Widely read:
At a time when most large-cap mutual funds are struggling to deliver even single-digit returns, the Motilal Oswal Largecap Fund posted an impressive 19.5 per cent gain over the past year, emerging as the best-performing scheme in the large-cap category.
Among peers, only one other large-cap fund managed to deliver double-digit returns: DSP Largecap Fund, which generated 11.2 per cent. In comparison, the large-cap universe’s benchmark, Nifty 100 TRI, rose just 5 per cent during the same period.
What drove the outperformance?
According to Niket Shah, CIO at Motilal Oswal Asset Management, the fund’s success rests on a few core principles. “When we’re bullish on a sector—say, IT—we look across the spectrum: large cap, mid cap, small cap; IT services versus engineering research and development (ER&D). Each bucket has different growth profiles,” he explains.
Equally important is the fund’s emphasis on avoiding missteps. “Make far fewer mistakes, become sharper and stay ahead of the curve,” says Shah, who manages the fund alongside Atul Mehra, Ajay Khandelwal and Rakesh Shetty.
The team also makes strategic use of its flexibility to invest up to 20 per cent of assets in mid- and small-cap stocks. Selective bets, including a few high-conviction IPOs, added alpha. The fund’s current mid-cap exposure stands at 7 per cent, well above the category average of 2.35 per cent.
Another key pillar is disciplined selling. The fund exits positions when valuations become stretched, earnings risks rise or more compelling opportunities emerge in the same sector.
A defensive shift in 2025
Despite its standout performance in the past year, the fund’s year-to-date (YTD) ranking has dipped as it adopted a more cautious stance. Over the one-year period, the fund ranks first among the 93 peers, but slips to 44th position in the last six months.
Reason? “In January this year, we made a conscious call that the coming year would be different. For the first time in four years, we expected earnings downgrades to begin. Therefore, we decided to adopt a more defensive stance in terms of market positioning, stock selection and overall allocation,” said Shah.
To sum up, Motilal Oswal Largecap Fund’s recent outperformance highlights the value of active management rooted in sectoral depth, stock selectivity and tactical flexibility.
Also read: Is India's largest tax-saving fund on a comeback trail?
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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