Motilal Oswal MOst Focused 25 Fund

An aggressive fund which endeavours to hold a concentrated portfolio of high conviction stocks

Summary

Type	An Open–ended diversified equity Fund	Benchmark Index	CNX Nifty Index
Min. Investment: Additional purchase:	For lump sum ⇒ Rs 10,000 and in multiples of Re 1 thereafter For Systematic Investment Plan (SIP) ⇒ Rs 1,000 for monthly SIP Option and RS 2,000 for quarterly SIP Option and in multiples of Re 1 thereafter under both the options Rs 1,000 and in multiples of Re 1 thereafter	Exit Load:	Nil
Entry Load	Nil	Face Value	Rs 10 per unit
Issue Opens	April 22, 2013	Issue Closes:	May 06, 2013

 

Investment Objective*

The investment objective of the scheme is “to achieve long term capital appreciation by investing in upto 25 companies with long term sustainable competitive advantage and growth potential.”

 

(Source: Scheme Information Document)

 

Is this fund for you?

Motilal Oswal MOst Focused 25 Fund (MF25) is being positioned as an aggressive fund focused on long term growth of capital. It endeavours to invest in businesses having favourable long term economies and which are being run by reliable managements. Moreover, MF25 would invest only in companies whose businesses are completely understood by the fund management team.

MF25 is expected to hold a concentrated portfolio of about 25 stocks. Moreover, in order to avoid going wrong in market timing, the fund intents to always remain invested. The fund is likely to follow the index plus strategy wherein the core portfolio of the fund will be held in largecaps i.e. stocks constituting Top 200 companies by market capitalisation. Moreover, it may also hold a significant portion of its assets in stocks of smaller companies.

Portfolio Strategy

MF25 would follow a combination of top down and bottom up approach. Moreover, it would invest in growth oriented companies evaluating them on parameters such as;

 

• Competitive Position of the company
• Industry Prospects
• Business Prospects of the company
• Quality of Management
• Sensitivity of Company to prevailing economic trends
   

MF25 has a flexibility to invest in derivative instruments upto 50% of its net assets and it may also participate in stock lending activity upto 20% of the net assets. The maximum single stock exposure, at the time of investments, will be capped at 10% while it would be maintained at 2.5% on the lower side. Under normal circumstances, the fund will hold maximum of 25 stocks and would limit its sector exposure to higher of 25% or 1.5 times the weight of sector in the benchmark index.

The asset allocation which will be followed by the fund will be as under:

 

Instruments	Indicative Allocation Range (% to Total Assets)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equity and equity related instruments selected from Top 200 listed companies, by market capitalisation	65	100	High
Companies with market capitalisation lower than that of 200th stock from the top but higher than Rs 14oo crore	0	25	High
Debt, cash and equivalent assets	0	10	Low to Medium

(Source: Scheme Information Document)

 

Fund Manager Profile

MF25 will be managed by Mr Taher Badshah who is the Senior Vice Precedent and Co-head of Equities at Motilal Oswal Mutual Fund. Mr Badshah, a Bachelor of Engineering (Electronics) from Mumbai University and Masters in Management Studies (SP Jain), has 18 years of work experience in equity research and fund management. Prior to joining Motilal Oswal Mutual Fund he was associated with Kotak Mahendra Investment Advisors and ICICI Prudential PMS.

At present, Mr Badshah is not managing any fund other than Motilal Oswal MOst Focused 25.

 

Fund Outlook

Since the fund is expected to hold a predominantly large cap portfolio; its performance would be affected by the movement in the large cap space. Markets have been rallying on the expectation that RBI has a room to go for aggressive rate cuts given that inflation has been falling and industrial growth still remains anemic even after reviving in February. Moreover, falling crude oil and gold prices are expected to help India register lower current account deficit in the coming quarters. Having said this, economy still remains vulnerable to external shocks. Besides, if corporate earnings fail to impress markets; markets may fall. On this backdrop concentrated nature of MF25 may work against it.

 

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