The Motilal Oswal
Midcap Fund-Regular has shown strong performance across various time horizons,
particularly in the medium to long term. Despite short-term volatility, the
fund's substantial returns over 3 months, 6 months, 1 year, and beyond indicate
effective management and favourable market conditions for mid-cap stocks.
Investors seeking exposure to the mid-cap segment may find this fund to be a
valuable addition to their portfolio, given its demonstrated potential for
significant growth and resilience over time.
If we do the analysis
of the returns, we find stellar analytics.
Medium-Term
Performance
3 to 6 Months
Performance: The fund has demonstrated strong
medium-term performance with returns of 19.21% over 3 months and 30.45% over 6
months. This significant growth reflects the fund's ability to capitalize on
market opportunities and effective stock selection within the mid-cap segment.
9 Months Performance: The
return of 53.29% over 9 months underscores the fund's robust performance in the
medium term, suggesting effective fund management and favourable market
conditions for mid-cap stocks during this period.
Long-Term Performance
1 Year Performance: With
an impressive return of 63.02%, the fund has significantly outperformed in the
long term, indicating strong growth and resilience in its portfolio.
3 Years Performance: The
fund's annualized return of 37.66% over 3 years showcases its consistent
performance and effective strategy in managing mid-cap investments.
5 Years Performance: The
32.60% return over 5 years further emphasizes the fund's long-term growth
potential and successful track record in the mid-cap category.
Since Inception: The
fund has delivered a cumulative return of 24.33% since inception, highlighting
its overall success and growth trajectory over time.
What we are missing
is that we need to find out what made the fund to achieve a stellar return?
From where did the funds returns came up? It’s the sector allocation and right
allocation and exposure skill of the Fund Manager in picking up the allocation. The
identification of timing by the Fund Manager in terms of Entry and Exit of
sector allocation plays a pivotal role behind the fund. Effective sector
allocation significantly impacts fund returns by balancing growth potential and
risk. Analysing economic cycles, market trends, policies, and consumer
behaviours allows fund managers to strategically allocate investments to
sectors poised for strong performance, thereby optimizing returns and managing
risks.
Sector Allocation
Trends from April 2023 to June 2024:
During the period
from April 2023 to June 2024, various sectors experienced fluctuations in their
allocation percentages within investment portfolios. Here is a detailed summary
of the trends for key sectors:
Alcohol
· Trend:
Showed initial growth from April 2023 (1.10%) to June 2023 (3.18%), then
fluctuated, ending at 10.65% in June 2024.
· Peak
Allocation: June 2023 with 3.18%.
Automobile
& Ancillaries
· Trend: Consistently
high allocations with fluctuations, starting at 13.93% in April 2023 and ending
at 10.65% in June 2024.
· Peak
Allocation: November 2023 with 16.65%.
Banks
· Trend:
Low and fluctuating allocations, starting to be tracked from July 2023 at
1.50%, with a decline towards early 2024 and slight recovery to 5.07% in June
2024.
· Peak
Allocation: June 2024 with 5.07%.
Capital Goods
· Trend:
High initial allocation with fluctuations, from 8.59% in April 2023 to a low of
1.38% in May 2024, recovering to 5.07% in June 2024.
· Peak
Allocation: July 2023 with 9.24%.
Chemicals
· Trend:
Stable high allocations, starting at 10.03% in April 2023, dipping slightly and
ending at 4.65% in June 2024.
· Peak
Allocation: November 2023 with 9.19%.
Construction
Materials
· Trend:
Steady but low allocations, starting at 1.11% in April 2023 and remaining below
1% from June 2023 onwards.
· Peak
Allocation: April 2023 with 1.11%.
Consumer Durables
· Trend:
Generally stable, starting at 3.39% in April 2023 and increasing towards the
end, with 5.39% in June 2024.
· Peak
Allocation: December 2023 with 5.74%.
Diamond &
Jewellery
· Trend:
Allocations tracked from December 2023, starting at 9.59% and decreasing to
7.64% in June 2024.
· Peak
Allocation: December 2023 with 9.59%.
Electricals
· Trend:
Initially low and erratic, from 0.33% in June 2023 to a peak of 4.80% in June
2024.
· Peak
Allocation: June 2024 with 4.80%.
Finance
· Trend:
Consistent increase from 8.28% in April 2023 to a peak of 18.46% in October
2023, then stabilizing around 10.48% in June 2024.
· Peak
Allocation: October 2023 with 18.46%.
FMCG
· Trend:
Steady but low allocations, starting at 3.98% in April 2023 and remaining below
4% throughout the period.
· Peak
Allocation: May 2023 with 3.28%.
Healthcare
· Trend:
Decreasing trend from 5.20% in April 2023 to 1.28% in August 2023, then
fluctuating and recovering to 5.26% in June 2024.
· Peak
Allocation: April 2023 with 5.20%.
Hospitality
· Trend:
Data for this sector is only available for April 2023 with 4.20%.
· Peak
Allocation: April 2023 with 4.20%.
Infrastructure
· Trend:
Data for this sector starts from March 2024 with an allocation of 2.39%.
· Peak
Allocation: March 2024 with 2.39%.
Iron & Steel
· Trend:
Fluctuating allocations, starting at 1.93% in April 2023, peaking at 4.84% in
August 2023, and declining to 0.91% in January 2024.
· Peak
Allocation: August 2023 with 4.84%.
IT
· Trend:
High and stable allocations, starting at 16.48% in April 2023 and slightly
fluctuating to end at 17.98% in June 2024.
· Peak
Allocation: October 2023 with 24.14%.
Media &
Entertainment
· Trend:
Data starts from November 2023 with low allocations, peaking at 1.86% in
February 2024 and declining to 0.65% in May 2024.
· Peak
Allocation: February 2024 with 1.86%.
Plastic Products
· Trend:
Initial high allocations, starting at 1.26% in April 2023, peaking at 2.02% in
May 2023, and gradually declining to 0.50% in November 2023.
· Peak
Allocation: May 2023 with 2.02%.
Power
· Trend:
Data starts from April 2024 with an allocation of 3.76%.
· Peak
Allocation: April 2024 with 3.76%.
Realty
· Trend:
Fluctuating allocations, starting at 4.30% in April 2023, peaking at 8.66% in
January 2024, and decreasing to 4.79% in June 2024.
· Peak
Allocation: January 2024 with 8.66%.
Retailing
· Trend:
High allocations with fluctuations, starting at 4.51% in April 2023, peaking at
9.31% in July 2023, and stabilizing around 7.15% in June 2024.
· Peak
Allocation: July 2023 with 9.31%.
Telecom
· Trend:
Low allocations, tracked from July 2023 with 1.71%, peaking at 12.34% in April
2024 and ending at 10.98% in June 2024.
· Peak
Allocation: April 2024 with 12.34%.
Textile
· Trend:
Stable but low allocations, starting at 2.37% in April 2023 and gradually
declining to 0.25% in January 2024.
· Peak
Allocation: May 2023 with 2.55%.
Key Ratio Analysis with
Respect to the Fund
.
Standard
Deviation: 13.13%
Standard
deviation measures the fund's volatility or risk. A higher standard deviation
indicates greater variability in returns, suggesting the fund experiences
larger swings in its NAV. At 13.13%, this indicates that the Motilal Oswal
Midcap Fund has moderate volatility, which is expected for a mid-cap equity
fund. Investors in this fund should be prepared for fluctuations in their
investment value.
2.
Semi-Standard
Deviation: 3.79%
Semi-standard
deviation measures the downside volatility, focusing only on the instances
where the returns are below a certain threshold, typically the mean return. A
lower semi-standard deviation compared to standard deviation indicates that the
fund's downside risk is relatively contained. At 3.79%, this metric shows that
the fund has managed to limit its losses, suggesting effective risk management.
3.
Correlation
with Benchmark: 0.82
Correlation
measures the degree to which the fund's returns move in relation to the
benchmark (Nifty Midcap 150 - TRI). A correlation of 0.82 indicates a strong
positive relationship, meaning the fund's performance is closely aligned with
the benchmark's movements. While this implies that the fund generally moves in
the same direction as the benchmark, it also suggests that it offers limited
diversification benefits from the broader mid-cap market.
4.
Beta:
0.83
Beta
measures the fund's sensitivity to market movements. A beta of 0.83 suggests
that the fund is less volatile than the benchmark. Specifically, for every 1%
move in the benchmark, the fund's NAV is expected to move by 0.83%. This lower
beta indicates that the fund might experience smaller fluctuations compared to
the benchmark, making it relatively less risky.
5.
Treynor
Ratio: 4.84
The
Treynor ratio measures the excess return earned per unit of market risk (beta).
A higher Treynor ratio indicates better risk-adjusted returns. At 4.84, this
ratio suggests that the fund has delivered strong returns relative to its
market risk, indicating effective management and potential for higher returns
relative to its volatility.
6.
Sharpe
Ratio: 1.07
The
Sharpe ratio measures the excess return per unit of total risk (standard
deviation). A Sharpe ratio above 1 indicates good risk-adjusted returns. With a
Sharpe ratio of 1.07
Performance
Comparison: The Motilal Oswal Midcap
Fund has outperformed its benchmark, Nifty Midcap 150 - TRI, across all
timeframes provided. Notably, its 1-year return of 69.30% significantly
surpasses the benchmark's 55.38%.
Risk
and Return: The fund exhibits a strong
Sharpe ratio of 1.07, indicating good risk-adjusted returns. The beta value of
0.83 suggests lower volatility compared to the benchmark, while the tracking
error of 2.27% indicates moderate deviation from the benchmark.
Capture
Ratios: The Up Capture Ratio of
104.48% shows that the fund has captured more gains than the benchmark during
market upswings. The exceptionally low Down Capture Ratio of 11.58%
demonstrates strong downside protection.
Conclusion
The
Motilal Oswal Midcap Fund-Reg(G) has demonstrated impressive returns and
favorable risk metrics, making it an attractive option for investors seeking
exposure to mid-cap equities. However, potential investors should consider
their risk tolerance and investment horizon, as mid-cap funds can be more
volatile compared to large-cap funds. The fund's strong performance and risk
management suggest it may be a suitable addition to a diversified portfolio,
particularly for those seeking growth opportunities in India's mid-cap segment.
Overall, the sector
allocations show significant variability over the months. Notably, IT, Finance,
and Automobile & Ancillaries sectors maintained high allocations,
indicating a strong investor preference. Meanwhile, sectors like Construction
Materials and Media & Entertainment had relatively low and inconsistent
allocations. The data reflects dynamic shifts in investment strategies, likely
influenced by market conditions and sector-specific performance.
Well this is just an
analysis of the Past allocation and hence not an investment advise. This is for
information purpose. We will be coming up with such analysis of other funds
too.
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