Motilal Oswal Asset Management Co (AMC) plans to flag off its maiden mutual fund scheme by March, according to Chief Executive Officer Nitin Rakesh.
“Hopefully, we should be through with all the formalities in the next two months. Our intent would be to launch at least our first set of products before March,” he said.
The fund house—sponsored by Passionate Investment Management, a holding company of Mumbai-based Motilal Oswal Financial Services —will focus on equity schemes though it is open to floating debt funds.
“Our strong focus will be on equity funds as our expertise lies in equities. We would create differentiated products on the basis of style (investment allocation),” he said. The AMC will sell its products through 400-500 franchise outlets of its sponsor, banks and independent financial agents.
“Given our brand expertise, financial services retail platform, and retail franchise, I think we have all the right ingredients to build the business,” he said.
The financial services company is also evaluating the option of transferring its portfolio management services business to the mutual fund arm.
Motilal Oswal is positive on equities on the back of healthy economic indicators from global economies, robust domestic demand, a strong consumption theme, and low interest rates.
Rakesh said the market had already discounted the Reserve Bank of India’s accommodative monetary policy stance and its impact on corporate earnings and share market.
“Partly, I think that (likely rate rise) will get negated by liquidity, which is enough at the moment. At some point of time as inflation inches higher, you will see some tightening of rates. As long as inflation stays on expected lines, it is okay. Hopefully, in the next three months, (we) don’t see any rate hikes by RBI,” he added.
Since October, the central bank has cut repo rate by 425 basis points to 4.75 per cent, reverse repo rate by 275 bps to 3.25 per cent, cash reserve ratio by 400 bps to 5 per cent, and statutory liquidity ratio by 100 bps to 24 per cent.
Indian equities could offer 15-20 per cent average annualised return over five to seven years, Rakesh said.
“I think, we have an ideal condition for the equity market right now. There is no concern. For almost 10 weeks, the market was consolidating. I think the market has now taken a breather for a while. It is fairly valued now,” he said, adding that there were enough investment opportunities for fund managers to explore.
Rakesh believes Indian companies will report a robust earnings growth during the current financial year.
The AMC favoured consumption-driven sectors such as fast moving consumer goods (FMCG), automobiles, banking and finance, he said.
“(We are positive on) anything that is impacted by the growing per capita income as well as growing consumption power,” he said.
“I think, bad monsoon has already been discounted by the market,” he said on the impact of the monsoon on the business of FMCG companies.
On banking, he said, “Banking and financial services are proxy to the economic growth and will grow as long as economy grows. But, growth will always depend on fresh capital.”
As the global market recovers, there are chances to explore export-driven sectors such as information technology and pharmaceuticals.
