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MOSt Focused Midcap 30 Fund: New Winner on the Block
Fri, Sep 04, 2015
Source : Jeni Shukla, Citrus Interactive

MOSt Focused Midcap 30 Fund is an open ended mid-cap oriented equity scheme. The investment objective of the Scheme is to achieve long term capital appreciation by investing in a maximum of 30 quality mid-cap companies having long-term competitive advantages and potential for growth. The fund is benchmarked against CNX Midcap Index and it came into existence in February 2014.  The fund has an AUM of Rs. 703 crore as of end-August 2015.

Fund Performance

MOSt Focused Midcap 30 Fund has shown an outstanding performance – by not only beating its benchmark index and equity diversified category average over the last 6 months, 1 year as well as year-to-date, but also by ranking among the top 5 in the various time periods listed below. It is the best performing equity diversified fund year-to-date.

Scheme Name

YTD

6 months

1-Year

Since Inception

MOST Focused Midcap 30 Fund

16.12

5.87

40.68

59.49

CNX Midcap Index

3.78

-0.45

17.50

39.79

Category Average

8.37

2.83

26.70

NA

Rank

1/158

4/160

2/157

NA

  Figures are in % as on Aug 31, 2015; Figures above 1-year are in CAGR

 

Portfolio Characteristics:

Sector Concentration: The concentration of the fund in the top three, five and ten sectors is much lower than the category median.

 

Top 3

Top 5

Top 10

MOST Focused Midcap 30 Fund

25.34

39.47

65.08

Category Median

42.08

54.93

76.32

Company Concentration: The fund’s concentration in the top three, five and ten companies in its portfolio is higher than the category median – a result of focusing on fewer high conviction stocks. This makes the portfolio riskier.


Top 3

Top 5

Top 10

MOST Focused Midcap 30 Fund

21.79

32.58

57.15

Category Median

21.08

31.67

50.86

Number of equity holdings:  As of July 31, 2015, the fund holds 22 stocks which is much lower than the category median of 47 stocks in the diversified equity segment. 

The Top five holding are Gujarat Pipavav Port Ltd., Page Industries Ltd., Bajaj Finance Ltd., Hindustan Petroleum Corporation Ltd. and Ajanta Pharma Ltd.

The fund manager bought MCX Ltd. in February and Pantaloons Fashion & Retail Ltd. in July. It completely exited out of City Union Bank Ltd. in January, Ipca Laboratories Ltd. in February and Supreme Industries Ltd. in June.

Risk Measures:

The fund has a Standard Deviation which is lower than the category median. Beta (measured over last two years) indicates that the fund has lower market risk level compared to the equity diversified category median.


Standard Deviation

Beta

MOST Focused Midcap 30 Fund

0.9177

0.6024

Category Median

0.9578

0.8808

Risk-adjusted Returns:

In terms of Sharpe ratio (measured over last two years) fund has a higher Sharpe and Treynor Ratio – which is favourable.


Sharpe

Treynor

MOST Focused Midcap 30 Fund

0.4432

0.2676

Category Median

0.1233

0.1061

Process

MOST Focused Midcap 30 Fund is mandated to have a minimum of 65% in Equity and equity related instruments between top 101st and 200th listed companies by market capitalization and a maximum of 25% beyond the top 200th listed companies with market capitalization not lower than Rs 600 crore. A maximum of 10% can be invested in debt instruments.

The fund follows a buy-and-hold approach – hence less chances of high churning. The strategy is bottom-up and follows a QGLP approach to pick stocks:

‘Q’uality denotes quality of the business and management

 ‘G’rowth denotes growth in earnings and sustained RoE

‘L’ongevity denotes longevity of the competitive advantage or economic moat of the business

‘P’rice denotes the approach of buying a good business for a fair price rather than buying a fair business for a good price.

The fund’s expense ratio is 2.43 per cent which is slightly higher than the category average of 2.36 per cent. One of the attractive features of the fund is that it has no exit load.  Minimum investment requirement for the fund is Rs. 5,000.


Fund Manager

The fund is managed by Taher Badshah. Mr. Badshah is a B.E. in Electronics from the University of Mumbai and has followed it up with a Masters in Management Studies (Finance) from the SP Jain Institute of Management, Mumbai. Mr. Badshah brings with him 19 years of rich experience in fund management and investment research. He started his career as an automobiles analyst with Motilal Oswal and has been well-regarded in the industry for his work in this sector. He has also worked in different capacities with organizations like Kotak Investment Advisors, Alliance Capital Asset Management Pvt. Ltd., Kotak Institutional Equities Ltd., and Prudential ICICI Asset Management Company Ltd. He has spent the first 10 years of his career doing sell-side equity research and the past 9 years in active fund management.

Other funds managed by him include Motilal Oswal MOSt Focused 25 Fund. He is also the Co-Fund Manager for Motilal Oswal MOSt Focused Multicap 35 Fund.

The fund is co-managed by Mr. Abhiroop Mukherjee. He is B.com (H), MBA with 4 years of experience in Trading Fixed Income Securities viz. G-sec, T-bills, Corporate Bonds CP, CD etc. He has earlier worked with PNB GILTS LTD. as a WDM Dealer for the period 2007-2011. He also manages Motilal Oswal MOSt 10 Year Gilt Fund and Motilal Oswal MOSt Ultra Short Term Bond Fund. He is also the Fund manager for the debt component of Motilal Oswal MOSt Focused 25, Motilal Oswal MOSt Focused Multicap 35 Fund and Motilal Oswal MOSt Focused Long Term Fund.


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In its short period of existence the fund has delivered an incredible performance. It is also attractive because of its lower churning and zero exit load. However, it comes with some amount of concentration risks because of the focused approach it follows. It can be a good choice for investors having higher risk appetite and willing to put their bets on small and midcap stocks.

 
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