Motilal Oswal Large & Midcap Fund (27 Sep’19-11 Oct’19)
Motilal Oswal has launched a New Fund Offer in the large & midcap category – Motilal Oswal Large & Midcap Fund. The category & NFO is expected to benefit from the evolving economic scenarios by way of capturing the uptrend and insulating against headwinds in an optimal fashion.
The fund is suitable for investors having a long-term investment horizon and seeking optimal appreciation across cycles.
The fund will be managed by Aditya Khemani & Abhiroop Mukherjee (star fund managers at Motilal Oswal). The targeted ratio between large & midcap is expected to be at 50:50; however, the AMC may have an underlying philosophy of maintaining at 35:35 with the rest being flexible for allocation between equities and debt. The fund has an exit load of 1% if redeemed within 15 days and none thereafter. Offer NAV at INR 10/unit.
Given our primary interaction & understanding with the AMC, the fundamentals and philosophy seem well-positioned considering currently evolving market dynamics.
The case for large-caps (NIFTY15) remains evergreen as it has known to withstand headwinds and leverage tailwinds effectively while continuing to grow efficiently. The case for large-caps is further strengthened by the current stimulus-orientation with the understanding that such measures will percolate from top to bottom of the market-cap pyramid across sectors.
As far as midcaps are concerned, Midcaps’ relative valuation (P/E) vs. NIFTY is at 2012-13 level lows – also the zone which marked the beginning of the midcap bull rally through 2014. The Nifty Midcap-100 market-cap is currently at a 5-year low with the rolling1-yr differential b/w NIFTY midcap-100 & NIFTY being at a historical extreme. Though there’s a strong case for a revival in the midcap space (albeit by tagging-along with the broader market), quality of stock-selection has become all the more critical within the space. We are confident that Motilal Oswal through its fund management team & framework along with institutional depth has the ability to deliver.