Motilal Oswal MOSt Focused Multicap 35 Fund: Right calls, focused strategy

Launched in April 2014, Motilal Oswal MOSt Focused Multicap 35 Fund is classified under the diversified equity funds of CRISIL Mutual FundRanking. It has featured in the top 30 percentile (CRISIL Fund Rank 1 or 2) in the three consecutive quarters ended December 2017. The equity component of the portfolio is managed by Gautam Sinha Roy and Siddharth Bothra since May 2014 and November 2016, respectively. Abhiroop Mukherjee has been managing the debt component since the fund’s inception and Swapnil Mayekar has been managing the foreign securities component since August 2015. The fund’s quarterly average assets under management stood at Rs 102.88 billion at the end of the December 2017 quarter.
 
The investment objective of the scheme is to achieve long-term capital appreciation by primarily investing in a maximum of 35 equity and equity-related instruments across sectors and market capitalisation levels.

Consistent outperformance
 
The fund has consistently outperformed the benchmark (Nifty 500 Total Return Index) and its category (funds ranked under the diversified category in December 2017 CRISIL Mutual Fund Ranking) in all time-frames under analysis.
 
The fund outperformed its category and the benchmark in both market phases since its inception. The fund declined less than the category and the benchmark during the Chinese slowdown phase. During the recent rally, led by global liquidity and domestic reforms, the fund delivered better returns than the category and the benchmark.
 
An investment of Rs 10,000 in the fund on April 28, 2014, (inception of the fund) would have grown to Rs 25,545 as on March 19, 2018, at an annualised rate of 27.24 per cent, significantly surpassing the category and the benchmark, which would have grown to Rs 19,088 (18.06 per cent) and Rs 17,488 (15.44 per cent), respectively.
 
A systematic investment plan (SIP) is a mode of disciplined investments offered by mutual funds to investors through which one can invest a certain amount at regular intervals. Motilal Oswal MOSt Focused Multicap 35 Fund outpaced its benchmark in the past two and three years.
 
Portfolio analysis
 
The fund has maintained the average allocation of 99 per cent to equities during the past three years. It has actively managed the allocation across market capitalisations during this period, with predominant allocation to large-cap stocks. The fund took exposure to 40 stocks during this period and being true to label, it kept the size of the monthly equity portfolio at 21 stocks, on average.
 
The fund took exposure to 15 sectors during the past three years. The top five sectors include banks with an average allocation of (21.39 per cent), finance (15.24 per cent), auto (13.66 per cent), petroleum (11.10 per cent), and consumer non-durables (10.94 per cent).
 
HDFC Bank and IndusInd Bank were the major contributors to the fund’s performance from the banking sector. Bajaj Finance and HDFC were the key contributors from the finance sector. Maruti Suzuki and Eicher Motors were the top contributors from the automobile sector. Hindustan Petroleum and Britannia were the top contributors from the petroleum and consumer non-durables sectors, respectively.
 
The fund reduced its allocation to the pharmaceutical sector from 14.19 per cent in November 2016 to 7.44 per cent in February 2018. During this period, it increased allocation to the finance sector from 14.16 per cent to 27.10 per cent. These sector allocations have benefitted the fund since during the above period. Nifty Pharma TRI declined 15.2 per cent per annum, while Nifty Financial Services TRI grew 30.1 per cent compared with the broader Nifty 50 TRI, which grew 23.0 per cent per annum. 
 
In the past three years, the fund has consistently held eight stocks accounting for average exposure of 47.75 per cent. Out of the eight stocks, six outperformed the fund’s benchmark during this period. This demonstrates strong conviction and a successful stock-picking strategy.
 
Among the consistently held stocks, Hindustan Petroleum, HDFC Bank, IndusInd Bank, Britannia and Eicher Motors were the top contributors to the fund’s performance. CRISIL Research