Motilal Oswal MOST50

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Motilal Oswal Mutual Fund presents m 50 REMIXED Acts like a fund, Trades like a share MOSt Shares Mutual Fund Motilal Oswal MOSt Shares M50 Exchange Traded Fund An Open Ended Exchange Traded Fund India’s first fundamentally weighted ETF based on Nifty Opens: 30 June 2010 Closes: 19 July 2010 NFO India’s First

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Transcript of Motilal Oswal MOST50

Page 1: Motilal  Oswal MOST50

Motilal Oswal Mutual Fund presents

m50REMIXED

Acts like a fund, Trades like a share

MOSt

SharesMutual Fund

Motilal Oswal MOSt Shares M50 Exchange Traded FundAn Open Ended Exchange Traded Fund

India’s first fundamentally weighted ETF based on Nifty

Opens: 30 June 2010

Closes: 19 July 2010NFOIndia’s

First

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MOSl Shares M50

India’s 1st Fundamentally Weighted ETF based on the S&P CNX Nifty

Index (Nifty).

Seeks investment return that generally corresponds to the performance

of the MOSt 50 basket*.

MOSt 50 basket is essentially Nifty Remixed and consists of all 50

stocks of Nifty but not in same proportion as Nifty.

Weights of stocks in MOSt 50 basket determined by using Motilal

Oswal AMC’s proprietary pre-defined methodology that assigns

weights based on stock’s fundamentals (ROE, net worth, retained

earnings & price) against market cap based weights used in Nifty.

Weightage allocation methodology based on a set of fundamental/

financial parameters and valuations.

Companies with good financial performance and reasonable valuation

get higher weightage.

* Before fees & expenses; Subject to tracking error

For further details on scheme features, please refer to the Scheme Information

Document ( SID ) of the scheme.

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Pre-defined set of rules to determine the allocations.

Day to day management of the basket components / weights being done

by India Index Services & Products Ltd. (IISL – A Joint Venture between

Crisil Ltd. & National Stock Exchange of India Ltd.) based on pre-defined

set of rules.

Periodic rebalancing of the basket ensures an element of active capital

allocation.

Rebalancing linked to change in Nifty constituents or 12 months from

last rebalance, whichever is earlier.

No discretion on weightages with Fund Manager / AMC, ensuring passive

replication of the MOSt 50 Basket.

MOSt Shares ETF platform to provide for an fficient, ransparent &

lexible platform.

For further details on scheme features, please refer to the Scheme Information

Document ( SID ) of the scheme.

E T

F

MOSl Shares M50

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Active Funds Scorecard

70% of Large Cap funds have underperformed S&P CNX Nifty Index

over a 5-year period.

Source: S&P Crisil SPIVA Report, Indices v/s Active Funds Scorecard, India,

December 2009

Equal Weighted

Returns v/s Benchmark

Large Cap

Equity1 Year 3 Year 5 Year

Equal

Weighted

returns

76.59% 9.42% 20.71%

S&P CNX

Nifty77.59% 10.71% 21.70%

Asset Weighted

Returns v/s Benchmark

Large Cap

Equity1 Year 3 Year 5 Year

Asset

Weighted

returns

77.86% 10.33% 21.36%

S&P CNX

Nifty77.59% 10.71% 21.70%

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Fundamental Weighing

Fundamentally Weighing combines the positive features of both

active fundamentals based investing and passive execution

Active Investing features

Passive / Index Investing features

Higher capital allocation to companies which have

Strong consistent financial performance

Cheap valuation or reasonable valuation

Quantitative rule based investing based on pre-defined investment rules

No discretion to fund managers in selecting or rejecting individual stocks

Low costs

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Market Cap Index MOSt 50 Basket

Weightage to

stocks

Based on stock's Market Capitalization. Based on stock's fundamentals (ROE,

Net Worth, Retained Earnings & Price).

Higher allocation to stocks with better financial

performance and reasonable valuations.

Periodic rebalancing of Most 50 basket linked

to change in Nifty constituents ensures higher

capital remains allocated to stocks with good

financial performance and reasonable valuations.

Implication Weight of stock is not reduced even

if it becomes expensive or have poor

financial performance.

Higher allocation to stocks with bigger

market capitalization irrespective of

their underlying fundamentals.

Investment Features - Market Cap Based

Index & MOSl 50

Investment Allocation in a Market Cap based index gives primary credence

to size of company.

Expansion in valuations lead to increasing weightage of a stock in an Index

thereby increasing investors exposure to an already expensive stock, when in

fact it should be the reverse.

Conversely, companies with depressed valuations tend to be underweight,

especially at times of extreme pessimism, when in fact it should be the

reverse.

MOSt Shares M50 aims at combining the best of active investing principles

with passive execution, thereby eliminating the bias of size & expensiveness

in an investment portfolio.

Source: Internal Analysis

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Illustrative Capital Allocation

MOSl 50

Under Weight Moderate Weight

Over WeightModerate Weight

Fundamental / Financial Performance

Low High

Low

High

Val

uat

ions

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Illustrative Capital Allocation

MOSl 50

Note : Representative basket as on last two Nifty change dates

Source: Internal Analysis

Metal

Oil

Telecom

Technology

Cement

Real

Estate

Banking &

FinancialPower

Auto

Pharma

Low

High

Fundamental / Financial Performance

Low High

FMCG

Capital

Equipment

Moderate weightUnder weight

Moderate weight Over weight

Val

uat

ions

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Sectoral allocation of Nifty

and MOSt 50 on Oct 22,

2009 and April 8, 2010

when change in Nifty took

place

Once MOSt Shares M50 is

listed, the constituent

holdings will be declared

on a daily basis

MOSt 50 Basket Inception

date : 3rd April 2007

MOSt Shares M50 is a new scheme and does not have a performance track record. Past

Performance may or may not be achieved in future. The above illustration is meant to help the

investors have an understanding of the MOSt 50 Basket. Investors may note that comparison shown

above is not meant to indicate performance of MOSt 50 Basket in any manner whatsoever. In

particular the Scheme does not offer capital protection or assured returns. MOSt 50 Basket

methodology is as mentioned in the Scheme Information Document. The results presented here are

based on indicative MOSt 50 Basket values and the final values since inception will be provided by

IISL before the Scheme is listed and will be available on the AMC’s website.

MOSt 50 BasketValue 3691

Nifty Value 3691

3rd Apr 2007

Nifty MOSt 50 Nifty MOSt 50

Automotives 4.60% 11.60% 5.20% 12.80%

Capital Equipment 11.10% 3.00% 10.60% 9.40%

Cement 2.20% 4.90% 1.30% 1.20%

Financial Services 24.40% 31.00% 24.00% 28.30%

FMCG 6.60% 1.20% 6.00% 4.30%

Infrastructure 1.20% 0.60% 1.20% 0.60%

Metals 8.00% 10.30% 9.10% 12.40%

Oils 15.00% 5.50% 15.80% 2.40%

Power 5.10% 12.40% 4.40% 10.30%

Pharma 2.10% 6.10% 2.40% 6.10%

Real Estate 3.30% 1.80% 2.60% 1.80%

Technology 11.50% 9.70% 12.80% 8.50%

Telecom 4.80% 1.80% 4.00% 1.85%

8-Apr-1022-Oct-09Sectors

Illustrative Capital Allocation:

Nifty & MOSl 50

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MOSt Shares M50 is a new scheme and does not have a performance track record. Past Performance, as

indicated above, may or may not be achieved in future. The above illustration is meant to help the investors have

an understanding of the MOSt 50 Basket. Investors may note that comparison shown above is not meant to

indicate performance of MOSt 50 Basket in any manner whatsoever. In particular the Scheme does not offer

capital protection or assured returns. MOSt 50 Basket methodology is as mentioned in the Scheme Information

Document. The results presented here are based on indicative MOSt 50 Basket values and the final values since

inception will be provided by IISL before the Scheme is listed and will be available on the AMC’s website.

MOSl Basket50

MOSt 50

Basket*Nifty

Value on 3rd April 2007

Value on 31st May 2010

Annualized Returns

Annualized Standard Deviation

Beta with Market

Sharpe Ratio

3691

5086

10.7%

34.24%

1.00

0.14

Jensen Alfa

3691

7218

23.7%

33.28%

0.94

0.53

13.2%

* Indicative Value

-

1,000

2,000

3,000

4,000

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6,000

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8,000

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/20

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Nifty MOSt 50

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Benefits of MOSl Shares M50

A mutual fund scheme with the convenience of share trading at real

time liquidity and prices.

Owning a diversified portfolio of bluechipTop 50 Nifty stocks.

Higher allocation to stocks with superior fundamentals and

reasonable valuations.

Lower allocation to stocks with inferior fundamentals & valuations.

Combines the benefit of active allocation & passive execution.

Lower cost structure (approx 1% against >2%) as compared to a

traditional investment product.

No Entry or Exit loads.

Tax efficient exposure to the “market”.

Complete transparency with daily portfolio disclosure.

Available at low denominations of less than Rs.100/-

For further details on scheme features, please refer to the Scheme

Information Document ( SID ) of the scheme.

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All types of investors i.e. Retail or Institutional, long term

or short term can use MOSt Shares M50 for following

strategies.

Investing

Trading

Hedging

Arbitrage

Uses of MOSl Shares M50

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Fund Manager

Mr. Rajnish Rastogi

14 Years Experience in Fund Management and Equity Research

Qualifications – CFA, M. Tech (Mgmt & Systems) and B.Tech from

Indian Institute of Technology (I.I.T.)

Prior Experience

Investment Manager at Alliance Bernstein LLP, New York, USA

Director Investment at HSBC Private Equity Advisors (India) Pvt. Ltd.

Associate Director at IL&FS Investment Managers Ltd.

Head Equity Research, CRISIL Ltd.

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Important Product Details

Post NFO Period

Post NFO, MOSt Shares M50 will be

listed on NSE and will be available for

buy and sell like any other share

through equity brokers.

Minimum investment would be in

round lot of one unit on NSE.

AP/Large investor can buy/sell in

creation unit size directly with the fund.

NFO Period

During NFO, Investors can apply

online on BSE Star Platform or on MFSS

platform of NSE through their share

broker/sub-brokers or through any

Mutual Fund distributor. They can also

apply directly to Motilal Oswal AMC

through physical applications.

Minimum investment amount during

NFO: Rs. 10,000 & in multiple of Rs. 1

thereafter.

During NFO period MOSt Shares M50

(units) will be allotted at 1/100th of

M50 basket Value e.g. if M50 basket on

allotment date is 7500 than issue price

for MOSt shares M50 will be

approximately Rs. 75 The units will be

alloted in whole numbers.

Any remaining fractional amount after

allotment will be refunded to the

investor.

For further details on scheme features,

please refer to the Scheme Information

Document ( SID ) of the scheme.

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Exchange Traded Funds (ETFs) are open ended mutual fund schemes,

which are traded on stock exchanges like a share and seek investment

returns that correspond to the performance of a particular index like

Nifty or Basket of Securities like MOSt50.

Post NFO, ETF is listed on stock exchanges and can be bought and sold

like any other company share.

ETF and Open ended Mutual Fund ( An Illustrative chart )

Feature

NAV / Price

Portfolio Transparency

Fund Management Charges

Operating expenses

Intraday Trading

Margin Funding

Purchase / Redemption

ETFs

Real Time

High - Daily

Low

Low

Possible

Possible

Exchange /

Fund House

Mutual Fund

End of the day

Low - Monthly / Quarterly

Comparatively High

Relatively high

Not possible

Not possible

Fund House

ETF – An Introduction

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Global ETF assets are at an all time high of US$ 1.03 Trillion as on March 2010,clocking a CAGR of approx 56% since it was first launched in 1993.

During 2006-09, worldwide MF assets have grown by 2.5%, where as ETFassets have grown by 82.46%

On US Exchanges, 11 out of top 25 Volume leaders / stocks are ETFs

These 11 ETFs account for 78% of total volume out of top 25 traded stocks onUS exchanges. 10 years back it was less than 25%

In US, ETF corpus increased by 180 billion$ last year while normal Mutual Fundlost similar amount of money.

In India ETFs are amongst top 150 traded stocks on NSE.

In India ETF AUM has grown from just 7 crores in 2001 to 2410 crores as on Dec09 i.e. astounding 344 times growth in assets.

Global ETF Growth

Global ETF Asset Growth

56% CAGR

Source: ETF Landscape Global Handbook Blackrock; Q1 2010

Source : Bloomberg

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DISCLAIMER:

This presentation has been prepared and issued on the basis of internal data, publicly available information andother sources believed to be reliable. The information contained in this document is for general purposes only andnot a complete disclosure of every material fact and terms and conditions and features of Motilal Oswal MOStShares M50 ETF (MOSt Shares M50). The information / data herein alone is not sufficient and shouldn’t be used forthe development or implementation of an investment strategy. It should not be construed as investment advice toany party. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on date and aresubject to change without notice. While utmost care has been exercised while preparing this document, MotilalOswal Asset Management Company Limited does not warrant the completeness or accuracy of the informationand disclaims all liabilities, losses and damages arising out of the use of this information. The statements containedherein may include statements of future expectations and other forward-looking statements that are based on ourcurrent views and assumptions and involve known and unknown risks and uncertainties that could cause actualresults, performance or events to differ materially from those expressed or implied in such statements. Readersshall be fully responsible / liable for any decision taken on the basis of this presentation. No part of this documentmay be duplicated in whole or in part in any form and/or redistributed without prior written consent of the MotilalOswal Mutual Fund/ Motilal Oswal Asset Management Company Limited. Readers should before investing in theScheme make their own investigation and seek appropriate professional advice.

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Statutory Details: Trustee:

Investment Manager: Sponsor:

Scheme Classification & Investment Objective: Motilal Oswal MOSt Shares M50 ETF

(MOSt Shares M50), an open ended Exchange Traded Fund

Asset Allocation:

Load: Terms of

Issue: Minimum Application Amount: During NFO, Ongoing Basis,

Directly with

the Fund:

Face Value & Issue Price:

Risk

Factors: (1) All the Mutual Funds and securities investments are subject to market risks and there can be no assurance

that the Scheme's objectives will be achieved (2) As the price / value / interest rates of the securities in which the

Scheme invests fluctuates, the Net Asset Value (NAV) of units issued under the Scheme may go up or down depending

upon the factors and forces affecting the securities market (3) Past performance of the Sponsor/AMC/Mutual Fund

and its affiliates does not indicate the future performance of the Scheme and may not provide a basis of comparison

with other investments (4) Motilal Oswal MOSt Shares M50 ETF (MOSt Shares M50) is the name of the Scheme and

does not in any manner indicate either the quality of the Scheme, its future prospects and returns. Investors are

therefore urged to study the terms of offer carefully and consult their Investment Advisor before they invest in the

Scheme (5) The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Mutual

Fund beyond the initial contribution made by it of an amount of Rs. 1 Lac towards setting up of the Mutual Fund (6)

Motilal Oswal Asset Management Company Limited (MOAMC) has no previous experience in managing a Mutual

Fund. The present Scheme is the first Scheme being launched under its management (7) The present Scheme is not a

guaranteed or assured return Scheme. Scheme Specific Risk Factors: Investment in the scheme shall be subject to

various other risk factors including but not limited to risk associated with investment in Equities such as trading

volumes, settlement risk, liquidity risk, default risk, tracking error risk, calculating agent risk, Underlying Basket risk,

risk associated with investment in derivatives, risk of fundamentally weighted Basket, risk of total return, etc. IISL

Constitution: Motilal Oswal Mutual Fund has been set up as a trust under the Indian Trust Act, 1882.

Motilal Oswal Trustee Company Limited. Motilal Oswal Asset Management Company Ltd.

Motilal Oswal Securities Ltd.

that seeks investment return that corresponds (before fees and

expenses) generally to the performance of the MOSt 50 Basket (Underlying Basket), subject to tracking error.

Securities constituting MOSt 50 Basket: 95%-100%; Debt and Money market instruments and cash at call: 0-5%. The total

exposure to Derivatives would be restricted to 10% of the net assets of the Scheme. Entry Load: Nil Exit Load: Nil

Rs. 10,000/- and in multiples of Re. 1/- each. On the

Exchange: The units of the Scheme are proposed to be listed on the Capital Market Segment on National Stock Exchange of India

Ltd. (NSE). On NSE, the units of the Scheme can be purchased/sold in round lot of 1 unit and in multiples thereafter.

The minimum number of units of the Scheme that investors can create/redeem in exchange of portfolio deposit and cash

component is 50,000 units and in multiples thereof. Offer of units of Rs. 10/- per unit for cash at a

premium approximately equal to difference between the face value of Rs. 10/- and 1/100th of the value of MOSt 50 Basket during

the New Fund Offer and at NAV based prices on ongoing basis. Investor Benefits and General Services: During NFO, Investors can

also subscribe to the units through the mutual fund trading platforms viz. BSE StAR MF of Bombay Stock Exchange Limited (BSE)

and Mutual Fund Service System (MFSS) of NSE. The AMC will calculate and publish the first NAV of the Scheme not later than 30

days from the closure of the NFO. Subsequently, the NAVs will be calculated and disclosed at the close of every Business Day.

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Disclaimer:

S&P Disclaimer:

NSE Disclaimer:

Please read the Scheme Information

Document (SID) & Statement of Additional Information (SAI) carefully before investing.

The MOSt 50 Basket is not sponsored, endorsed, sold or promoted by India Index Services & Products Limited (IISL).

MOSt 50 Basket has been developed by MOAMC and IISL has calculated and maintained as per the specifications and requirements

of MOAMC. IISL does not make any representation or warranty, express or implied regarding the advisability of investing in the

products linked to MOSt 50 Basket and availing the services generally or particularly or the ability of MOSt 50 Basket to track

general stock market performance in India. Please read the full Disclaimers in relation to the MOSt 50 Basket in the Scheme

Information Document. “S&P®” and “Standard and Poor's®” are trademarks of S&P, and have been licensed for

use by India Index Services & Products Limited in connection with the S&P CNX Nifty Index. MOSt Shares M50 is not sponsored,

endorsed, sold or promoted by India Index Services & Products Limited ("IISL") or Standard & Poor's ("S&P"), a Delaware limited

liability company. Neither IISL nor S&P makes any representation or warranty, express or implied, to the owners of MOSt Shares

M50 or any member of the public regarding the advisability of investing in securities generally or in MOSt Shares M50. Please read

the full Disclaimers in relation to the S&P CNX Nifty Index in the Scheme Information Document. It is to be

distinctly understood that the permission given by NSE should not in any way be deemed or construed that the Scheme Information

Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the

Scheme Information Document. The investors are advised to refer to the Scheme Information Document for the full text of the

'Disclaimer Clause of NSE'. For further Scheme Specific Risk Factors & other details,

A copy of SID, SAI and KIM

alongwith the application form are available at the office of the AMC, R&T, Distributors, or can be downloaded from

www.motilaloswal.com/assetmanagement and www.mostshares.com Investors can also contact us on our toll free number 1800-

200-6626 or send email at [email protected]

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Call: 1800-200-6626 l SMS: M50 to 575753E-mail: [email protected]

Website: www.mostshares.comwww.motilaloswal.com/assetmanagement