Fund Review: Motilal Oswal Multicap 35 has a CAGR of 26.55% since inceptionMotilal Oswal Focused Multicap 35 Fund (MOSt Focused Multicap 35) is now Motilal Oswal Multicap 35 Fund (MOF35). The original scheme was launched on 28th April 2014 and has delivered a CAGR of 26.55% since its launch. In other words, Rs 1 lakh invested in the fund at inception would be about Rs 2.56 lakh at present.

Returns have been steadily dropping over more recent time periods but this is generally true of funds investing wholly or partly in mid and small caps. Investors going for such categories – multi-cap, mid cap and small cap have to be extremely patient. Motilal Oswal Multicap 35 also came in for a great deal of criticism for its 1.77% holding in Manpasand Beverages a company whose stock went into free fall after its auditors resigned. However, the relatively low allocation has contained the overall damage to the fund.     

Time Period 1 year 3 years 5 years Since inception
Returns 8.35% 16.02% 26.55%

Source: Value Research, Data as observed on 10th June 2018

The fund has beaten its benchmark (Nifty 500 Total Returns Index) over the past three years but not the past one year. The Nifty 500 TRI delivered 11.99% CAGR over the past three years and 10.52% over the past one year.

Portfolio

The fund is a multi-cap fund with the liberty to invest in large, mid and small-cap companies. However, the fund manager has to stay heavily in large caps. Companies defined as ‘Giant cap’ and ‘Large cap’ by Value Research take up about 66.5% of its portfolio. Mid-caps account for another 27.6% leaving just 7.6% in small caps.

To understand why investors should note that the fund has a size of Rs 13,131 crore and a mandate to focus on a maximum of 35 stocks. This means it is not likely to stray into small and illiquid companies even if they present an attractive proposition. Size and perhaps, relative safety, come at a price. The fund is allowed by its mandate to invest 0-35% of its assets in debt and 65-100% in equity. However, it has not chosen to take advantage of the leeway to move into debt. HDFC (9.06%), HDFC Bank (7.61%) and Maruti Suzuki India (7.06%) dominate its portfolio. Gautam Sinha Roy has been its manager since May 2014.

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.