Introduction to Motilal Oswal Multicap Fund
Motilal Oswal mutual funds have launched Multicap Fund that has opened for subscription today. This fund is open-ended and invests in stocks of large cap, mid-cap, and small cap companies. These mutual funds can help investors in diversifying their portfolios and have the potential to provide risk-adjusted returns across different market cycles. Should you invest in Motilal Oswal Multicap Fund New Fund Offer? What risk factors investors should consider before investing in such funds.
Motilal Oswal Multicap Fund – NFO Issue Details
Here are the NFO details.
| Fund Name | Motilal Oswal Multi Cap Fund |
| NFO Opens | 28-May-24 |
| NFO closes | 11-Jun-24 |
| Scheme reopens for continuous purchase/sale | Within 5 working days |
| Minimum Application Amount | Rs 500 and in multiples of Rsย 1 thereafter |
| Minimum SIP | Rs 500 for 12 months |
| NAV of the fund | Rs 10 during NFO period |
| Entry Load | Nil |
| Exit Load | 1% for redemption within 15 days |
| Risk | Very High Risk |
| Benchmark | Nifty 500 Multicap 50:25:25 TRI |
| Fund Manager | Ajay Khandelwal Atul Mehra Niket Shah Santosh Singh Rakesh Shetty |
Motilal Oswal Multicap Fund SID
What is the investment objective of Motilal Oswal Multicap Fund?
The investment objective of the scheme is to achieve long term capital appreciation by predominantly investing in equity and equity related instruments of large, mid and small cap companies.
There is no assurance that the investment objective of the Scheme will be achieved.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
| Type of instruments | Min % | Max % | Risk Profile |
|---|---|---|---|
| Equities and equity related instruments as follows: | 75% | 100% | Very high |
| Largecap companies | 25% | 50% | Very high |
| Midcap companies | 25% | 50% | Very high |
| Smallcap companies | 25% | 50% | Very high |
| Debt and Money Market Instruments | 0% | 25% | Low to Moderate |
| Units issued by REITs and InvITs | 0% | 10% | Very high |
Multicap Funds vs. Flexicap Mutual Funds โ What’s the Difference?
Multicap mutual funds must invest at least 25% in each of the large-cap, mid-cap, and small-cap stocks. Beyond this requirement, they have the flexibility to invest based on the fund’s investment objective.
On the other hand, flexicap funds invest in stocks across all market capitalizations (large-cap, mid-cap, and small-cap) without any minimum investment restrictions. This gives the fund manager the flexibility to make investment decisions, particularly when a certain market segment is underperforming.
Why to Invest in Motilal Oswal Multicap Fund?
Here are a few reasons to invest in this fund.
- This fund invests at least 25% in large-cap, mid-cap, and small-cap stocks. This can be beneficial for investors as it helps diversify their portfolio across different market segments.
- Based on historical data, we have noticed that different segments of the market, such as large-cap, mid-cap, and small-cap, perform well during different cycles. As a result, this type of mutual fund has the potential to deliver consistent returns, considering the level of risk, throughout various market cycles.
Why Not to invest in Motilal Oswal Multicap Fund?
One should consider some of these risk factors / negative factors before investing.
- This fund will allocate a minimum of 25% to large-cap, mid-cap, and small-cap stocks which has negative factors too. This type of portfolio allocation is relatively new, being only around 3.5 years old. As a result, we do not know how this allocation will perform in the medium to long term.
- The fund will invest in small-cap and mid-cap stocks which are high risk.
- Up to 25% of the fund’s portfolio will be invested in debt instruments which has interest rate risk, reinvestment risk, credit risk and liquidity risk.
- Additionally, the fund will allocate up to 10% to REITs and InvITs, which are considered high-risk investments.
- Investors should review all risk factors indicated in the scheme information document (SID) before investing in such schemes.
Performance of existing Multi Cap Funds
Multicap funds have emerged in the past 3+ years, with only a few funds retained from the previous category based on the old definition. Now, let’s examine the short to medium-term performance of these funds. Returns indicated over a year are annualised.
| Scheme Name | 1 Yr | 3 Yrs | 5 Yrs |
|---|---|---|---|
| Mahindra Manulife Multi Cap Fund | 56% | 26% | 26% |
| Nippon India Multicap Fund | 55% | 33% | 23% |
| Baroda BNP Paribas Multi Cap Fund | 49% | 25% | 23% |
| Invesco India Multicap Fund | 46% | 21% | 22% |
| ICICI Prudential Multicap Fund | 49% | 24% | 20% |
| Sundaram Multi Cap Fund | 45% | 23% | 20% |
| ITI Multi Cap Fund | 60% | 20% | 19% |
| Union Multicap Fund | 44% | – | – |
| Tata Multicap Fund | 33% | – | – |
| LIC MF Multi Cap Fund | 48% | – | – |
| HDFC Multicap Fund | 51% | – | – |
| Axis Multicap Fund | 52% | – | – |
| Aditya Birla Sun Life Multi Cap Fund | 42% | 22% | – |
| HSBC Multi Cap Fund | 63% | – | – |
| Bank of India Multicap Fund | 53% | – | – |
| Kotak Multicap Fund | 61% | – | – |
| IDFC Multicap Fund | 44% | – | – |
| Bandhan Multicap Fund | 44% | – | – |
| SBI Multicap Fund | 34% | – | – |
Should you invest in Motilal Oswal Multicap Fund?
Motilal Oswal Multicap Fund invests a minimum of 25% in each of the large-cap, mid-cap, and small-cap stocks. In the short term (1 to 2 years), this category has shown exceptional performance. While investing in large-cap stocks can provide stable returns, investing in mid-cap and small-cap stocks has the potential to yield very high returns in the medium to long term. Therefore, investing in this multicap fund can offer opportunities that align with market cycles.
However, investors should note that investing in the mid-cap and small-cap segments carries high risk, and your capital could be at risk.
High risk investors can invest in such funds. If you do not test with new funds, you can invest in existing mutual funds in the multicap category.
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