This week we bring to you a multi cap fund under the house of Motilal Oswal Mutual Fund, Motilal Oswal Multi-Cap 35 Fund.

Multi cap funds are those funds which invest in stocks of different market capitalization (i.e. large caps, mid-caps and small caps).

Motilal Oswal Multi-Cap 35 Fund has beaten its benchmark index (NIFTY 500 TRI) since its inception on 28th April 2014 (Returns by the fund has been 25.81% since inception whereas that of NIFTY 500 TRI has been 17.03% and NIFTY 50 is 14.94%.

Therefore, we can see that the fund has beaten the category benchmark index by 8.78% and NIFTY benchmark by 10.87%).

As the name suggests, the investment objective of the fund is to enhance capital growth by investing in not more than 35 equity stocks or equity related instruments (hence the name Motilal Oswal Multi-cap 35 Fund) across various sectors and also market capitalizations.

Also Read: SBI Magnum Multicap Fund Review

Key details of the fund

Launch Date 28/04/2014
NAV (As on 19th September 2018) 27.0
Plan Type Direct
Managing Fund House Motilal Oswal Mutual Fund
Ratings of Groww 3 Star
AUM (Size) 13,016 crores
Riskometer Moderately High
Minimum SIP 1000
Benchmark NIFTY 500 TRI
Age of the fund 4 years old
Expense Ratio 1.16%
Exit Load Exit Load is 1% if redeemed between 0 to 12 months
Type Open Ended
Fund Manager Danesh Mistry

One can see marquee names such as HDFC Ltd., HDFC Bank Ltd., Maruti Suzuki etc. in the list of companies (Top 10 holdings) that Motilal Oswal Multi Cap 35 Fund has acquired a stake in.

Portfolio (Top 10 Holdings)

Name % of Assets Sector Instrument Size
Housing Development Finance Corporation Ltd. 9.5% Financial Services Equity Large Cap
HDFC Bank Ltd. 8.6% Financial Services Equity Large Cap
Maruti Suzuki India Ltd. 7.2% Automobiles Equity Large Cap
IndusInd Bank Ltd. 5.9% Financial Services Equity Large Cap
Eicher Motors Ltd. 5.0% Automobiles Equity Large Cap
Bajaj Finance Ltd. 5.0% Financial Services Equity Large Cap
Infosys Ltd. 4.5% Information Technology Equity Large Cap
United Spirits Ltd. 4.0% Consumer Goods Equity Large Cap
Bharat Petroleum Corporation Ltd. 3.8% Energy Equity Large Cap
Britannia Industries Ltd. 3.3% Consumer Goods Equity Large Cap

Sector Allocation

Sector Allocation (%)
Automobiles 14.3%
Financial Services 45.6%
Energy 10.2%
Pharma 8.1%
Consumer Goods 10.7%
Information Technology (IT) 7.8%
Others 3.2%

Allocation by Market Size

Market Size Allocation (%)
Large Cap 79.7%
Mid Cap 17.5%
Small Cap 0.6%

As per the stock allocation, the fund has to invest a minimum of 65% in equities and equity related instruments and a maximum of 35% in debt or money market instruments.

However, in order to optimize the full potential of equity markets, the fund managers have to invest around 97.9% of the total assets in equities.

The fund can also invest in foreign securities upto a limit of 10% in total net assets.

However, a risk entails in the fund which lies in the exposure or investment of the fund in the financial service sector which is around 45.6% (The benchmark category of NIFTY 500 TRI has financial services allocation of around 32.27%).

However, one good thing that an investor can be pleased about is that the fund has initiated positions in financial service companies which have performed exceedingly well in the recent past i.e HDFC Ltd., HDFC Bank Ltd., IndusInd Bank, Bajaj Finance Ltd. etc.

Such companies have also weathered the NPA (Non-performance assets) issue which has plagued havoc in other state run banks such as SBI, PNB, IOB, Bank of India.

Motilal Oswal Multi-Cap 35 Fund does not have any exposure to such state run banks.

Also Read: Aditya Birla Sun Life Tax Relief 96 Fund Review 2018

Comparison

Let us look at how Motilal Oswal Multi-Cap 35 fares in comparison to other funds in the same category

Other similar funds Returns over the years Minimum SIP Investment Fund Size (In Crs.) Expense Ratio Ratings by Groww
  1Y 3Y 5Y
Motilal Oswal Multi Cap 35 Fund -1.7% 15.4% NA 1000 13,016 Cr. 1.16% 3*
Aditya Birla Sun Life Equity Fund – Direct 2.7% 14.8% 23.3% 1000 9,351 Cr. 1.21% 4*
Kotak Standard Multi Cap Fund – Direct 6.6% 14.8% 22.3% 500 19,827 Cr. 1.17% 4*
SBI Magnum Multi Cap Fund –  Direct 5.0% 14.2% 22.6% 1000 4,086 Cr. 1.18% 4*
Mirae Asset India Equity Fund – Direct 9.9% 16.0% 22.9% 1000 7,945 Cr. 1.32% 5*

Looking at the returns generated by the fund, we find that in both the 1-year and 3-year period, it has performed better than similar funds in the same category.

However, we can see that all the funds have taken a beating in the 1-year return period, mainly because the markets have remained choppy since the last year with various domestic factors (examples being GST implementation, taxes imposed @ 10% in Budget 2018, rise in inflation thereby increase in interest rates by the Central Bank) and global factors (such as trade war between US and China and its impact on India, increase in the oil prices, strength in dollar weighing on rupee) playing out.

However, due to the strong performance of the fund, one can see that the fund size of Motilal Oswal Multi-Cap 35 Fund has increased and crossed a mammoth 13,000 crores.

This shows that investors have flocked to buy this fund as compared to other funds whose fund size has not increased in proportion to Motilal Oswal Multi-Cap 35 Fund.

However, there is also an element of risk associated with the fund size, wherein the negative effects of the fund size outweighs the positive effects of the fund’s returns.

Fund Managers

As specialized as it may sound, Motilal Oswal Multi-Cap 35 Fund has different fund managers for different categories of investments namely

1.Gautam Sinha Roy – (Responsible for investment in equity)

Education

Mr. Gautam Sinha Roy holds a degree in Chemical Engineering and is an alumnus of IIM Calcutta.

Experience

He has over 15 years of experience and has worked with reputed firms such as IIFL Capital (Singapore), Mirae Asset Global Investments, Edelweiss Capital and GE Capital International, prior to joining Motilal Oswal.

Other Schemes managed

  • Motilal Oswal Long Term Equity Fund;
  • Motilal Oswal Dynamic Equity Fund

2.Swapnil Mayekar – (Responsible for investment in foreign securities)

Education

Mr. Swapnil Mayekar has completed Masters of Commerce from Mumbai University.

Post which, he completed Advanced Diploma in Business Administration from Welingkar, Mumbai.

Experience

Mr. Swapnil Mayekar has previously worked with Business Standard Limited post which has been with Motilal Oswal Asset Management Company Limited since 2010.

Other Funds managed

  • Motilal Oswal NASDAQ-100 ETF

3.Abhiroop Mukherjee – (Responsible for investment in debt)

Education

Mr. Abhiroop Mukherjee has completed Bachelor of Commerce (B.Com) and Master of Business Administration (MBA) from National Institute of Bank Management.

Experience

Mr. Mukherjee has over 10 years of experience in Trading Fixed Income Securities (which includes G-securities, treasury bills, corporate bonds, commercial papers, certificate of deposits etc.

He has also worked with PNB Gilts Ltd. as a WDM (Wholesale Debt Market) Dealer for a period of four years (from 2007-2011).

Other Funds managed

  • Motilal Oswal Focused 25 Fund;
  • Motilal Oswal Long Term Equity Fund;
  • Motilal Oswal Dynamic Equity Fund

4.Snigdha Sharma – Associate Fund Manager

Education

Ms. Snigdha Sharma is a Mechanical Engineer and an MBA in Finance.

Experience

Prior to joining Motilal Oswal AMC, Ms. Sharma has worked with Axis Capital Ltd. as (Vice President – Institutional Equity Research), and also as an Equity Research Analyst in major financial firms such as Fidelity International Ltd., Karma Capital Ltd. and Goldman Sachs India Ltd.

Other Funds managed

  • Motilal Oswal Long Term Equity Fund
  • Motilal Oswal Dynamic Equity Fund

Other Factors

Investor Insights

Average age of Investor (in years) 42
Live SIPs 315901
Average monthly SIP installment INR 4478
Total no. of folios 541637
Top 5% of the stocks 36.2%
Top 10% of the stocks 56.8%
Beta 0.88
Portfolio Turnover Ratio 0.15
R-Squared 0.81
Sharpe Ratio 0.52 (Annualized)
Standard Deviation 14.04 (Annualized)

Behavioral Analysis of investors 

                                                          Investor Age Bracket
1-30 Years 30-50 Years 50-75 Years >75 Years
93423 256592 104025 6431

One can witness that people falling into the age bracket of 30-50 years have largely invested in the SIP scheme of this fund.

This mainly comprises of the middle income salaried class saving for long term goals.

Conclusion

Motilal Oswal Multi-Cap 35 Fund truly signifies its slogan, “Buy Right, Sit Tight”.

The companies which the fund has invested in are market leaders in their respective spheres or sectors and have generated a lot of wealth for investor in the years gone by.

The fund is suitable for investors (both lump-sum and Systematic Investment Plan – SIP) who want:

  • Term capital appreciation and are willing to hold the investment for a long term to reap maximum benefit.
  • Investors who do not want to over-diversify their portfolio and dilute their returns.

If you want to know more about mutual funds, you can drop us an email at support@groww.in, or you can also call us on our customer support number. We’re always happy to help!

Happy Investing!

Disclaimer: The views expressed on this post are that of the author and not those of Groww