Why invest in Motilal Oswal Small Cap fund?

Disclaimer: Past performance may or may not be sustained in future. The above graph is used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy.

Portfolio Construct

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Disclaimer: Past performance may or may not be sustained in future. The above graph is used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy. The term ‘Hi-Quality and Hi- Growth Portfolios’ refer to Motilal Oswal AMC’s defined fund management processes based on internal qualitative and quantitative research parameters & not be construed as investment advice to any party.

Why Small Cap?

High Growth Potential

Small Is Getting Bigger

Under researched companies

Large Investible Universe

Under Ownership

Unique Sectors

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Enhance your long term wealth creation by leveraging smallcap’s potential for earnings growth

Source: Bloomberg, Prowess CMIE. Note : Earning growth are annualized. FY 08 - 23 growth calculated as average of EPS CAGR for each category. ^Nifty Smallcap 250 index data available since 1st Apr’05. As of 30th Jun’23 classification by SEBI Past performance may or may not be sustained in future. The above graph is used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy.

Nifty Smallcap 250 TRI offered better historical long-term returns

Smallcap index has outperformed the largecap index across time periods. Momentum in earnings growth and improving trends of flows in the category are important factors among reasons for outperformance
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Source/Disclaimer : MOAMC Internal Research, AMFI, NSE Indices, BoB. Data as on 31 Oct 23 Past performance may or may not be sustained in future. The above graph is used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy. The figures pertain to performance of the index and do not indicate the return/performance of the scheme. It is not possible to invest directly in index.

Want to Know more about the Small Cap Fund?

Here's what our Fund Manager, Ajay Khandelwal has to say.

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  • Fund Info

  • Periodic Returns

  • Portfolio

  • Product Label

  • Downloads

Fund Name

Motilal Oswal Small Cap Fund

Plans

Regular Plan and Direct Plan

Options (Under each plan)

Dividend (Payout and Reinvestment) and Growth

Benchmark

Nifty Small cap 250 TRI

Minimum Application Amount

₹ 500/- and in multiples of ₹ 1/- thereafter

Minimum Redemption Amount

₹ 500/- and in multiples of ₹ 1/- thereafter or account balance, whichever is lower.

Investment Objective

To generate capital appreciation by investing predominantly in Small Cap stocks. However, there can be no assurance that the investment objective of the scheme will be realized.

Type

An open ended equity scheme predominantly investing in small cap stocks

Entry load

NIL

Exit load

1% If redeemed on or before 15 days from the date of allotment.

Nil  If redeemed after 15 days from the date of allotment.

Fund Managers

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Ajay Khandelwal

Executive Group Vice President

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Niket Shah

Fund Manager

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Ankush Sood

MF Fund Manager

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Rakesh Shetty

Fund Manager/Dealer

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FAQs

What is small cap?

PlusSign
A small-cap fund is an equity -oriented mutual fund scheme that predominantly invests in the stocks of small-cap companies, offering potential for higher returns but also higher volatility.

Why Small Caps?

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High Growth Potential: Historical outperformance during economic growth.

Growing Market: 38x increase in the largest small cap's market cap in 20 years. 537 small cap companies with a market cap above 2,000 Cr for diverse selection.

Under-Researched Opportunities: Limited analyst coverage, creating opportunities for professional research. Expert portfolio management crucial for navigating the small cap landscape.

Investment Case: Distinctive earnings and returns profile emphasizes the importance of expertise. Large investible universe (4,813 companies) creates potential for alpha generation.

Unique Sectors: Opportunities in high-growth segments not well-represented in large caps. Access to unique and niche sectors within the broader market.

Why Small Caps Now?

PlusSign
Earnings Buoyancy: Consistent earnings growth of 49% over the last 3 years. Reduced volatility, with a decrease from 22.8% (Apr’07 to Mar’20) to 18.4% (Apr’20 to Oct’23).

Healthier Balance Sheets: Net debt-to-equity ratio decline from 0.76x (FY15) to 0.3x (FY23). Reduced reliance on external funds, with 70% of fund raises since FY21 through offer for sale.

Strong Trend of Retail Investment Flows: Small cap category attracts 26% of net flows in active mutual funds in 2023. Noteworthy rise in SIP flows, with a more than 2x increase to 2,200 crores in 2 years, providing stability against extreme volatility.

Trading at Reasonable Valuations: Despite past concerns, current small cap PE is at a 17% premium over Nifty 50. TTM P/E ratio well below peak, indicating favorable earnings growth potential.

General Elections Run-Up as a Comfortable Period: Historical data shows substantial small cap rallies in the six months leading up to general elections. Nifty Smallcap 250 index experienced significant rallies in 2009, 2014, and 2019.

Higher Exposure to Domestic Market: Small cap index companies have 12% of revenues from exports (FY23) vs. 23% for Nifty 50. Greater orientation towards domestic markets provides better visibility of earnings growth.

Small Caps Poised for Next Rate Cycle: Correction during rising interest rates followed by a robust rally. Expectations of rate cuts position small caps for further upward momentum.

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