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Motilal AMC Mid to Mega

Scheme Rating

IME Scheme Rating

3 of 5 stars

Wait for performance to improve: While Motilal has all the required credentials for a strong PMS strategy, continued underperformance in recent years with limited signs of strategies to turn around the same, lead to us not recommending Motilal Focused Midcap at this time. We would wait for clearer signs of performance to improve before recommending the same.

IME Strategy Rating

4 of 5 stars

Strategy: The Strategy expertise in mid-cap aims to invest in a concentrated portfolio (15-20 stocks) of top mid-cap ideas. Focusing on emerging businesses benefiting from a growth in earnings and valuations re-rating. The portfolio has minimal style drift, remaining concentrated and with exposures predominantly in mid-caps. There is a clearly defined investment philosophy of long-term investing in high-quality companies that meet Motilal’s QGLP Philosophy (Quality, Growth, Longevity, Price).

PMS Scheme Ratings are driven by IME’s Proprietary Scheme Rating Methodology, which takes into account our ratings of the Scheme’s investment strategy, its maturity, the investment team, and our separate rating on the AMC that runs this particular scheme. Our views on each of these individual criteria are available via the IME RMS – which you can view by reaching out to one of our relationship managers (using either the live chat or book appointment feature on this site).

IME View on Motilal AMC Mid to Mega

Type: Mid & Smallcap | GARP | AUM (1435 cr) | Inc Date (24 Dec 2019)

Investment Philosophy

Motilal’s Focused Midcap strategy aims to invest in a concentrated portfolio (15-20 stocks) of their top mid-cap ideas (companies ranked 101-400 in market capitalisation). The focus is on emerging businesses that can benefit from a growth in earnings and valuation re-rating. Mid-cap focus is driven by the premise that most multi-baggers are found in mid and small-cap space. 

Motilal has a very clearly defined investment philosophy of long-term investing in high quality companies that meet their QGLP investment criteria. They have followed this strategy consistently for over 2 decades, with limited style drift.

The QGLP Framework:

  • Quality of the Business and Quality of the Management: Stable businesses preferable consumer facing, with huge business opportunity and sustainable competitive advantages. Businesses run by competent management.
  • Growth in Earnings: Driven by volume growth, price growth, mix change, operating and financial leverage.
  • Longevity (of Quality and Growth): Dictated by long-term relevance of the business, extending competitive advantage period and sustenance of growth momentum.
  • Price: Reasonable valuation, relative to quality and growth prospects with high margin of safety.

Once they have identified stocks that meet their strict QGLP criteria, Motilal aims to Sit Tight (by following a long-term buy-and-hold approach in concentrated stock portfolios.)

STRATEGY

  • Growth: outlook of 20%+ at a portfolio level and portfolio level ROE at 15%+
  • Reversion to mean: Invest in companies where valuations have corrected in last 2 years while they have retained their earnings profile
  • Sector: little or no allocations to Commodities and global cyclicals

PORTFOLIO CONSTRUCTION

  • Allocation: based on convictions on companies and does not necessarily dependent on the price
  • Action-based on price movement: Mismatch of price and timelines should lead to action on folio on both sides i.e. selling and buying. Regular trimming of positions if price targets run ahead of timelines.

 

Trailing Performance

1yr 3yr 5yr Since Inception
Motilal AMC Mid to Mega 68.2 20.2 27.7
S&P BSE 500 TRI 39.5 19.5 20.5
Alpha over Broad Mkt BM 28.7 0.7 7.2
Nifty Midcap 150 56.3 26.5
Alpha over Category BM 11.9 -6.3

Performance as of: 28-Feb-23 | Inception Date: 24-Dec-19

Fund Managers

Prateek Agrawal | 5-star rated FM

Executive Director | 30 yrs Experience | 13 yrs at current firm

Past Experience: BoI AXA MF (Head of Equity), BNP Paribas MF (Head of Equity), SBI Capital Markets (Head of Research)

Prateek has over 2 decades of experience in fund management and research, having worked in senior positions in BoI AXA MF, BNP Paribas MF & SBI Capital Markets. Prateek has been at ASK since Apr-11 and has spearheaded the growth of ASK PMS over this period.

Manish Sonthalia | 5-star rated FM

CIO | 26 yrs Experience | 20 yrs at current firm

Past Experience: SKP Securities (VP)

Manish has spent most of his career at Motilal, having joined Motilal in 2004 from SKP Securities. He is the CIO-Equities at Motilal PMS and along with Ramdeo Agarwal has been instrumental in the growth and performance of the PMS strategies.

Fee Structure

Fee StructureFee
Fixed Fee Structure
Variable Fee Structures0 fixed fee + 20% above 6% hurdle
Exit Fees1yr(2%)

AMC

AMC: Motilal Oswal AMC PMS (click link for detailed AMC review)

Not a top recommendation (at this time) due to weak recent performance: Motilal PMS comes with a very high level of pedigree. Co-founded by a highly-respected and pedigreed investor, Motilal has a number of advantages - stability of its core PMS investment team, very strong investment processes, a very clearly defined investment philosophy and the benefits of the backing of a strong broking & MF business. However, this strong pedigree has failed to reflect in the performance of the strategies (which have been weak, especially in recent years), which results in a lower 3-star rating for one of the more established PMS providers.

AMC Rating

3 of 5 stars

AMC Pedigree

5 of 5 stars

AMC Size

5 of 5 stars

Team Pedigree

5 of 5 stars

Inv Philosophy

5 of 5 stars

Performance

1 of 5 stars

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