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MUTUAL FUNDS NEWS
New Fund Review: MOSt Focused Dynamic Equity Fund
Thu, Sep 15, 2016
Source : Jeni Shukla, Citrus Interactive

NFO Dates: 6 September, 2016 to 20 September, 2016

 

MOSt Focused Dynamic Equity Fund is an open ended scheme launched by Motilal Oswal AMC. As the name suggests, it will allocate money dynamically across equity, derivatives and debt as per the market valuations. The fund will be benchmarked against Crisil Balanced Fund Index.     

 

Asset Allocation 

The unique feature of the scheme is that the asset allocation between equities, arbitrage, derivatives and debt will be decided by using an in-house index - Motilal Oswal Value Index (MOVI). The asset allocation shall be reviewed twice a month.

 

 

Allocation (%)

Equity & equity related instruments

65 – 100

Equity derivatives

0 – 35

Debt instruments, Money market instruments, G-secs, Cash

 

0 – 35

At any point in time the scheme will maintain a minimum 30% net long equity position. Long only equity exposure means exposure to equity shares alone without a corresponding equity derivative exposure. 


What is MOVI?

The MOVI helps gauge attractiveness of the equity market. The MOVI is calculated based on a 30 day moving average, taking into account Price to Earnings (P/E), Price to Book (P/B) and Dividend Yield of the Nifty 50 Index. If the MOVI level is low, it indicates that the market valuation is cheap which makes equity attractive as an asset class.

 

How will equity allocation be done based on MOVI?

The following table shared by the fund house depicts the allocation based on MOVI levels.

 

MOVI Levels

Equity Exposure

Scheme Allocations

Equity

Min. Equity Arbitrage

Debt

Less than 70

100%

100%

0%

0%

70

< 80

90%

90%

0%

10%

80

< 90

80%

80%

0%

20%

90

< 100

70%

70%

0%

30%

100

< 110

55%

55%

10%

35%

110

< 120

40%

40%

25%

35%

120

< 130

25%

30%

35%

35%

130 or above

0%

30%

35%

35%

 

Investment Style

The equity portion will be managed actively using a bottom-up stock picking approach. The fund house defines its style as ‘Buy Right : Sit Tight’. The fund is likely to make a few concentrated bets (20 to 25) – like we see in the other funds from Motilal Oswal.

Like other Motial funds, the stock selection will be based on QGLP (Quality, Growth, Longevity and Price).

 

Fund Managers

Taher Badshah will manage the equity portion. He brings with him over 18 years of experience in fund management and investment research. 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. He also manages MOSt Focused Midcap 30, MOSt Focused 25 Fund, MOSt Shares Midcap 100 ETF and MOSt Shares M50 ETF.

 

Abhiroop Mukherjee is AVP and Fund Manager – Fixed Income. He will manage the debt portion. He brings with him over 6 years experience in Fixed Income Securities trading. Mr. Mukherjee is a PGPBF (Finance) from National Institute of Bank Management, a B.Com (Honours) from Calcutta University.


Our View

The fund has an objective strategy to allocate among asset classes. The fund manager skill will come into play for managing the equity portion actively. As per the back-tested data published by the fund house this strategy beats Nifty in most time periods. The fund also has an attractive feature of zero exit load. However, often asset allocation based strategies tend to underperform pure equity diversified funds during market rallies. So the fund can be considered for moderate risk takers.

 
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