NFO Alert: All you need to know about Motilal Oswal Small Cap Fund

The scheme opened for public subscription on December 05, 2023, and will close on December 19, 2023. The scheme re-opens for continuous sale and repurchase within five business days from the date of allotment.

What kind of mutual fund scheme is this?

This is an open-ended equity value fund scheme predominantly investing in small-cap stocks.

Ajay Khandelwal, Fund Manager, Motilal Oswal AMC, said, “In the last 2-3 years, we’ve witnessed a remarkable surge in small-cap fund flows, and this trend indicates a structural shift in investor preferences. Small caps, with their agility and growth potential, have become a focal point for discerning investors looking beyond conventional avenues. The Motilal Oswal Small Cap Fund is crafted with a meticulous approach, seeking out companies with visionary leadership, strong execution capabilities, and a commitment to corporate governance.”

What is the main objective of investing in this fund?

The investment objective of the scheme is to generate capital appreciation by investing predominantly in small-cap stocks. However, there is no assurance that the investment objective of the scheme will be achieved.

This product is suitable for investors seeking

• Long-term capital growth
• Investment predominantly in equities and equity-related instruments of small-cap companies.

Small-cap funds offer the potential for high earnings growth, evidenced by a 38X increase in the market cap of the largest small-cap companies over the past 20 years. With approximately 537 companies having a market cap above ₹2,000 crores, the small-cap space provides a fertile ground for alpha generation. Further, the small-cap earnings growth has compounded by 49% in the last three years, contributing to reduced volatility and healthier balance sheets.

Navin Agarwal, MD & CEO, MOAMC, said, “The financial landscape is continually evolving providing various investment opportunities to investors. We are committed to staying ahead of the curve and delivering innovative solutions. Our previous ventures into active funds have demonstrated our ability to navigate markets effectively, and with the Motilal Oswal Small Cap Fund, we are poised to continue this legacy.”

How may one invest in this scheme?

Investors can invest under the scheme with a minimum investment of ₹500 per plan/option and in multiples of Re 1. There is no upper limit for investment.

Under normal circumstances, the asset allocation of the scheme will be as follows:

Are there similar mutual funds in the market?

To date, many asset management companies (AMCs) have launched such small-cap equity funds. Some of them include:

How will the scheme benchmark its performance?

The performance of the Scheme will be benchmarked against the Nifty Smallcap 250 TRI as the scheme will invest primarily in small-cap companies. The allocation in the Fund would be a minimum of 65% in equity and equity-related instruments of small-cap companies and a maximum of 35% in debt and money market instruments. Hence, the aforementioned benchmark will be able to give a true and accurate comparative analysis. The Total Return variant of the index (TRI) will be used for performance comparison.

Are there any entry or exit loads to this scheme?

This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would be charged in this order:

– 1% – If redeemed on or before 15 days from the date of allotment.

– Nil – If redeemed after 15 days from the date of allotment.

Who will manage this scheme?

The Motilal Oswal Small Cap Fund will be managed by Ajay Khandelwal. This fund will be co-managed by Niket Shah for the equity component, Rakesh Shetty for the debt component, and Ankush Sood for the international equity component. 

Does the fund contain any inherent risk?

The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.

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Updated: 05 Dec 2023, 04:58 PM IST