A focused high-conviction oriented fund investing in 30 quality mid cap companies having a long-term competitive advantages and potential for growth.

Summary

Type	An Open–ended diversified equity Fund	Benchmark Index	CNX Midcap Index
Min. Investment:	lump sum -> Rs 5,000 and in multiples of Re 1 thereafter For Systematic Investment Plan (SIP) - > Rs 1,000 for weekly / fortnightly / monthly SIP Option (with a minimum of 6 instalments) and Rs 2,000 for quarterly SIP Option and in multiples of Re 1 thereafter (with a minimum of 3 instalments)	Additional Investment:	Rs 1,000 and in multiples of Re 1 thereafter
Face Value	Rs 10 per unit	Expense Ratio:	For Regular Plan - > Upto 2.50% For Direct Plan - > Upto 1.00%
Entry Load	Nil	Exit Load:	2% if units are redeemed / switched out before 1 year from the date of allotment; Nil if units are redeemed/ switched out after 1 year from the date of allotment
Issue Opens	February 03, 2014	Issue Closes:	February 17, 2014

 

Investment Objective*

The investment objective of the scheme is "to achieve long term capital appreciation by investing in a maximum of 30 quality mid-cap companies having long-term competitive advantages and potential for growth."

However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved.

*Source: Scheme Information Document

 

Is this fund for you?

Motilal Oswal MOSt Focused 30 Mid Cap Fund (MF30 Mid Cap) is being positioned as focused high-conviction oriented fund investing in 30 quality mid cap companies having a long-term competitive advantages and potential for growth.

Mid cap stocks are the companies which fall below the large caps but above the smaller companies in the market capitalisation pyramid. These are the companies which are not as established as the large cap ones, but unlike mature large caps, such companies tend to have a higher growth potential and are often available at a discount to large caps. Such companies are well-established as compared to the small caps with better reach and revenues. Mid caps offer the potential of being future large caps. The long-term India growth story provides an excellent platform for small and mid-size businesses to unleash their growth potential and to emerge as large cap companies of the future. India has a plethora of mid-size listed companies and their number has only risen in recent years. The midcap universe in India even today presents similar such investment opportunities from a medium to long term perspective. But careful portfolio construction and long-term investment horizon is needed, since very few companies have actually managed to zoom past the competitors when the going gets tough for them. Thus for this reason, investing in mid caps is perceived to carry very high risk. Therefore before investing one's hard earned money, it is imperative to take into account his / her risk appetite and risk tolerance.

 

Portfolio & Investment Strategy

MF30 Mid Cap will essentially follow Motilal Oswal Asset Management Company’s (MOAMC’s) QGL philosophy - i.e. invest in Quality businesses with reasonable Growth potential and with sufficient Longevity of that growth potential. While investing quality 30 mid cap companies, the fund shall invest in companies which have the following traits amongst others:
 

• A strong competitive position (or economic moat)
• Good business prospects
• Run by a competent management (that will help the company to achieve good growth over the medium to long term and available at reasonable valuations)
   

Also the investment decisions will be guided by economic environment over the medium to long term prospects of the companies.

By investing in 30 quality mid cap stocks, MF30 Mid Cap shall practice a focused high-conviction portfolio strategy by adopting predominantly a bottom-up approach to stock picking. It will typically select companies from beyond the top-100 listed entities on the Indian stock exchanges with market capitalization not lower than the smallest constituent of the scheme’s benchmark, i.e. the CNX Midcap Index. And for the portfolio management, the fund intends to have a low portfolio churn by following a ‘buy and hold’ strategy.

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

 

Instruments	Allocation Range (%)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equity and equity related instruments* selected between Top 101st and 200th listed companies by market capitalisation	65	100	High
Equity and equity related instruments* beyond the Top 200th listed company and with market capitalisation not lower that the smallest company in the CNX Midcap Index	0	25	High
Debt, Money market instruments, G-Secs, bonds, Cash and equivalent assets, etc.	0	10	Low to Medium

*subject to overall limit of 30 companies
(Source: Scheme Information Document)  

Fund Manager Profile

MF30 Mid Cap 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) and Masters in Management Studies (in Finance) from the University of Mumbai, has over 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 Prudential ICICI Asset Management Company Ltd. as a Senior Fund Manager-PMS.

At present, Mr Badshah also managed Motilal Oswal MOst Focused 25, which was launched in May 2013.

 

Fund Outlook

MF30 Mid Cap by holding a concentrated portfolio of 30 quality stocks for its portfolio and aiming to capture "emergence to endurance" in the portfolio construction, imbibes with it intermediate risk of failure to recognise the appropriate companies for the portfolio. This therefore amounts to very high risk for the fund’s investors while it pursues to follow a high-conviction portfolio strategy, by adopting a predominantly a bottom-up approach to investing. The fortune of the fund will also be closely linked with the performance of CNX Midcap Index.

 

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