Motilal Oswal Mutual Funds: Worth Investing?

Motilal Oswal Mutual Fund is a premier asset management company with operations in over 600 locations across India. With a diverse portfolio of financial services, Motilal Oswal offers more than 20 mutual fund schemes, including debt funds, equity funds, hybrid funds, and tax-saving funds. The fund house has consistently delivered impressive returns, with the Motilal Oswal Midcap Fund experiencing a remarkable AUM growth of over 143% in one year. The fund's performance has been strong, outperforming the benchmark and category average of mid-cap funds across various timeframes.

However, it's important to note that investing in mutual funds carries risks, and individuals should carefully consider their investment objectives, risk appetite, and expenses before allocating their savings. Motilal Oswal Mutual Fund provides a range of investment options, and understanding the specifics of each fund is crucial before making any investment decisions.

Motilal Oswal Mutual Fund's performance and risk analysis

Motilal Oswal Mutual Funds: Performance and Risk Analysis

Performance Analysis

Motilal Oswal Mutual Fund offers a range of mutual fund schemes, including equity, debt, and hybrid funds. The performance of these funds varies, with some generating impressive returns, while others underperforming in comparison. Here is a closer look at the performance of some of their key funds:

• Motilal Oswal Midcap Fund: This fund has experienced significant AUM growth of over 143% in the last year. It has outperformed the benchmark and category average of mid-cap funds over 1, 3, 5, 7, and 10-year periods. The fund's SIP returns over 10 years were 23.12%, higher than the benchmark. However, its rolling returns showed a slight underperformance compared to the benchmark.
• Motilal Oswal Large and Midcap Fund: This fund has delivered annualised returns of around 26.65% and 27.71% over the past 3 and 5 years, respectively.
• Motilal Oswal ELSS Tax Saver Fund: With annualised returns of approximately 25.8% and 24.87% over 3 and 5 years, this fund has been a strong performer.
• Motilal Oswal Flexi Cap Fund: The fund's annualised returns have been around 19.87% and 18.88% over the last 3 and 5 years.
• Motilal Oswal Focused Fund: This fund has generated annualised returns of about 12.2% and 16.23% in the past 3 and 5 years.
• Motilal Oswal Nifty Midcap 150 Index Fund: The fund's annualised returns for the past 3 and 5 years have been approximately 22.33% and 28.64%.

Risk Analysis

When considering investing in mutual funds, it is essential to assess the associated risks. Here are some key risk factors to consider for Motilal Oswal Mutual Funds:

• Volatility: The Motilal Oswal Midcap Fund, for instance, has a higher standard deviation than the benchmark and category average, indicating higher volatility.
• Investment Style: The fund managers at Motilal Oswal have a bold and opportunistic investment style. They follow a concentrated portfolio approach, which can be high-risk, high-return, as a few stocks can significantly impact overall performance.
• Market Risk: Equity funds, in particular, are subject to market volatility, and their performance can be impacted by price fluctuations in the underlying stocks.
• Exit Load: Motilal Oswal Mutual Funds, like other AMCs, charge an exit load for premature withdrawal from a scheme, which varies depending on the fund type.
• Expense Ratio: The expense ratio is a charge imposed by the fund house to cover management expenses. This directly impacts returns, so it is essential to consider this factor before investing.

In conclusion, while Motilal Oswal Mutual Funds have delivered impressive returns in some cases, it is important to carefully consider the risks associated with their investment strategies and the volatility of specific funds. Investors should assess their risk appetite and financial goals before making any investment decisions.

The fund's investment style and strategy

Motilal Oswal Mutual Fund offers a range of investment options, including equity, debt, and hybrid funds, with a focus on wealth creation and financial planning for retail investors. The fund's performance has been impressive, with an AUM growth of over 143% in one year as of April 2024. This growth reflects investor confidence and satisfaction with the fund's returns.

The fund's investment strategy can be considered bold and opportunistic, and it has a unique approach. The fund has a concentrated portfolio, taking contra-sectoral calls and selling stocks early if they start to underperform. The fund manager appears to be highly confident about his bets but is quick to cut down on losses.

The fund's portfolio turnover ratio, which indicates how frequently the fund manager buys and sells stocks, is on the higher side at 131 as of April 2024. This ratio suggests that the fund manager is actively trading stocks, which is surprising given the high-conviction nature of the stock picks.

The fund has a relatively low number of stocks in its portfolio, indicating a concentrated portfolio strategy. As of April 2024, the fund had only 22 stocks, the lowest in the midcap funds space. Historically, the fund has preferred a portfolio of less than 30 stocks.

The fund's top holdings include a diverse range of sectors, with the highest allocation to the IT sector, followed by unique bets in the telecom and jewellery sectors. The fund's market cap allocation is currently 71% to midcaps, 19% to large caps, and 3% to small caps.

The fund's investment style can be considered risky, and it may not be suitable for all investors. It is important for individuals to assess their own risk appetite and investment objectives before investing in any mutual fund.

The pros and cons of investing in the fund

The Pros and Cons of Investing in the Motilal Oswal Mutual Fund

Pros

• Motilal Oswal Mutual Fund is a premier AMC with active operations in over 600 locations across India and a strong client base of over 9 Lakh registered clients.
• The fund has a diversified portfolio of financial services, including asset management, business consultancy, portfolio management, and research exchange.
• Motilal Oswal Mutual Fund offers a wide range of investment options, including equity, debt, and hybrid mutual funds, catering to various financial goals and risk appetites.
• The fund has shown impressive growth, with an AUM growth of over 143% in one year (as of April 2024).
• The fund has generated good returns over the long term, outperforming the benchmark in recent years.
• The fund offers a convenient and transparent online investment process, making it accessible and user-friendly.

Cons

• The investment style of the fund is considered relatively risky due to its bold and opportunistic approach.
• The fund has a concentrated portfolio, which can be high-risk and high-return, as a few stocks can significantly impact overall performance.
• The fund has a high portfolio turnover ratio, indicating frequent buying and selling of stocks, which may not align with a long-term investment strategy.
• The fund's volatility is higher than the benchmark and category average, as indicated by its standard deviation.
• The fund's downside protection is decent but not as strong as some other funds in the category, which means it may be more vulnerable to market downturns.
• The expense ratio, a charge imposed by the fund house, will impact returns, and potential investors should consider this cost.

The investment process and requirements

The investment process of Motilal Oswal Mutual Funds is straightforward, hassle-free, and transparent. The entire process can be completed online, allowing for a convenient and quick investment experience. Here is a step-by-step guide to investing in Motilal Oswal Mutual Fund:

• Visit the Groww website and create an account. If you are an existing user, simply log in.
• Upload documents that serve as proof of identity. Accepted documents include government-issued IDs such as a Voter ID card, Passport, Driving License, Aadhaar card, or PAN card.
• Provide proof of address. In addition to the PAN card, you can use your Ration card or utility bills for this step.
• Choose your preferred investment tenure. You have the option to select between long-term, mid-term, or short-term investments.
• Select your desired risk level from the options: low, medium, or high.
• Pick a specific Motilal Oswal Mutual Fund scheme that aligns with your investment goals and preferences.
• Decide on your investment approach by selecting either 'Start SIP' or 'Invest One Time'. The first option initiates a Systematic Investment Plan (SIP), while the latter allows for a substantial one-time investment.

By following these steps, you can complete the investment process. Typically, the changes will reflect in your Groww account within 3 to 4 business days.

Minimum Investment Amounts

When considering investing in Motilal Oswal Mutual Funds, it is essential to be aware of the minimum investment amounts required for different schemes. Here are the minimum amounts for some of the popular Motilal Oswal Mutual Fund schemes:

• Motilal Oswal Midcap Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal Large and Midcap Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal ELSS Tax Saver Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal Nifty Next 50 Index Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal Nifty Midcap 150 Index Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal Flexi Cap Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal Nifty 500 Index Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal Nifty 50 Index Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal Nifty Smallcap 250 Index Fund: ₹500 for lump sum and ₹500 for SIP.
• Motilal Oswal Focused Fund: ₹500 for lump sum and ₹500 for SIP.

These minimum investment amounts offer flexibility to investors, allowing them to start with a relatively low amount and gradually increase their investments over time.

The fund's historical returns and current performance

Motilal Oswal Mutual Fund has demonstrated strong historical returns, with an impressive AUM growth of over 143% in a year as of April 2024. This growth reflects investor confidence and satisfaction with the fund's performance. A monthly SIP of Rs 10,000 started 10 years ago would have grown into a corpus exceeding Rs 40 lakh.

The fund has consistently outperformed the benchmark and the category average of mid-cap funds across various timeframes. Over a 10-year period, the fund generated a CAGR of 23.35%, compared to the index's return of 21.45%. The 10-year SIP returns were also impressive at 23.12%, outperforming the Nifty Midcap 150's return of 21.61%.

However, when looking at the average 7-year rolling returns between 2014 and 2024, the fund slightly underperformed the benchmark by 0.8%. The standard deviation of the fund's rolling returns is higher than both the benchmark and the category average, indicating higher volatility.

When it comes to downside protection, the fund has performed decently but not as well as other funds in the category. In quarters where the Nifty Midcap 150 had negative returns, the average returns of most active mid-cap funds were better than the index. Motilal Oswal Midcap Fund's performance was better in 9 out of 12 such quarters.

Looking at specific fund performances, here are some key highlights:

• Motilal Oswal Midcap Fund: Annualised returns of around 36.31% and 33.6% over the past 3 and 5 years, respectively.
• Motilal Oswal Large and Midcap Fund: Annualised returns of about 26.65% and 27.71% over the past 3 and 5 years, respectively.
• Motilal Oswal ELSS Tax Saver Fund: Annualised returns of approximately 25.8% and 24.87% over the last 3 and 5 years, respectively.
• Motilal Oswal Flexi Cap Fund: Annualised returns of roughly 19.87% and 18.88% in the past 3 and 5 years, respectively.
• Motilal Oswal Midcap Fund (Direct Growth): Annualised returns of about 34.95% and 34.66% over the past 3 and 5 years, respectively.
• Motilal Oswal Flexi Cap Fund (Direct Growth): Annualised returns of around 20.36% and 19.5% in the last 3 and 5 years, respectively.
• Motilal Oswal ELSS Tax Saver Fund (Direct Growth): Annualised returns of approximately 26.72% and 26.56% over the past 3 and 5 years, respectively.

Frequently asked questions