Motilal Oswal NTDOP

Fund Snapshot

Investment Philosophy

NTDOP stands for Next Trillion Dollar GDP growth. So, the focus is on buying companies that will benefit out of the Next Trillion Dollar GDP growth. Motilal Oswal identifies potential long-term wealth creators by focusing on individual companies and their management. It strongly believes that “Money is made by investing for the long term”

Motilal Oswal Portfolio Management Services’ Next Trillion Dollar Opportunity Strategy is to choose stocks from sectors including India’s developing firms, primarily in the Small and Midcap area, in order to find potential multibaggers.

The Strategy seeks to outperform the market by investing in stocks from industries that would profit from the Next Trillion Dollar GDP expansion. It intends to invest in equities throughout the market capitalization spectrum, with an emphasis on finding prospective winners who will participate in consecutive stages of GDP development.

Buy Right is symbolised as (QLGP) “: Q” signifies the quality of the firm, “G” suggests earnings growth, “L” denotes longevity, and “P” denotes the strategy of buying a good stock at a fair price rather than a fair stock at a fair price. Tighten Your Seat: Buy and hold—concentrate on 25 to 30 stocks.

Focuses on Sectors and Companies, as well as Identifying Emerging Stocks / Sectors that promise above-average growth. Emphasis on developing themes. The “Buy and Hold” approach

The strategy’s mandate is to invest in equity and equity-related securities throughout the full market capitalization spectrum of big, mid, and small size businesses.

Portfolio shall be focused on investing at a reasonable price/value in high-growth businesses and NTDOP PMS embraces the buy and hold strategies.

For investors who wish to invest with a long-term view to wealth building, investment Horizon is medium to long-term (3+ years).

Allocations — Currently the portfolio includes market-wide investment. It is a Multicap strategy which seeks, mainly during the time of early ideations and investments under the strategy’s model portfolio, to invest in large and medium-sized shares.

A multi-cap method to discover companies that profit from India’s rising GDP Track record 13+ years with steady performance across market cycles Concentrated portfolio of high quality with 27 stocks Buy and hold 14 equities held for more than 5 years to create wealth for investors agnostic index: ~83% off criteria Five hundred Banking, consumer discretion, software, are the key sector allocations.

Scrip – The allocation in one stock at the time of the fresh ideation is not more than 10%

The Sector Allocation Limit is set at 35%, or as per the Nifty 500 TRI benchmark.

Portfolio actions in the last 6 months are that SBI Ltd. has been added whereas City Union Bank Ltd. was one of the companies that went out of business and has been removed.

One lac invested in the strategy on 3rd Aug 2007 would have grown to ` ~8 lacs today against ~4 lacs invested in Benchmark

Things Benefited from GDP Growth

Below are illustrative and may change from time to time depending on the portfolio manager’s outlook.

Consumption:

• Increasing consumer spending,
• Retailing,
• Consumer durables,
• Passenger Vehicles and
• Utility Services.

Banking and financial services:

• Beneficiary from high GDP growth and savings rate,
• Banks,
• Broking, Insurance and
• NBFCs.

Service related to Infrastructure:

• Benefits from government spending,
• Power,
• Cement,
• Capital Goods,
• Construction,
• Real Estate and
• Engineering.

Attributes of The diversified Markets:

• Fewer and more focused business lines,
• A larger stock universe,
• Companies that are under-owned and under-researched,
• Attractive valuations when compared to large caps.

Unique Feature

Small & midcap portfolio of potential multibagger stocks.

Sweet Spot of The Market

We believe that the market cap range of INR 3,500 Cr – INR 30,000 Cr is the sweet spot for Indian equities. They can provide an excellent balance of rapid growth and a track record of management success.

Portfolio Positioning

• Underweight on financials,
• Equal weight on Customer staples,
• Higher allocation to industrials, select privatisation beneficiaries,
• Overweight on customer discretionary, healthcare and technology and
• Averse towards commodity business, global cyclical, leveraged business.

Categorised Portfolio Positioning

High-quality lenders: There is clear consolidation in the lending space and value migration.

Increased allocation to mid-and small-cap stocks: With the approaching economic recovery, mid-and small-cap stocks are expected to recover.

Giving discretionary more weight: V-shaped recovery across industries 9% allocation to autos – At the bottom of the cycle and beginning to recover.

The economic recovery prompted recent government initiatives on PLIs: It has begun to reflect in new projects. We expect this trend to continue as PLIs are finalised for the auto (such as ancillaries) and pharma sectors over the next few months.

Exposure to the privatisation theme: The government’s decisive moves toward privatisation will benefit portfolio stocks.

Capex recovery: Private sector capex cycle should revive as growth impulses take root, according to the beneficiaries of a turnaround in the investment cycle.

Insurance – an untapped market: An untapped market with multi-decadal growth potential. Insurance is a capital-efficient business because it has little or no risk on the asset side and is a well-protected brand.

Why should you invest in Motilal Oswal NTDOP?

• In the fiscal year 2008, India joined the ranks of countries with a trillion-dollar GDP. Our GDP took nearly 60 years to reach the first trillion dollars in the United States, but only 7 years to reach the second trillion dollars.
• Our GDP is expected to reach the next trillion dollars in rapid succession. Overall, the service sector is thriving, thanks to strong GDP growth. The service sector, benefiting from rapid productivity growth, is expected to drive future GDP growth.
• Manufacturing is expected to be a key growth driver as consumer income rises. Agriculture’s reliance is expected to decline, as seen in developed countries. An increase in the contribution of the service sector to GDP would decrease the volatility of GDP growth.
• It is one of India’s leading PMS providers, with approximately Rs. 16,711 crores in assets under management and over 39,672 HNI investors. Over the last ten years, the NTDOP Strategy has greatly exceeded the benchmark all over market cycles. Since its inception in 2003, PMS has amassed a track record of more than 15 years.