“Every firm has a core branding in the minds of its customers. And at Motilal Oswal, we have been known for our equity progress and equity expertise that we’ve built over years” says Ashish Shanker, head of Motilal Oswal Private Wealth.
Launched in 2007 alongside many of its peers, the private wealth firm has built a reasonable offering and client assets around this core expertise.
Catering to salaried CXOs with a team offer
Like many other firms, MOPWM segments prospective clients into broad groups. Interestingly its segmentation in salaried CXOs, SME owners and independent professionals (salaried segment having portfolio of INR 25 lakhs to 2.5 crores, small and medium business people with INR 3 to 100 crores and ultra HNIs like athletes with INR 100+ crore portfolio) leaves out the higher end inheritors and self-made tech entrepreneurs. But they seemed to have found their niche in the first segment which is the salaried professionals and the small to medium sized entrepreneurs.
The firm has built a team approach – “We have a seasoned professional who works with clients to help them on their succession, a real estate expert who helps clients with their direct real estate needs, a very strong product and research team for wealth management, an analytics team which works on client portfolios to give them insights on how the money can be managed better” says Asish Shanker, newly appointed managing director of Motilal Oswal Private Wealth Management.
Research-driven investment philosophy
The 20+ member product and research advisory team identifies simple products that have been researched keeping the clients in the centre of every recommendation.
The Investment Committee includes experts from across the group.
In case of equities, the firm strongly believes that from a longer-term wealth creation point of view, managed products are better, whether actively or passively-managed. They believe that a client trying to buy stocks himself directly, without the adequate knowledge or the time to study those businesses, is very inefficient.
For active managers, there is a philosophy called 4Cs, where they try to understand the philosophy of the fund manager, whether he has ‘Clarity of philosophy’, ‘Consistency of performance’ because the findings tell them that most fund managers who are best performing on the last three- or five-year basis, invariably tend to underperform in the next three to five years. Apart from looking at the performance, they also spend a lot of time understanding the philosophy, the process, the ‘Capability,’ and what is the experience in the fund manager so that the portfolio of super fund managers can be built and spoken to over time. The portfolios are kept simple and at the minimum possible risk. They have essentially a core-and-satellite approach where 70-80% of the portfolio is designed in a manner that it is set to deliver returns on the long-term objectives.
MOPWM uses alternative investments like private equity and venture capital for when clients are looking for growth, then there are hedge funds used too. The basic idea is to reduce the correlation to the core portfolio.
Motilal Oswal Private Wealth Management (MOPWM) is a part of Motilal Oswal Group – a brand that is over 30 years old.
MOPWM was instituted in the year 2007 and its major clientele is Corporates/ Institutions, High Net Worth and Ultra High Net worth Individuals who are divided into 3 categories: salaried segment having portfolio of INR 25 lakhs to 2.5 crores, small and medium business people with INR 3 to 100 crores and ultra HNIs like athletes with INR 100+ crore portfolio.
As of December 2020, MOPWM managed the wealth needs of over 3000 HNI families through a 200+ member team across 9 cities.
Assets under advisory of over Rs. 22,678 Crore or ~US$ 3.4 billion were reported on the company website as of 2020. As of 2019, their AUM in India was US$ 2.7 billion ( Source: Asian Private Banker)
The total RMs that the company had were 122 in total as of 2019. ( Source : Asian Private Banker)
Motilal Oswal Wealth Management Limited (MOWML) is a distributor of various mutual funds (AMFI ARN: 87554) and other financial products. They have given up their RIA license.
Motilal Oswal Wealth Management Limited (MOWML) is also a registered Portfolio Manager registered with SEBI (Registration No.: INP000004409)
Ashish Shanker – is Deputy Managing Director at Motilal Oswal Private Wealth Management(MOPWM) encompassing family office mandates, product & research, financial planning and investment strategy. Ashish is a management graduate from the University of Bangalore and has completed the Senior Leadership Program at Harvard Business School. LinkedIn Profile
- The main services that are provided by the firm are relationship management, wealth management and investment management services.
- Professional money managers manage mutual funds, portfolio management services and alternative investment funds. These are offered to clients.
- Specialized services like investment banking services, offshore advisory and hedging and insurance advisory are also provided.
- Trading of different assets and wealth transmission services.
Investment Philosophy (for firm)
MOPWM is considered to have expertise in equities. They create an investment charter for the client that consists of the investment objective, investment tenure, risk profile and asset allocation. So the main aim is to have a client centric approach.
They have a three way proposition which is a glimpse of what MOPWM’s Investment Philosophy is:
- The firm considers asset allocation to be the bedrock of any portfolio. Then the second job is considered to be allocation of assets in the most efficient manner.
- They try to design the core portfolios around PMS, mutual funds and index funds.
- Then there is a process of creating a ‘Winning portfolio Powered by Knowledge’ as defined by MOPWM consists of three parts:
- They have a 20+ member product and research advisory team that identifies simple products that have been researched keeping the clients in the centre of every recommendation.
- They have a 4C fund manager identification process that helps in identifying the ideal fund manager for the client.
- They have exclusive knowledge events that sight out new ideas and insights on wealth creation to the clients.
- Ideas backed by research.
- They follow a consumer centric approach that includes the constant international with the wealth managers who are under continuous training as they work.
- Once the asset allocation is made, the philosophy and the idea that is used is, “change is the only constant.” The investment advisor undergoes rigorous periodic portfolio review keeping in mind the milestones of the investor. There is an integration of the views and opportunities laid down by the research team with the goals and objectives of the client.
- In terms of fixed income, the company follows a core satellite approach and if greater returns are wanted by the clients, real estate comes in.
- MOPWM uses alternative investments like private equity and venture capital for when clients are looking for growth, then there are hedge funds used too. The basic idea is to reduce the correlation to the core portfolio.
MMI team interviews Ashish Shanker, MOPWM, Feb 2021.
Ashish Shanker lifts the lid on the business strategy of MOPWM. There is in-depth conversation about client segregation, investment philosophy, product selection strategy and how alternatives are looked at by the firm. The future of wealth management in India and on how MOPWM is different from other private wealth managers in India is also a topic of conversation in this interview.
In the Hot Seat with Forbes Advisor India, Motilal Oswal, October 2020. https://www.forbes.com/advisor/in/personal-finance/in-conversation-with-motilal-oswal/
This interview of Motilal Oswal speaks a lot about his and the company’s insights on the Indian markets. He considers timing of the markets as one of the most difficult decisions and the whole group has said that they will not time the market. They believe that with a greater time horizon, there is a greater chance of wealth creation. Motilal Oswal is of the opinion that simple mutual funds are ideal for HNIs even if they insist on different complex products.
Franklin India Bluechip Fund: Good for long-term investment, MoneyControl, https://www.moneycontrol.com/news/business/mutual-funds/franklin-india-bluechip-fund-good-for-long-term-investment-1157207.html
The small video shows what MOPWM looks at while suggesting a fund. They look at funds with a long term history of stable performances and not short term success, they look at the manner in which it is tracking the market index and the stability from changes of the fund management team in the organisation.
Building a successful Wealth Creation Strategy, Outlook Money, May 2020
In an interview with industry personnel, Virendra Somewanshi, the former CEO and MD, POPWM, states what the choice of funds should take into account. The choice of funds should take into account the investment style of the manager and the consistency of performance. The capabilities of the AMC is judged by the AUM and the experience of the investment team is also something that is taken into consideration.
- How do you analyse a fund through its past performances and classify it as a fund that you would like to add to your client’s portfolio?
- What are a few examples of the simple products that you have been suggesting to your clients?
Prepared by – Madhav Patel, Feb 2021, Peer reviewed by – Adza and Chaitanya