Motilal Oswal Mutual Fund Launches Multicap Fund

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 Rs  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.

Motilal Oswal Mutual Fund Launches Multicap Fund

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 – 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.

Leave a Reply

Your email address will not be published. Required fields are marked *