Fund manager explains Motilal Oswal Midcap's winning streak

Shouldering the responsibility of the majority of Motilal Oswal's active equity funds, Niket Shah, fund manager at Motilal Oswal AMC, is a veteran at navigating the mid-cap space. With Motilal Oswal Midcap Fund beating an average peer for the third year straight, we caught up with Shah to understand the AMC's investment framework and get insights into the performance contributors for his fund. Here is the edited transcript of the interview. What is your stock selection framework? How many stocks make up your potential investment universe in terms of keeping coverage on them? We follow the QGLP (Quality, Growth, Longevity, Price) philosophy to identify stocks. With both the Motilal Oswal Mid Cap and Flexi Cap Fund, our core philosophy continues to be investing in high-quality, high-growth businesses. Our focus has always been on the longevity of growth and at reasonable valuations. At an organisation level, we have a coverage of more than 250 stocks, but at all times, we look to invest only in the top 30 names in our portfolios. We look at a few things while deciding on a company to invest in. Firstly, the size of the opportunity in a sector. Secondly, we see if the sector has the potential to grow at two times the GDP growth. For example, if you look at the EV (electric vehicle) sector, the size of the opportunity there is extremely large. And in the next five to seven years, the EV sector will likely grow at least three times India's GDP growth, which gives us a lot of comfort. Next, we deep dive into stock selection within that sector, and it's here where we use the QGLP framework. To continue with our earlier example, in the EV sector, we see which companies are gaining market share and have high-quality management, governance, quality of earnings growth and longevity of those earnings. Then, we finalise the top three companies we want to invest in within that sector. While we run concentrated portfolios, our thought process has always been to invest in high-quality names. The

This article was originally published on February 05, 2024.