Vaibhav Agrawal, CIO – Alternates, Motilal Oswal Asset Management Company, a part of Motilal Oswal Financial Services (MOFSL) is responsible for Rs 5,831 crore worth portfolio management (PMS) and Rs 2,999 crore in alternate investment funds (AIFs), as of June 2025. An alumni of University of Pennsylvania, Vaibhav earned a MBA from the London Business School. Agarwal tells Nesil Staney that AIFs’ ability to invest in areas such as unlisted equity and structured products helps them generate higher yields. Excerpts:
What is your current number of clients?
We currently serve approximately over 21K clients as on 31 March 2025. What truly sets our service apart is our long-term investment focus, a disciplined and research-driven approach, and strong alignment with our investors’ interests, demonstrated by significant sponsor investment in our own strategies.
What factors should investors consider while investing in AIFs?
Investors should evaluate the asset manager’s track record, including AUM and past performance. Equally important aspects are the fund’s theme, its specific series of strategy, as well as the profile of its distributors and investors. These provide insights into the fund’s credibility.
What is your best performing equity fund?
One of our well performing equity funds is the Founders Portfolio, in alternative investment offering. The strategy focuses on investing in quality growth-oriented companies that demonstrate sector relevance, reasonable return metrics, and long-term potential. The portfolio is centered around Indian entrepreneurs with meaningful personal investment and a track record of building sustainable businesses. Each year, over 500 companies are evaluated to construct a focused portfolio of 25–30 selected stocks.
What are your stock and sectoral picks in the current market?
We foresee corporate earnings rebounding in FY26. With a strong government focus on infrastructure, electronics manufacturing, and other emerging sectors, we expect robust economic momentum. Our preferred sectors include high-growth private banks, NBFCs, power transmission and distribution, and electronics manufacturing.
Are you comfortable with valuations of mid and small firms?
We focus on company fundamentals rather than size. Our approach prioritizes liquidity, growth potential, and consistency in returns. While markets have moved up since March 2025, attractive risk-reward opportunities still exist in the sectors we favor.
How does AIF fees compare with actively managed MFs and PMS?
AIF fees are generally similar to PMS, with both often charging management and performance fees, while mutual funds have a different, more regulated fee structure that usually just involves an expense ratio. Although these differences might sound minor, even a small increase in annual fees can significantly reduce your long-term returns, so while MFs are essential for core portfolios, AIFs offer access to niche themes and under-researched opportunities, complementing broader investment strategies.
How do AIFs offer differentiated access to India’s private market vs mutual funds and PMS?
AIFs provide exposure to areas beyond the reach of mutual funds and PMS, such as unlisted equity, private credit, and structured deals. With fewer regulatory constraints, they offer good flexibility in asset selection, strategy, and holding periods, appealing to investors seeking bespoke and diversified exposure to India’s growing private markets. As investor awareness grows, family offices and HNIs are seeking differentiated opportunities beyond traditional instruments. AIFs offer them flexible structures and access to private equity and credit, aligning with their desire for specialized and higher-yielding investments.
Private equity and Private credit are now preferred vehicles for exposure to unlisted businesses. What is your opinion?
With India’s GDP nearing $4 trillion and projected to grow at one of the fastest rates globally, the investment landscape is poised for significant expansion. This growth is expected to create a wide array of opportunities across sectors, catering to both domestic and global markets. Companies will increasingly require access to both equity and credit solutions at different stages of their development. In parallel, Indian investors are becoming more sophisticated and are seeking diversified exposure beyond traditional asset classes. As a result, AIFs focused on Private equity and Private credit are well-positioned to play a strategic role, offering targeted access to unlisted businesses, special situations, and bespoke credit structures. Consequently, the demand for such vehicles is anticipated to rise substantially in the coming years.