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Back in Action: Motilal Oswal launches small-cap fund after a hiatus of 7 years

05 December 20233 mins read by Angel One
The small-cap earnings growth has compounded by 49% in the last 3 years, contributing to reduced volatility and healthier balance sheets.
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In a strategic move, Motilal Oswal Asset Management Company (MOAMC) has introduced its latest investment avenue, the “Motilal Oswal Small Cap Fund.” After a hiatus of 7 years, MOAMC is making a splash in the active fund arena, aiming to provide investors with a distinctive entry point into the promising small-cap segment.

Key Fund Essentials

Nature: Open-ended equity scheme

Investment Objective: Capital appreciation through predominantly investing in small-cap stocks

NFO Period: December 5, 2023, to December 19, 2023

Charting the Course: Portfolio Strategy

The fund adopts a well-balanced approach, with a minimum 65% exposure to small-cap stocks. This strategic allocation is complemented by a thoughtful inclusion of large-cap stocks, serving both tactical and liquidity purposes.

Targeting Growth: Ideal Investor Profile

Tailored for investors eyeing long-term capital growth, the Motilal Oswal Small Cap Fund is an ideal choice for those with an investment horizon of 5-7 years. The fund’s performance will be closely measured against the Nifty Small Cap 250 TRI.

Insights from Leadership

Mr. Navin Agarwal, MD & CEO of MOAMC, highlights the company’s robust small-cap expertise, citing a significant 22% investment in this segment and showcasing a rich history of wealth creation. Mr. Agarwal expresses commitment to innovation and navigating markets effectively, building on the success of previous ventures into active funds.

Philosophy in Action: High-Quality High Growth

Prateek Agrawal, Executive Director at Motilal Oswal AMC, underscores the fund’s commitment to a “High Quality High Growth” approach. He emphasizes valuation-conscious investing, targeting companies with strong fundamentals. According to Agrawal, the Motilal Oswal Small Cap Fund is not just an addition to their product suite but a reflection of their strategic vision and expertise in small-cap investments.

Crafting Opportunities: Fund Manager’s Vision

Ajay Khandelwal, Fund Manager for the Motilal Oswal Small Cap Fund, acknowledges the recent surge in small-cap fund flows, signalling a structural shift in investor preferences. He elaborates on the meticulous approach employed, seeking companies with visionary leadership, strong execution capabilities, and a commitment to corporate governance.

Potential: Small Cap Investments

Small Cap Funds, as evidenced by a 38X increase in the market cap of the largest small-cap companies over the past 20 years, offer the potential for high earnings growth. With approximately 537 companies having a market cap above 2,000 Cr, the small-cap space provides fertile ground for alpha generation.

Guiding the Ship: Fund Management Team

The Motilal Oswal Small Cap Fund is set to be steered by Ajay Khandelwal, bringing a wealth of expertise to navigate the dynamic landscape of small-cap investments. As investors embark on this new journey, the fund promises not just returns but a strategic vision aligned with the evolving financial landscape.

Disclaimer:This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. 

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