Motilal Oswal Multifactor Equity PMS

Fund Snapshot

Investment Objective

The Multifactor Equity PMS from Motilal Oswal aims to build a portfolio that outperforms the overall market over the cTheirse of the investment cycle by taking diversified exposure to several investing factors using a methodical, rules-based methodology.

Portfolio Strategy

The quantitative portfolio construction methodology of Motilal Oswal’s Multifactor Equity PMS tries to allocate to firms that rate well on common investing characteristics, including quality, value, momentum, and low volatility.

The Investment Factors

• Any quality that contributes to an asset’s long-term risk and returns performance is a factor.
• Factors serve as the basic building elements of all investing processes.
• E.g.: Momentum, Quality, Value, Low Vol, etc.

Commonly used Factors

• Momentum: 12 M Returns, 6 M Returns
• Quality: Leverage, Profitability
• Value: Price / Book, Price / Earnings, Dividend Yield
• Volatility: Beta, Standard, Deviation

MFE PMS Stock Selection Framework

• Opportunity Universe: Restrict Universe from 51-300 by Market Capitalization
• Apply Quality Filter: ~75 companies selected based on Quality Filter
• Choose businesses based on their value and momentum: a portfolio of 20–25 companies based on value and momentum
• Quarterly Portfolio Rebalancing

Unique Characteristics of the Portfolio

• Style diversification – use of multiple factors simultaneously
• Elimination of fund manager bias – rule-based portfolio creation
• Adaptive portfolio – Quarterly churn leading to portfolio positioning for changing market conditions (Churn Rate: ~140% p.a.)
• Higher consistency of performance
• Low correlation & exposure to Nifty 50

Buy Right. Sit Tight

The only 100% equities fund manager in India with a clear investing philosophy, An asset management organization with a strong point of differentiation, we aim to provide targeted mutual funds, PMS, and AIF strategies based on our primary competencies in equities research and investing. Our sponsor, Motilal Oswal Financial Services Limited, which has over 30 years of experience under the direction of our founder and thought leader, Raamdeo Agrawal, provides us with equity expertise. Our unique investing methodology has grown and is continually being enhanced by the application, insights, and practical lessons of our seasoned equities investment and research team through his 25 Annual Wealth Creation Studies series.

Our equity offerings have been based on our investment tenet, Buy Right: Sit Tight, where Buy Right refers to purchasing high-quality, growth-oriented businesses at a fair price and Sit Tight refers to maintaining investment in them for a considerable amount of time in order to realize the full growth potential of the underlying business. We aim to manage portfolios with about 20–25 high conviction holdings and little portfolio churn, along with a “Buy and Hold” approach.

Learning from the Cockroach

Survive

Killing cockroaches is challenging. They are capable of surviving even nuclear apocalypses.

Compound

Cockroaches multiply quickly. They can quickly increase in number.

Investors may benefit from a portfolio that may profit from market declines and multiply during market expansion times.