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) - 11.242Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive-Dir (G) - 11.2744Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative (G) - 10.8933Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative-Dir(G) - 10.9285Motilal Oswal Dynamic Fund (Div-A) - 14.0658Motilal Oswal Dynamic Fund (Div-Q) - 12.5976Motilal Oswal Dynamic Fund (G) - 15.5208Motilal Oswal Dynamic Fund-Dir (Div-A) - 14.286Motilal Oswal Dynamic Fund-Dir (Div-Q) - 12.81Motilal Oswal Dynamic Fund-Dir (G) - 16.438Motilal Oswal Equity Hybrid Fund - Direct (G) - 16.2581Motilal Oswal Equity Hybrid Fund - Regular (G) - 15.4886Motilal Oswal Flexi Cap Fund(D) - 26.8968Motilal Oswal Flexi Cap Fund(G) - 35.7815Motilal Oswal Flexi Cap Fund-Dir(D) - 26.9807Motilal Oswal Flexi Cap Fund-Dir(G) - 38.375Motilal Oswal Focused 25 Fund - Direct (D) - 22.2961Motilal Oswal Focused 25 Fund - Direct (G) - 38.0864Motilal Oswal Focused 25 Fund (D) - 19.9881Motilal Oswal Focused 25 Fund (G) - 34.0565Motilal Oswal Large and Midcap Fund - Dir (D) - 17.1367Motilal Oswal Large and Midcap Fund - Dir (G) - 17.1513Motilal Oswal Large and Midcap Fund (D) - 16.5808Motilal Oswal Large and Midcap Fund (G) - 16.5808Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0098Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0489Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0777Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0081Motilal Oswal Liquid Fund - Direct (G) - 11.1971Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0093Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0478Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.0746Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.0151Motilal Oswal Liquid Fund - Regular (G) - 11.1509Motilal Oswal Long Term Equity Fund (D) - 21.2876Motilal Oswal Long Term Equity Fund (G) - 27.0985Motilal Oswal Long Term Equity Fund -Dir (D) - 25.4073Motilal Oswal Long Term Equity Fund -Dir (G) - 29.6439Motilal Oswal Midcap 30 Fund (D) - 25.2023Motilal Oswal Midcap 30 Fund (G) - 41.2546Motilal Oswal Midcap 30 Fund-Dir (D) - 26.1027Motilal Oswal Midcap 30 Fund-Dir (G) - 45.3207Motilal Oswal Multi Asset Fund - Direct (G) - 10.9237Motilal Oswal Multi Asset Fund (G) - 10.7384Motilal Oswal Nasdaq 100 FOF - Direct (G) - 23.5874Motilal Oswal Nasdaq 100 FOF - Regular (G) - 23.3234Motilal Oswal Nifty 50 Index Fund - Direct (G) - 14.4569Motilal Oswal Nifty 50 Index Fund (G) - 14.3513Motilal Oswal Nifty 500 Fund - Direct (G) - 16.744Motilal Oswal Nifty 500 Fund (G) - 16.5231Motilal Oswal Nifty Bank Index Fund - Direct (G) - 13.4552Motilal Oswal Nifty Bank Index Fund (G) - 13.2786Motilal Oswal Nifty Midcap 150 Index Fund (G) - 19.2812Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 19.5506Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 14.8326Motilal Oswal Nifty Next 50 Index Fund (G) - 14.661Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 20.0033Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 20.2768Motilal Oswal S&P 500 Index Fund - Direct (G) - 14.7915Motilal Oswal S&P 500 Index Fund (G) - 14.6525Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 10.0009Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 10.0242Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 10.008Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 10.1521Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 10.012Motilal Oswal Ultra Short Term Fund - Dir (G) - 14.1702Motilal Oswal Ultra Short Term Fund (Div-D) - 9.9464Motilal Oswal Ultra Short Term Fund (Div-F) - 9.9572Motilal Oswal Ultra Short Term Fund (Div-M) - 9.9469Motilal Oswal Ultra Short Term Fund (Div-Q) - 10.0914Motilal Oswal Ultra Short Term Fund (Div-W) - 9.9499Motilal Oswal Ultra Short Term Fund (G) - 13.6991

QGLP - Investment process for Mutual Fund & Portfolio Management Services

Our Mantra for Wealth Creation

Over the years Motilal Oswal Asset Management Company (MOAMC) has conducted various Wealth Creation Studies. These studies and our passion for equity investing has helped us hone a unique and focused investing process that can be summarised in 4 letters - ‘QGLP’.

Where; 'Q'uality denotes quality of the business and management, 'G'rowth denotes growth in earnings and sustained RoE, 'L'ongevity denotes longevity of the competitive advantage or economic moat of the business and 'P'rice denotes our approach of buying a good business for a fair price rather than buying a fair business for a good price. This approach has helped us identify many multibaggers in our portfolios as can be seen in the performance of our PMS schemes

Let's look at each of these characteristics in a bit more detail

Past performance may or may not be sustained in future

QUALITY

Quality of a business/company is reflected in its ability to derive superior returns on capital invested while treating stakeholders in a consistently fair way. This ability should be deep-rooted and hence sustainable.

Quality itself can be characterized into two dimensions - ‘Quality Business’ and ‘Quality Management’

1. Quality Business

  • A Quality Business is one with a sustained competitive advantage measured by high return ratios. Some good examples of these characteristics can be seen in stocks like TCS & Hero MotoCorp

    Source : Bloomberg & Internal Analysis | Data as on November 30, 2014

    The Stocks mentioned above are used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy. It should not be construed as investment advice to any party. The stocks may or may not be part of our portfolio/strategy/ schemes. Past performance may or may not be sustained in future

    Source : Bloomberg & Internal Analysis | Data as on November 30, 2014

    The Stocks mentioned above are used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy. It should not be construed as investment advice to any party. The stocks may or may not be part of our portfolio/strategy/ schemes. Past performance may or may not be sustained in future

  • A Quality Business also has Industry leadership position. Like Bosch India which has a market share of 90-95%* in Fuel Injection System for medium and heavy commercial vehicles and is the undisputed leader in its category.
  • In addition, quality businesses typically have a favourable industry structure i.e. they operate in a monopoly, duopoly or oligopoly. Good examples of such industries are Asian Paints and United Spirits
  • Quality is found in secular and stable businesses; preferably consumer facing. A good example of such a business is Colgate which has been present in oral care as an established consumer category for many years
  • Another characteristic of a quality business is its limited use of leverage on its balance sheet

Please refer last page for the disclaimer

*Source: HSBC Global Research Report. Data as on 2 September, 2014

2. Quality Management

  • Quality Management is one which has competence and can be seen in the industry leading margins they command. TCS and Sun Pharma are good examples of this.
  • Quality Management is also characterized by a rational capital allocation policy. For eg Hero Honda; given its focused investment in core business and high dividend payouts.
  • Quality Management believes in rewarding its shareholders with regular dividend. Companies like Colgate and Page Industries are examples
  • Quality Management thinks innovatively in terms of their products, processes and selling approach. For example; the management of a company like Pidilite, has successfully created new segments/markets through innovation
  • Quality Management is honest and trustworthy. It is also transparent in its dealings and provides adequate disclosures. TCS and HDFC Bank are good examples of this characteristic

Please refer last page for the disclaimer

GROWTH

Most Investors look for growth while selecting companies for investing. However growth by itself doesn't mean much. It adds value only when the company earns Returns on Capital higher than its Cost of Capital. Hence, Growth is simply an amplifier: good when returns exceed the cost of capital, bad when returns are below the cost of capital, and neutral when returns equal the cost of capital. Higher growth adds value for high return businesses and detracts value for low return businesses.

Growth can be identified with the following characteristics

  • Is the company in a growing, large and addressable market? P&G in the consumer goods space and Page Industries in the innerwear category are not only in large and growing categories; they also have the products to address various needs of their markets
  • Is the company gaining market share? Sun Pharma and Amara Raja Batteries are good examples here
  • There are various margin growth levers in the company’s operations that can help identify growth. For eg Bata's growth in margins has happened due to the reduction in its employee costs
  • And lastly, the growth should preferably be in a profitable segment. Again Amara Raja Batteries is an example - given its strong growth in the more profitable replacement market.

Please refer last page for the disclaimer

LONGEVITY

The final driver of franchise value is the sustainability of excess-return investment opportunities. Economic forces tend to drive the return on invested capital down to the cost of capital over time.

A central task for an investor is to assess how long a company earning above its cost of capital can continue to find productive investment opportunities. Stock prices often reflect ten to twenty years of value-creating cash flows. Competitive strategy analysis is particularly useful in this effort.

  • Longevity can be identified in the Long competitive advantage period that a company has. For eg Container Corporation, Page Industries have a long period of competitive advantage before their competitors catch up
  • It can also be seen in understanding growth potential for 10-15 years. For eg the penetration of spirits market and United Spirits critical mass gives a good indicator of the longevity of its growth
  • Maximum 10%: Debt, Money Market Instru

Please refer last page for the disclaimer

PRICE

Price of a stock has to be seen in conjunction with Value it offers. Price is what we pay, value is what we get. Therefore, stock prices are attractive only when they are less than the value perceived in the stock.

Pricing can be evaluated by the following characteristics

  • Discount to historical P/E(Price-Earnings) trading band
  • P/B (Price-to-Book) Discount
  • PEG (Price-Earnings to Growth) Ratio
  • DCF (Discounted Cash Flow)
  • Replacement Value Discount
  • Popular/Unpopular idea
  • Payback ratio
  • Dividend yield

Please refer last page for the disclaimer

This is just a short introduction to the concept of QGLP. It has many interesting permutations and combinations. The principals; however; remain the same. Wealth can be created if QGLP is practiced sincerely; along with the focus and discipline of patience over the years.

It is a process practiced by investing Oracles. All MOAMC offerings; be it PMS or Mutual Funds; practice this process. Have a look at the holdings of our various schemes and funds to get an idea.

So go ahead, practice QGLP… and create wealth. And if you do not have the expertise or time to diligently practice this unique wealth creating mantra, all you need to do is invest in any Motilal Oswal AMC equity fund or strategy.

Happy Investing


Disclaimer

This brochure has been issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact. The information / data herein alone is not sufficient and shouldn't be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions, figures, estimates and data included in this brochure are as on date mentioned in the brochure. The brochure does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The Stocks and sectors mentioned herein is for explaining the concept and shall not be construed as a recommendation or an investment advice from MOAMC. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for any decision taken on the basis of this brochure. Past performance may or may not be sustained in the future. The stocks may or may not be part of our portfolio/strategy/schemes. The Fund Manager retain the flexibility to increase or decrease the exposure of a stock or to exit a stock. This brochure is not for circulation in general and is meant for intended recipient only.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully

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