17.3864Motilal Oswal Nifty 500 Fund (G) - 17.1473Motilal Oswal Nifty Bank Index Fund - Direct (G) - 14.6152Motilal Oswal Nifty Bank Index Fund (G) - 14.4152Motilal Oswal Nifty Midcap 150 Index Fund (G) - 20.2464Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 20.5437Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 14.8476Motilal Oswal Nifty Next 50 Index Fund (G) - 14.6674Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 20.7092Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 21.0056Motilal Oswal S&P 500 Index Fund - Direct (G) - 15.4219Motilal Oswal S&P 500 Index Fund (G) - 15.2694Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 10.0245Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 10.0484Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 10.0316Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 10.176Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 10.0357Motilal Oswal Ultra Short Term Fund - Dir (G) - 14.2037Motilal Oswal Ultra Short Term Fund (Div-D) - 9.9629Motilal Oswal Ultra Short Term Fund (Div-F) - 9.9737Motilal Oswal Ultra Short Term Fund (Div-M) - 9.9634Motilal Oswal Ultra Short Term Fund (Div-Q) - 10.1082Motilal Oswal Ultra Short Term Fund (Div-W) - 9.9665Motilal Oswal Ultra Short Term Fund (G) - 13.7219

Investing In Portfolio Management Services

Knowledge Center Investing In Portfolio Management Services

The Need for Portfolio Management Services

PMS or Portfolio Management Service is a professional service where qualified and experienced portfolio managers backed by a research team manage equity portfolios on behalf of clients instead of clients managing it themselves. India being one of the oldest stock market ecosystems,the direct equity investing cult has been prevalent for decades and has especially taken deeper root since many marquee listings in the markets since late 1970s. There are a large number of investors who own equity portfolios in their demat accounts that they manage based either on their own experiences or with inputs from broking companies and equity advisors.

There are millions of demat accounts; in fact some of the largest listed companies individually have 2-3mn shareholders each. While brokers provide equity research, advisory services and an operational platform; this usually needs the investors' involvement in investment discretion as well as operational aspects. More importantly, the onus of outcomes is shared between investors as well as the service providers. On the other hand, professionally managed portfolios make the portfolio manager answerable to the investor. They are managed for a fee and everything including, research, investing, operations, etc. are available to the investor.

PMS could either be Discretionary; i.e. where the fund manager takes decisions on investors' behalf or Non-Discretionary; i.e. where the fund manager needs to take approvals from the investors on suggested investments. The other alternative for professionally managed investments into equities is through Mutual Funds; which is a very popular choice too. Discretionary PMS differ from Equity Mutual Funds in following aspects:

Investors in Mutual Funds are allotted units that represent their holding in a basket of stocks. For every PMS investor, the Portfolio Manager creates a segregated demat account where his portfolio is held on his behalf. The Portfolio Manager has to be provided with a power of attorney to transfer stocks in and out of the demat account.

Mutual Funds have investment thresholds as low as ` 500/- or ` 1,000/- while for PMS, regulation requires that such services be offered only to investors bringing in a minimum of ` 25 lakhs by way of stocks or cash. Subsequent investments (top-up), typically have a threshold of ? 2 lakh.

However, there are certain aspects where PMS could be seen to be having distinct advantages for long term buy and hold investors as compared to investing by self or investing via Mutual Funds

Advantages of Investing in Portfolio Management Services

I. Quality Portfolio

People who manage their own portfolios on an average buy less of quality and focus more on price, rather than value

Data shows that while there are thousands of listed companies; individual investors (Non Promoter Non Institutional [NPNI]) have a lower share of holding in the larger indices like Nifty, BSE 200 or even Nifty 500. Retail or NPNI holding is higher in non-index smaller companies. There is a skew to lesser quality stocks in their portfolios. It is equally remarkable that Nifty accounts for almost 60% of total market cap, BSE 200 accounts of nearly 85% of market cap and Nifty 500 accounts for nearly 94% of market cap (Source: Capitaline). This means that while the bulk of the market value resides with the top 500 companies, retail direct investors' holding is with the 'long tail' which doesn't hold much value. Retail investors consistently seem to ignore the adage, “Price is what you pay; Value is what you get”. They seem to chase stocks that are attractive on price and may or may not be so on value. It's not that retail investors never buy good quality stocks; it's just that they have a tendency to sell when they make a profit and hold on to stocks that have depreciated in value. It's a well- known fact that profits are booked easily and mostly prematurely, but losses are allowed to run. Motilal Oswal AMC promotes 'BUY RIGHT : SIT TIGHT' having realized that when people buy right they book profits and when they buy wrong they become long term investors. A simple test to measure the quality and performance of a portfolio can be done by visiting :

II. Independent Portfolio

PMS Holdings are isolated and hence not impacted by other investors behavior

Mutual Funds being managed and held as a pool may be at times exposed to vagaries of the sum total behavior of hundreds of thousands of investors. In general, investors tend to invest in rising markets or improving fund performance and there could be times of panic in rapidly falling markets and times of poor fund performance. It may happen that mutual funds at times are forced to buy in rising markets and sell in falling markets because fund managers have discretion on stock picks but not on fund flows. Apart from managing the portfolio, managing fund flows is a significant activity on a daily basis. As far as PMS is concerned, every investor influences his own buying or selling time and price, there is no impact on other investors' holding or experiences. PMS has isolated individual holdings so one investor's behavior doesn't impact other investors investments.

At the same time, it is worth noting that Mutual Funds get benefited by regular inflows by way of Systematic Investment Plan, which helps them buy stocks in all kinds of market conditions. On the other hand, PMS would get inflows depending upon client discretion and their preferences. It is possible to register a SIP with Motilal Oswal PMS too, but these PMS-SIP flows will benefit individual client accounts and not comparable with enabling a fund to buy in general, consistently on a monthly basis..

III. Online Top Up

Mini PMS facility

Registering SIP in Motilal Oswal PMS is an interesting experience because our portfolios have very low churn. As an investor when one registers PMS- SIP more often than not, one knows the curated focused list of high quality stocks that one will end up buying month on month. Also, one can register a paperless and user-friendly PMS-SIP, online. Similarly, Motilal Oswal PMS also enables an investor to purchase additional amounts into the PMS portfolio online on a same day basis. Ideal for the day when some global event not connected with our markets results in a 1000 point correction on the Sensex, only to bounce back in a few days!!!

IV. Transparent Holdings

PMS is transparent

If we were to use cricket parlance, one can say that in PMS an investor can get a ball by ball update on the portfolio. Every trade is intimated to the investor and a live portfolio view is available on the managers' website. Specifically for Motilal Oswal PMS portfolios, there is a focused portfolio of curated stocks which the client can view in his holdings. Mutual Funds typically tend to have large diffused portfolios ranging from 25, 30 to even a 100 stocks, (which restrict the transparency) and the holdings are made available only once in a month or a quarter. And for investors holding 5/6/7 different funds in their portfolios, they end up holding over 250-300 stocks. Even if they de-duplicate the holdings through proper analysis, they would realize they pretty much own whatever of the market there is to own, resulting in dilution of returns. You can't beat the market if you buy the market.

V. Possibility of Superior Returns

PMS can be more aggressive (hence more risky) and has the potential to generate higher returns

Mutual Funds being structured for a wide mass of retail investors tend to be regulated strictly; for instance there are regulatory norms for benchmarking, scrip level exposure, investment patterns etc. More specifically in Mutual Funds, no stock can be over 10% of portfolio exposure. In PMS for instance; if a stock has 8% exposure and all things being static, this stock appreciates to become 12% of the portfolio, there is no compulsion to sell. There are times when a stock classified as mid cap appreciates over time and comes within the large cap basket. In a Mutual Fund scheme depending on investment universe defined the portfolio manager might be forced to sell.In a PMS, a portfolio manager may choose to have higher exposure as well as hold on to concentrated positions as long as they are delivering growth. While this can cut both ways, the ability to run concentrated positions combined with no inflows and outflows or compulsions of fund flow management, does afford the potential to generate higher returns.

VI. Transparent Expense Ratio

PMS is flexible in terms of expense ratios being transparent and customized

Expense ratio disclosures of PMS are transparent as each client signs a specific fee structure and receives a monthly detail of charge levied on the portfolio. Further, expense structures can be customized based on ticket size and profit sharing based fee structures are possible too

VI. Focused Customer

PMS helps focus on the mass affluent and affluent customer

While Mutual Funds can focus on the new to market and lower sized segments through SIPs etc; PMS by definition, focuses on the mass affluent and affluent. This audience in India is growing by leaps and bounds, values flexibility and most importantly they are familiar with equity investing. The number of equity investors is almost 3 times the number of Mutual Fund investors. Significant wealth creation in the last decade has anyway occurred by way of sweat equity. It is then easy to diversify the holdings by investing in PMS. Hence, while there is a market for Mutual Fund investors, there also exists a market for PMS products

Our experience at Motilal Oswal brings out that PMS ageing is almost 1.5 to 2 times higher than Mutual Funds. This longer investing period means higher chances of returns, especially if you 'Buy Right' and 'Sit Tight'. A WIN-WIN-WIN situation for investor- manufacturer-investment advisor.

In general, if PMS is offered to experienced direct equity investors who have a higher risk appetite and Mutual Funds are offered to investors who are risk averse or at early stage of equity investing, it would be ideal in product suitability terms.

Disadvantages of Investing in Portfolio Management Services

I. Tax Implications

While Mutual Funds are registered as a tax exempt trust structure, for PMS portfolios the tax implications are the same as those for investors investing directly. If stocks are held for more than a year, it results in long term capital gain tax @ 10% plus surcharges. If the portfolio manager indulges in short term trading activity, it may result in short term capital gains, which would mean the investor has to pay tax. At Motilal Oswal specifically, our average holding for stocks is in excess of 3-4 years and hence this tends to be a lesser concern. 

II. Documentation

Since PMS accounts entail opening of a segregated demat account and registering a power of attorney in favour of the portfolio manager, the documentation tends to be onerous as compared to Mutual Funds

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