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 5 Year G-Sec Fund of Fund (G) - 9.9531Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive (G) - 10.6371Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive-Dir (G) - 10.7166Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative (G) - 10.5159Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative-Dir(G) - 10.5978Motilal Oswal Dynamic Fund (Div-A) - 11.9467Motilal Oswal Dynamic Fund (Div-Q) - 10.4933Motilal Oswal Dynamic Fund (G) - 14.0137Motilal Oswal Dynamic Fund-Dir (Div-A) - 12.2627Motilal Oswal Dynamic Fund-Dir (Div-Q) - 10.7944Motilal Oswal Dynamic Fund-Dir (G) - 14.9892Motilal Oswal Equity Hybrid Fund - Direct (G) - 14.845Motilal Oswal Equity Hybrid Fund - Regular (G) - 13.969Motilal Oswal Flexi Cap Fund(D) - 20.8985Motilal Oswal Flexi Cap Fund(G) - 29.8314Motilal Oswal Flexi Cap Fund-Dir(D) - 21.1092Motilal Oswal Flexi Cap Fund-Dir(G) - 32.2117Motilal Oswal Focused 25 Fund - Direct (D) - 18.0822Motilal Oswal Focused 25 Fund - Direct (G) - 33.1307Motilal Oswal Focused 25 Fund (D) - 16.0662Motilal Oswal Focused 25 Fund (G) - 29.3596Motilal Oswal Large and Midcap Fund - Dir (D) - 13.8206Motilal Oswal Large and Midcap Fund - Dir (G) - 14.85Motilal Oswal Large and Midcap Fund (D) - 13.227Motilal Oswal Large and Midcap Fund (G) - 14.1938Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.008Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0337Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.007Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0095Motilal Oswal Liquid Fund - Direct (G) - 11.4936Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0077Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0335Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.0069Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.0165Motilal Oswal Liquid Fund - Regular (G) - 11.4329Motilal Oswal Long Term Equity Fund (D) - 16.88Motilal Oswal Long Term Equity Fund (G) - 23.0709Motilal Oswal Long Term Equity Fund -Dir (D) - 20.3335Motilal Oswal Long Term Equity Fund -Dir (G) - 25.4728Motilal Oswal Midcap 30 Fund (D) - 23.9294Motilal Oswal Midcap 30 Fund (G) - 41.9786Motilal Oswal Midcap 30 Fund-Dir (D) - 25.0072Motilal Oswal Midcap 30 Fund-Dir (G) - 46.5206Motilal Oswal MSCI EAFE Top 100 Select Index Fund (G) - 9.1679Motilal Oswal Multi Asset Fund - Direct (G) - 10.7301Motilal Oswal Multi Asset Fund (G) - 10.4404Motilal Oswal Nasdaq 100 FOF - Direct (G) - 19.7152Motilal Oswal Nasdaq 100 FOF - Regular (G) - 19.4348Motilal Oswal Nifty 200 Momentum 30 Index Fund - Direct (G) - 8.2453Motilal Oswal Nifty 50 Index Fund - Direct (G) - 13.256Motilal Oswal Nifty 50 Index Fund (G) - 13.1183Motilal Oswal Nifty 500 Fund - Direct (G) - 15.2714Motilal Oswal Nifty 500 Fund (G) - 14.9944Motilal Oswal Nifty Bank Index Fund - Direct (G) - 12.2896Motilal Oswal Nifty Bank Index Fund (G) - 12.0604Motilal Oswal Nifty Midcap 150 Index Fund (G) - 17.6226Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 17.9788Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 12.9999Motilal Oswal Nifty Next 50 Index Fund (G) - 12.7842Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 17.8049Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 18.1483Motilal Oswal S&P 500 Index Fund - Direct (G) - 13.9382Motilal Oswal S&P 500 Index Fund (G) - 13.7472Motilal Oswal S&P BSE Low Volatility Index Fund (G) - 9.8502Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 10.2308Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 10.2557Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 10.2378Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 10.3864Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 10.2429Motilal Oswal Ultra Short Term Fund - Dir (G) - 14.4966Motilal Oswal Ultra Short Term Fund (Div-D) - 10.1318Motilal Oswal Ultra Short Term Fund (Div-F) - 10.144Motilal Oswal Ultra Short Term Fund (Div-M) - 10.1335Motilal Oswal Ultra Short Term Fund (Div-Q) - 10.2795Motilal Oswal Ultra Short Term Fund (Div-W) - 10.1367Motilal Oswal Ultra Short Term Fund (G) - 13.9545

Stick to a defined asset allocation plan

Blog Blog Details
  • August 20, 2021
  • Akhil chaturvedi|
  • Associate Director
Benchmark equity indices closed at record highs on Friday (August 13), with the S&P BSE Sensex crossing the 55,000 level for the first time and Nifty scaling the 16,500-mark. The current run has extended amid sustained FII flows, better corporate results, waning inflation concerns and increased retail participation.

A look back at the previous bull-run reveals that the Nifty 50 grew about 6x – from 1,100 levels in January 2002 to 6,300 in January 2008, and delivered a return of 33 per cent CAGR. 

The interesting part is that this seemingly secular run was marred with multiple corrections. In that 6x journey, Nifty 50 recorded seven falls of more than 10 per cent, two of which were more than 30 per cent.

In the period beginning May 2014 till August 2021, Nifty 50 has grown nearly 2.5x, from 6,695 to 16,500, registering a growth of 13 per cent CAGR. This journey has witnessed five falls of over 10 per cent in seven years, two of which were 20 per cent drawdowns, including the 40 per cent correction in March 2020. 

Why is this important?

As explained by Howard Marks, investor behaviour gyrates like a pendulum swinging between extreme pessimism and euphoria.

The fear of losing everything amid Covid induced lockdown, experienced by investors in March 2020, is replaced by excessive greed – where every other IPO is getting oversubscribed multiple times over. At these levels, the instincts of ‘freeze’ or ‘flee take over.

There is a school of thought which dictates exit from all equity investments and switch to the safest option. The other predominant thinking among investors is to wait on the sidelines for a correction and try to time the market. 

The fundamental problem with both approaches is that neither can you call the end of bull-run nor can you time an intermittent fall. One may then ask, What is the best way forward? 

Well, let us go back to the basics, Earnings Growth.  

FY22 Resembles FY02

The nascent recovery in corporate earnings growth seen in the third and fourth quarters of FY21 will need to sustain into FY22 and beyond. In terms of valuation, market P/E is higher than the long-period average. But this can be explained by way of low-interest rates and expected high growth rates. Further, even in terms of Market Cap to GDP, India is at around 100 per cent. Many countries are at much higher levels.

Corporate profits have fallen from 7.8 per cent to 1.8 per cent of GDP over the last decade, led by destruction in profit pools of several businesses, including Commodities, Telecom, Industrials, Corporate lenders and US Generics, to name a few. 

Most of these profit pools are in the process of getting rehabilitated. Analysts predict that even if corporate profit to GDP reverts to the long term averages, we could sustain strong earnings growth of over 20 per cent versus the 5 per cent that have witnessed for the last decade. 

A host of other complementary factors besides corporate profit growth, viz., i) benign interest rates, ii) robust FII flows, iii) stable rupee & health forex reserves, iv) Capex Growth and v) higher savings & investment rates are a lot similar to 2002.

The trailing P/B went from 2.0 in mid-2002 to 6.6 by 2008. There were multiple corrections through the journey, as has been highlighted in the data above. The trend seems to be similar currently, with trailing P/B rising to around 3.9 from the lows of 2.2 made in March 20.

This, coupled with corporate profits returning to mean, consensus estimates suggest a Nifty EPS growth of 24 per cent CAGR through FY25 resulting in a possible Nifty price Compound Annual Growth Rate (CAGR) of 23 per cent.

It shouldn’t look unbelievable because the same had played out in 2002-08 with Nifty Earnings Per Share (EPS) growth at 24 per cent CAGR and Nifty Price Growth at 29 per cent CAGR. 

The inherent risks to the above hypothesis are a) subsequent covid waves, b) an earlier than expected increase in interest rates & hence bond yields, and c) rising commodity prices.  

The current journey started in January 2020 with Nifty at 12,000 levels, and we have scaled only 16,500 yet. A lot of money is lost in waiting for corrections rather than staying invested.

Investors would do well if they stick to a defined asset allocation plan and appreciate that, in the long run, stock prices are a function of earnings growth.  

Stay safe & stay invested.


This article originally appeared in Deccan Herald on 15th Aug, 2021
 
This article has been issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact. The Stocks mentioned herein is for explaining the concept and shall not be construed as an investment advice to any party. The information / data herein alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions, figures, estimates and data included in this article are as on date. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for any decision taken on the basis of this article. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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