MOAMC blends large cap with mid cap: Should you invest in Motilal Oswal Large & Mid Cap Fund?

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Published: September 27, 2019 10:11:20 AM

The investment objective of Motilal Oswal Large and Midcap Fund (MOFLM) is to provide medium to long-term capital appreciation by investing primarily in large- and mid-cap stocks.

Motilal Oswal Asset Management Company, Motilal Oswal AMC, MOAMC, NFO, Motilal Oswal Large and Midcap Fund, MOFLM, should you invest in Motilal Oswal Large and Midcap Fund, mutual fund, MF, equity MFThe NFO period of the open-ended fund will start on September 27 and close on October 11, 2019.

Motilal Oswal Asset Management Company (MOAMC) has launched new fund offer (NFO) of its Motilal Oswal Large and Midcap Fund (MOFLM) with an investment objective is to provide medium to long-term capital appreciation by investing primarily in large- and mid-cap stocks.

Instead of making it a conventional multi-cap fund, the investment for MOFLM will be limited to large- and mid-cap universe with around 50 per cent weightage in large-cap (top 100 stocks of Nifty 100) and 50 per cent weightage in mid-cap (next 150 stocks of Nifty Midcap 150) until market cap weighted.

The NFO period of the open-ended fund will start on September 27 and close on October 11, 2019 during which minimum Rs 500 and thereafter in multiple of Re 1 may be invested in lump sum and weekly, fortnightly and monthly SIPs at a face value of Rs 10 per unit. However, minimum investments required for quarterly and annual SIPs are Rs 1,500 and Rs 6,000 respectively.

While there will be no entry load, 1 per cent exit load will be charged if units are redeemed before completion of 15 days from the date of purchase.

The benchmark of the fund will be BSE 200 TRI and equity portion of the fund will be managed by Aditya Khemani and the debt portion by Abhiroop Mukherjee.

The fund will have a concentrated and high conviction portfolio having around 25 stocks with following allocation guidelines:

  • Equity & Equity related instruments of Large cap companies: 35% – 65%
  • Equity and Equity related instruments of Mid cap companies: 35% – 65%
  • Equity and Equity related instruments of other than above: 0% – 30%
  • Units of liquid/ debt schemes, Debt, Money Market Instruments, G-Secs, Cash and Cash at call, etc: 0% – 30%
  • Units issued by REITs and InvITs: 0% – 10%

As the risks increases when investments shifted from large companies to smaller companies, Motilal Oswal tries to restrict risks by keeping small-cap funds out of purview and aims to increase return by including mid-cap stocks in the portfolio along with the large-cap stocks. Moreover, the options to invest up to 35 per cent of fund money in liquid, money market and debt instruments along with newly opened avenues of REITs and InvITs to take refuge at the time of market volatility.

“The largest product segment in the equity mutual funds industry is usually some combination of large cap and mid cap stocks which offer a fine balance of relative conservatism with high growth opportunities,” said Aashish Somaiya, MD & CEO, MOAMC.

However, investments in large- and mid-cap stocks get affected by market risks along with fund specific risks – like fund managers’ bias or selection risk, concentration risk, etc on equity investments along with risks like interest rate risk, reinvestment risk, credit risk, etc on investments related to debt segment.

Moreover, equities are vehicle of long-term investments – be it in large-cap or mid-cap – and hence only long-term money should be invested in this fund.

So, in case you have risk appetite to sustain ups and downs of equity investments at the time of market turmoils and want to fulfill your long-term financial goals through superior returns, this fund may prove to be a good blend for you. Otherwise, it may turn out to be a deadly cocktail if you go for a misadventure without any financial planning.

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