Motilal Oswal Asset Management (MF)

About

Established in 2008, Motilal Oswal Asset Management Company (MOAMC) was set up by Motilal Oswal Financial Services Ltd (MOFSL) . MOAMC is sponsored by MOFSL.

Currently the AMC manages over INR 49,000 crores  in assets (~ USD 6.12 Billion conversion rate of $1 to INR 80) as of March 31, 2023. 

In addition to mutual funds, it offers advisory services to offshore funds and portfolio management services. The firm has a team of over 30 investment professionals and a client base of over 12 lakh accounts.

https://www.motilaloswalmf.com/about-us/overview

MOFSL was set up by Motilal Oswal and Raamdeo Agrawal as a broking house in 1987. It is a public limited company listed on BSE and NSE. It has a wide network of branches, franchises and sub brokers across India with a presence over 2200 locations in 500+ cities.

 Key figures from financial statements for FY 21-22 – 

YearTotal Income (INR crore)Total Expenses (INR crore)EBIT (INR crore)EBIT (%)Net Profit (INR crore)Total Income (USD millions)Total Expenses (USD millions)Net Profit (USD millions)
2021-22727.48368.2359.2849%284.3790.93546.02535.546

Key staff

Navin Agarwal, Managing Director and CEO  – He joined the group in 2000. Prior to joining MOAMC, he was the Managing Director of Motilal Oswal Financial Services Limited. He is affiliated with Institute of Chartered Accountants of India, Institute of Cost and Works Accountant of India, Institute of Company Secretaries of India and CFA Institute, Virginia.

Raamdeo Agrawal, Chairman – He is responsible for the firm’s investment approach. He is an Associate of Institute of Chartered Accountant of India and a member of the National Committee on Capital Markets of the Confederation of Indian Industry. 

Siddharth Bothra, Executive Group Vice President – He has 13 years of experience in the field of research and investments. He is the fund manager of Motilal Oswal Focused 25 Fund. In the past, he worked with broking firms such as Alchemy Share & Stocks and VCK Share & Stocks. He has an MBA from ISB (Indian School of Business, Hyderabad).

Investment philosophy 

The following has been taken from the firm’s website

The recommended way to Create Wealth from equity –‘Buy Right : Sit Tight’

‘Buy Right’ means buying quality companies at a reasonable price and ‘Sit Tight’ means staying invested in them for a longer time to realize the full growth potential of the stocks.

  • Buy Right:
  • Q-G-L-P approach to buying right stocks
  • Q:  Quality of business and management
  • G:  Growth in earnings and sustained ROE
  • L: Longevity of the competitive advantage / economic moat of the business
  • P: Buying a good business for a fair price rather than buying a fair business for a good price.
  • Sit Tight:
  • Focus and Discipline
  • Buy and Hold:  the firm believes that picking the right business needs skill and holding onto these businesses to enable their investors to benefit from the entire growth cycle, needs even more skill.
  • Focus: the firm’s  portfolios are high conviction portfolios with 20 to 25 stocks being our ideal number. 

https://www.motilaloswalmf.com/about-us/investment-philosophy

Media

You need to work hard to even lose money if you’re a serious investor: Raamdeo Agrawal November 21, 2022 https://economictimes.indiatimes.com/markets/expert-view/you-need-to-work-hard-to-even-lose-money-if-youre-a-serious-investor-raamdeo-agrawal/articleshow/95653326.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Raamdeo Agrawal, chairman of Motilal Oswal Group, advises serious investors to prioritize long-term investing over speculative trading in today’s market. He suggests that dedicated investors need to make an effort to even lose money, as investing in quality stocks can yield good profits. He acknowledges market volatility but highlights India’s transition from poverty to prosperity, citing its defense and economic power, fast-growing status, and stable government as reasons not to fear. He discourages the pursuit of overnight wealth and encourages a long-term perspective, using examples of successful companies like TCS, Infosys, and HDFC Bank that took decades to grow significantly. He emphasizes the need for practicality and patience in wealth creation 

Title- “Stay with quality, Stay with growth”- Aashish Somaiyaa

Platform– Value Research, Date– December 21, 2017

Linkhttps://www.valueresearchonline.com/stories/34877/stay-with-quality-stay-with-growth

Summary- “Digitalization, less cash, tax compliance, change in age profile of average investors, huge investor-awareness activity by the industry – all this is a confluence of factors resulting in the inflection we seem to have passed.” says Aashish Somaiyaa, the former MD and CEO of Motilal Oswal AMC. 

  • Managing return expectations- As a house they desist from giving market views because they distract investors and advisors from the real purpose and he believes that the only way to set right expectations is to allow clients and distributors to manage the right allocation. 
  • Risk controls- Since they stick to growth-oriented sectors and companies, they have witnessed that in many cases the market seems to be rewarding stocks faster than one would normally anticipate while buying and hence, profit booking has gone up. So, they are ensuring that in terms of the combination of earnings growth of the portfolio and valuations, they are on a better intersection than where the broader market has been. They like to stay with quality and growth and keep portfolio-level valuations in check.
  • Rising industry assets- As a house they are sensitive to the capacity of the products they manage and they regularly monitor how much they can manage, given their high-quality, high-growth investment objectives. If they see performance being impacted, they do not hesitate to gate the fund concerned. Also, at regular intervals they are seeing some brilliant businesses coming to raise capital.
  • Growing clout of domestic funds vis-a-vis FIIs- He thinks given the flow of numbers, changing equity holding of mutual funds and retail adoption of activities on an incremental-flow basis, Indian mutual funds are becoming material participants.
  • Outlook for equity and debt- They believe that the consumer-sector companies, private financial services, oil-marketing companies etc, will continue to show profitable growth. A wider earning recovery will take time to gather steam. Also, high trailing PEs need to be seen more as they were in 2004 and 2011, rather than in 2007.

Topic- Investing in international funds- Aashish Somaiyaa 

Platform- The Economic Times, Date- June 11, 2020

Link- https://economictimes.indiatimes.com/mf/analysis/new-love-for-international-funds-is-related-to-disappointment-with-indian-equities/articleshow/76317044.cms

Summary- In this interview, Aashish Somaiyaa, the former MD and CEO of Motilal Oswal AMC talks about everyone’s interest in overseas funds. Everyone wants to invest in international funds and everybody is also recommending them. International funds should be bought because of low correlation to India and asset classes within India and they should be bought to benefit from growth of businesses which we cannot otherwise access in Indian capital markets. At Motilal Oswal AMC, international fund offering has existed since 2012, but about everyone wanting to invest in them, his apprehension is that a good part of this new found interest in international funds is related to disappointment with Indian equities and relatively great looking report cards on international funds. One has to look at it on merit in light of their own portfolio objectives, prime one being enhancing returns while reducing risk. Bulk of the exposure should be to the developed world because that gives highest currency diversification, geographic diversification and growth opportunities that are otherwise not available in India. A narrow single country or sectoral exposures should be clearly avoided. He also clarified why Motilal Oswal offers only passive international funds. That is because they are building an entire bouquet of passive funds in preparation for a world view where they believe that index funds will gain traction not for obvious reasons like alpha or lack of alpha, but because of simplicity, ease of choice and sticking to decisions, preferences of a minimalist thought process etc. There have been multiple time windows where Indian markets don’t do as well as other markets. Also, investing is not just about chasing returns, it also calls for optimizing return to take least possible risk which is where having other asset classes, geographies and currencies is a must. 

Prepared by- Kritika Agarwal, May 2021, updated Debolina Dey Dec 2022

Authors

 Yuvraj Bhola,  Rakshit Murjani

 Updated by Tanvi Gandhi, June, 2023

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