Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.

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Motilal Oswal Asset Management Company launches its first Equity Hybrid Fund

Mumbai    23-Aug-2018

                                                 

Press Release

Motilal Oswal Asset ManagementCompany launches its first Equity Hybrid Fund

Cash flow Plan allows investors toselect monthly, quarterly or annual cash flow

 

23 August, 2018: Motilal Oswal AssetManagement Company Ltd. (Motilal Oswal AMC), one of India’s fastest growingboutique AMC launches its first open ended Motilal Oswal Equity Hybrid Fund(MOFEH), to offer growth potential of equities but with significantly lowervolatility.

 

Motilal OswalEquity Hybrid Fund is an open ended hybrid scheme investing predominantly inequity and equity related instruments. The scheme NFO will open from August 24, 2018 and will close onSeptember 07, 2018. The scheme is benchmarked against the CRISIL Hybrid 35+65Aggressive TRI.

 

 Motilal Oswal AMC will endeavour to keep theexposure restricted to a narrow band of 65%-70% in equity and the balance indebt. The fund will have a mixture of 65% -80% in equity, a multi-cap portfoliowith large cap bias. The fund will have a Bottom up stock picking approach with“Buy Right- Sit Tight” Investment Philosophy. The debt portion will consistaround 20%-35% with an optimum mix of corporate bond and market instruments. Itwill be high quality short duration accrual instruments maintaining highliquidity; there is no intent to take credit or duration risk. Investorschoosing to invest into equity oriented funds even have the choice of investingin small and midcap funds but given that they choose hybrid funds it’s animperative that the equity be managed with low beta and the fixed income beconservative in credit and duration to return in a stable range.

 

Speaking on the launch, Mr Aashish Somaiyaa, CEO-Motilal Oswal AMC said, “Equity Hybrid Funds have the potential todeliver equity like performance with significantly reduced volatility by way ofregular rebalancing in favour of 65:35 equity debt split. Motilal Oswal AMC haslaunched this fund without Dividend option instead we enabled cash flow plan forthose investors who want a regular cash flow for their planned needs. This planwill provide a regular source of funds from their invested corpus at a chosenrate and frequency – because equity markets can be volatile, your cash flowsneed not be”

 

 

 

Explaining on the equity component for the fundmanager Mr. Siddharth Bothra said, “This fund is aimed at addressing long term investor's needto more effectively deal with market volatility and risk. It aims to moderateinvestor's risk profile by having a defined prudent equity & debt mix of65:35, investing in QGLP stocks with large cap bias in equities and abstainingfrom taking long duration calls on debt.

The fund alsooffers investors to opt for Motilal Oswal Cash Flow Plan (MO-CP). The planenables investors to withdraw a regular sum from their investments at a fixedpercentage of the original investments at a predefined frequency irrespectiveof the movement in market value of the investments. This is subject toavailability of balance in the investors’ folio.

 

Benefits of investing in Motilal Oswal Equity HybridFund

 

1.       Reduction in Volatility: Equity Hybrid Funds having65% to 70% fixed allocation to equities do leave the potential for the fund togive equity like performance. But at the same time consistent re-balancing bybooking profits when equity allocation goes up and buying more equity whenequity allocation goes down, keeping the equity exposure in a right range of 65%-70%preserves performance potential even while curtailing the volatility. Further,minimum of 30%-35% of fixed income exposure into high quality papers withoutcredit or duration risk also ensures low volatility.

2.       Steady Cash Flows: Motilal Oswal realises thatthe uptake of monthly dividend options in erstwhile Balanced Fund category wasby investors with the need for a monthly cash flow. But the intent of availingregular cash flows by subscribing to dividend options is untenable becausedividends fluctuate with fund performance and availability of surpluses.Equities are volatile and hence dividends would fluctuate. Motilal Oswal EquityHybrid Fund has been launched with Motilal Oswal Cashflow Plan which allowsinvestors to select at desired level of monthly, quarterly or annual cash flowfrom options of 7.5%, 10% and 12%. If the underlying asset class combinationand the fund delivers say 12% compounded over a long period of time andinvestors are taking regular cash flow out @ say 10% then the cash flow requirementsare met in a predictable fashion and capital remains intact with some potentialfor further appreciation from time to time.

3.       Tax Efficiency : Rebalancing / Redemption/ Taxation on Debt Component of 35%– If one were to allocate individually 65%to an equity scheme and 35% to a fixed income scheme and then manage the assetallocation then each rebalancing event would invite tax implications. On theother hand, intra scheme rebalancing events within the Equity Hybrid Fund donot invite any tax implications. Similarly since an Equity Hybrid Fund fortaxation purposes is treated as an equity fund, on redemption the short termcapital gains would be @15% and long term capital gains would be @10% unlikethe separate tax implications of debt and equity if allocation is doneindividually. Also it is worth noting that in an Equity Hybrid Fund the 35%debt allocation also enjoys equity like taxation.

4.       Avoiding Dividend Tax: As mentioned above, manyinvestors have been opting for dividend plans thinking that dividends are abankable instrument to receive regular cash flow. But introduction of 10%distribution tax on equity mutual fund dividends clearly reduces theattractiveness of dividends as a mechanism to fulfil cash flow requirements.Motilal Oswal’s Cash flow Plan is clearly more tax efficient and alsopredictable with regards to periodicity and amount of cash flows as it providesa regular source of funds from returns generated and capital invested.

5.       Regular Payoutswith growth Potential – Cash flow Plan enables meeting of cash flowrequirements for sustenance and at the same time leaves potential for capitalappreciation.

 

Fund Details:

For EquityComponent:

Fund Manager: Mr.Siddharth Bothra

Co- Fund Manager:Mr. Akash Singhania

For DebtComponent: Mr. Abhiroop Mukherjee

Name of TrusteeCompany: Motilal Oswal Trustee Company Ltd

 

Asset Allocation:

Instruments

Allocations (% of total assets)

Risk Profile

Minimum

Maximum

High/Medium/Low

Equity & equity related instruments

65

80

High

Debt, Money Market Instruments, G-Secs, Bonds, Debentures, Cash and Cash at call, etc.

20

35

Low to Medium

Units issued by REITs and InvITs

0

10

Medium to High

 

The Scheme retains the flexibility to invest across all thesecurities in the equity, debt and Money

Markets Instruments as per investment objectives of theScheme and as per the SEBI Regulations.

The portfolio may hold cash depending on the market condition.Exposure by the Scheme in derivative instruments shall not exceed 50% of thetotal Net Assets of Scheme. The Fund shall not write options or purchaseinstruments with embedded written options. The Scheme will not participate instock lending more than 20% of total Net Assets of the Scheme and would limitits exposure with regard to stock lending for a single intermediary to theextent of 5% of the total net assets at the time of lending.

 

Each Plan offersGrowth Option.

Growth Option - All Income earned and realized profit inrespect of a unit issued under that will continue to remain invested until repurchaseand shall be deemed to have remained invested in the option itself which willbe reflected in the NAV.

The AMC reserves the right to introduce further Options asand when deemed fit.

 

About MotilalOswal Asset Management Company:

Motilal Oswal Asset Management Company (Motilal Oswal AMC) isregistered with SEBI as the Investment Manager for Motilal Oswal Mutual Fund.It was incorporated on November 14, 2008. Motilal Oswal AMC is a 100%subsidiary of Motilal Oswal Securities Limited. It provides InvestmentManagement and Advisory Services to investors based within and outside Indiaand having Portfolio Management Services business, ETFs and Mutual Funds. 

Motilal Oswal one of the fastest growing Asset ManagementCompanies in India with a unique investment philosophy, ‘Buy Right; Sit Tight’which means buying quality companies at a reasonable price and Sit Tight toride their growth cycle for a long period of time.

 

Disclaimer:

Product Labeling:

 

 

This product is suitable for investors who are seeking*

Description: C:\Users\deenaldhulia\Desktop\Moderately High Risk.jpg

Motilal Oswal Equity Hybrid Fund (MOFEH)

(An open ended hybrid scheme investing predominantly in equity and equity related instruments)

·      Long term capital appreciation by generating equity linked returns

 

·      Investment predominantly in equity and equity related  instruments

*Investors should consult their financialadvisers if in doubt about whether the product is suitable for them.

Past performance may ormay not be sustained in future.

For Further DetailsContact:

Rohini Kute

Head of Corporate Communications, Motilal Oswal Financial Services

Mob +91 9820196838

Mail: rohini.kute@motilaloswal.com

Alpesh Nakrani

Paradigm Shift Public Relations

Mob +91 98691 21167

Ph-   +91 22 2281 3797 / 98

 


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