Motilal Oswal MF’s new multicap fund promises to be very different from the rest.
It will have no more than 30-35 stocks and will operate as a best ideas fund for MO across large, mid and small caps. Limited stocks with high conviction bet sizes makes this akin to a focused fund in the multicap space.
The discretionary allocation (beyond the 25-28% each in large, mid and small caps) will likely be deployed in midcaps and not in the consensus large cap category as MO sees many more high growth stocks in this space.
Expect the portfolio to be underweight the biggies: private sector banks, large cap IT, pharma, auto OEMs. With a clear focus on selecting stocks that can deliver 20%+ earnings growth, the portfolio will likely select NBFCs, midcap IT, chemicals, auto ancillaries, telecom, capital goods and other growth sectors.
Niket sees chemicals and telecom being the big outperformers for FY25. He likes getting into sectors a quarter or two before their turnaround becomes very visible to the market. Both sectors in his view fit this bill neatly.
He remains bearish on banks as he reiterates his view that NIMs have topped out and perhaps consequently so has the era of rapid earnings growth. EPS growth in the low teens is unappetizing for a growth manager like him.