Motilal Oswal Nifty Alpha 50 ETF · NSE:MOALPHA50
Motilal Oswal Nifty Alpha 50 ETF — Motilal Oswal Asset Management Company — Investor Presentation (August 2017)
33 slides from Motilal Oswal Nifty Alpha 50 ETF's investor presentation, August 2017
Slide 1: The Zen of Investing: Value, August 2017
The Zen of Investing 4 Value August 2017 pe 5 id
Slide 2: Contents
Contents Why Equities? Why Large caps? Why Value Strategy? Portfolio and Sectors Performance Risk Analysis Qualitative Valuations Strategy Structure Why Motilal Oswal PMS? BUY RIGHT : SIT TIGHT Our Investment Philosophy Management Team
Slide 3: Why Equities?
Why Equities? Key benefits of investing in Equities as an asset class: Participation in entrepreneurship Wealth Creation in long term Dividend income Liquidity in times of exigencies Tax benefits on capital appreciation and income Corporate control in form of voting rights
Slide 4: Why Equities? In a nutshell
Why Equities? In a nutshell Equity markets have historically produced higher returns than gold, real-estate, bank deposits or other fixed income assets over the longer term (source: Bloomberg) Historical data states that the risk of capital loss does exist especially in the shorter term but with
Slide 5: Why Equities? Purchasing Power
Why Equities? Because key objective of investing in equities is to create wealth. Inflation adjusted current values of the investment of Rs. 100 invested in March 1979 1,750 Sensex Fixed Deposit Gold 1,500 If you had invested Rs 100 ..... 1,671 1,250 Purchasing Power 1,000 750 500 250 210 109 - Mar-
Slide 6: Inflation erodes purchasing power of money
Why Equities? Because Inflation erodes the purchasing power of your money. 120 Rupee Inflation erodes purchasing power of money 100 100 80 Value of Rupee has eroded by about 95% from 1979 to 2017. Average inflation rate has been 6.92% for this period. 60 40 20 5.1 CPI = Consumer Price Index - Ma
Slide 7: Markets return as much as growth in earnings
Why Equities? Because markets returns as much as growth in earnings . 21-years CAGR of Sensex at 10% is exactly the same as 21-years Sensex EPS CAGR! Sensex Sensex Sensex YoY EPS YoY Sensex YoY EPS YoY Mar-95 3261 181 Mar-07 13072 16% 720 33% Mar-96 3367 3% 250 38% Mar-08 15644 20% 833 16% Mar-97 33
Slide 8: Why Equities? Food for thought
Why Equities? Food for thought !!! Over long periods of time equities do deliver in line with corporate earnings; but it’s a known fact that the volatility in share prices is way higher than volatility of earnings themselves This volatility in share prices results in emotional response of greed
Slide 9: Why Large-caps? Key traits
Why Large-caps? Key Traits of Large cap companies: Well established track records of Management Sound financials and balance sheets Demonstrated ability to pay dividends Relatively stable companies as compared to midcaps Stocks are seldom mispriced by the markets Wide research coverage
Slide 10: Why Large-caps? Time spent in Nifty 50
Why Large-caps? When fundamental supports, the Large cap always remains a Large cap!!! No of Companies in Nifty 50 Index 17 14 12 8 Always Over 10 Years 5-10 Years 0-5 Years Time spent by the companies in the Nifty 50 Index Large caps have acceptable returns with higher probability of success from
Slide 11: Why Large-caps now?
Why Large-caps now? 19 3 Years CAGR Nifty 50 - 9% (1.29X) Nifty 50 18 Nifty Free Float Midcap 100 - 20% (1.71X) Nifty Free Float Midcap 100 17 BSE Smallcap - 19% (1.68X) S&P BSE Small Cap 16 15 14 13 12 11 10 9 Apr-15 Oct-15 Apr-16 Apr-17 Jul-14 Oct-14 Jul-15 Jul-16 Oct-16 Mar-15 Mar-16 Mar-17 Jun-1
Slide 12: Why Large-caps now? Mean reversion expected
Why Large-caps now? Because mean reversion expected. Nifty 50 - P/E Premium/Discount to Nifty Midcap 100 100% Premium/ Discount 80% 60% 25% 40% Discount 20% 0% -20% -40% -60% Jul-08 Jul-15 Jul-17 Jun-06 Jun-13 Jan-06 Nov-06 Apr-07 Aug-10 Jan-11 Jan-13 Nov-13 Apr-14 Aug-05 Sep-07 Feb-08 Mar-10 Mar-12
Slide 13: Why Motilal Oswal PMS?
Why Motilal Oswal PMS? Motilal Oswal Group possess legacy in equities for over 3 decade Motilal Oswal AMC is chaired by Mr. Raamdeo Agrawal, one of the most honored and trusted name in the investing world One of the pioneers of PMS business with over 14 years of PMS track record Trusted by o
Slide 14: Investment Philosophy: Buy Right Sit Tight
Investment Philosophy BUY RIGHT : SIT TIGHT Buy Right Sit Tight QGLP Buy and Hold: We are strictly buy ‘Q’uality denotes quality of the and hold investors and believe that business and management picking the right business needs skill and holding onto these businesses ‘G’rowth denotes growth i
Slide 15: Why Buy Right Sit Tight is significant?
Investment Philosophy Why BUY RIGHT : SIT TIGHT is significant ? Real wealth is created by riding out bulk of the growth curve of quality companies and not by trading in and out in response to buy, sell and hold recommendations. This philosophy enables investor and manager alike to keep focus on
Slide 16: QGLP Investment Philosophy
Investment Philosophy QGLP – The investment philosophy has been framed out of 20 years of annual wealth creation studies authored by our co–founder, Raamdeo Agrawal. Q-G-L-P Demystified Enduring business, preferably consumer facing Volume growth Compelling business opportunity Price growth Sustainab
Slide 17: Buy & Hold and Focused Portfolio
Investment Philosophy What is the relevance of Buy & Hold and Focused Portfolio? Buy & Hold leads to low churn ratio of the portfolio. If the portfolio is churned many times during a year, the fund will incur higher transaction costs, thus impacting the returns. On the other hand, low churn in the p
Slide 18: Why Value Strategy? Stock universe filtering
Why Value Strategy? Because you deserve the best of the Large cap world ! Over 3500 listed companies in India. Large portion of this is junk stocks which do not have any underlying business fundamentals MOAMC applies QGLP filters and our universe narrows down to 300 odd stocks. High quality, high po
Slide 19: Rigorous stock selection process
Why Value Strategy? Rigorous stock selection process Existing and Emerging Large cap companies Quantitative Secular growth thesis Screening Discount to intrinsic value >30% ‘360 degree view’ of company Fundamental Identify competitive advantages Analysis High conviction ideas Superior risk adjusted
Slide 20: Why Value Strategy? Selection criteria
Why Value Strategy? Because you deserve the best of the Large cap world ! Hence when we select the stocks for Value Strategy we ensure the following: The companies are large in size with an established business of secular nature They are largely consumer facing businesses The companies are mar
Slide 21: Value Strategy Characteristics
Why Value Strategy? Value Strategy Characteristics Focus on return on net worth Companies which are likely to earn 20-25 % on its net worth going forward Balance between growth and value The focus is on buying undervalued companies Buying stable earnings / cash flows in reasonably priced a
Slide 22: Wealth Creation is the forte
Why Value Strategy? Because Wealth Creation is the forte ! Market Rate as BUY & HOLD strategy, leading low churn, Adjusted on lower costs and enhanced returns Stock Purchase Date % Growth Purchase Price 31-Jul-17 A business is prudently picked for Bosch Limited Jun-03 497 24,178 4765% investment
Slide 23: Top Holdings and Sector Allocations
Why Value Strategy? Top 10 Holdings Sector Allocations Scrip Names % Holdings Banking & Finance 0.45 5.09 HDFC Bank Ltd. 12.33 5.11 Auto & Auto Ancillaries 5.34 Kotak Mahindra Bank Ltd. 10.83 Oil and Gas 35.77 Eicher Motors Ltd. 8.54 6.07 FMCG Bosch Ltd. 8.39 7.00 Airlines Bharat Petroleum Corporati
Slide 24: Performance Snapshot
Performance Snapshot Since Inception Value Strategy has delivered a CAGR of 25.26% vs. Nifty 50 returns of 17.31%, an outperformance of 7.95% (CAGR) 30.00 Value Strategy Nifty 50 25.26 25.00 22.70 20.00 17.89 17.31 16.71 15.93 14.67 14.92 15.00 13.88 13.01 10.00 8.60 8.33 9.06 8.26 5.00 0.00 1 year
Slide 25: Performance Since Inception
Performance Since Inception The chart below illustrates Rs.1 crore invested in Value PMS in March 2003 is worth Rs. 25.38 crores as on 31st July 2017. For the same period Rs. 1 crore invested in Nifty 50 is now worth Rs. 9.90 crores. 25.38X 240.00 Value Strategy Nifty 50 Index 190.00 Investment Valu
Slide 26: Rolling Returns
Rolling Returns The data shows rolling returns of the Value Strategy over various time frames. It is worth noting that on 1 year rolling basis, the returns are in a very wide range. The best return made by the Strategy is 174% and the worst return is - 48%. As we increase the time horizon, the
Slide 27: Risk Analysis
Risk Analysis The Value strategy has outperformed the benchmark with a lower level of volatility and has managed to deliver strong returns while offering defensive characteristics, reducing losses during periods of market downturn but participating in the upside. 5 Years Data Portfolio Benchmark* Be
Slide 28: Risk Analysis: Beta and Standard Deviation
Risk Analysis How to interpret Beta Value Strategy year-wise Beta A Beta of 1 indicates that the security's price moves with the 0.96 0.90 market. A beta of less than 1 means that the security is 0.87 0.87 theoretically less volatile than the market and vice versa. Beta 0.79 0.82 0.76 of 0.76 (since
Slide 29: Risk-Return Matrix & Strategy Construct
Risk-Return Matrix & Strategy Construct Strategy Objective: Aims to benefit from the long term compounding effect on investments done in good businesses, run by great business managers for superior wealth creation Investment horizon: - Medium to long term (3 Years +) For Whom: - Investors who like t
Slide 30: Strategy Structure
Strategy Structure Mode of payment By fund transfer/cheque and/or stock transfer Investment Horizon Medium to long term (3 Years +) Benchmark Nifty 50 Index Account Activation Next business day of clearance of funds Portfolio Valuation Closing NSE market prices of the previous day - Investments mana
Slide 31: Chairman
Chairman Raamdeo Agrawal - Chairman, MOAMC Raamdeo Agrawal is the Co-Founder and Joint Managing Director of Motilal Oswal Financial Services Limited (MOFSL). As Chairman of Motilal Oswal Asset Management Company, he has been instrumental in evolving the investment management philosophy and frame
Slide 32: Fund Management Team
Fund Management Team Manish Sonthalia – Head Equity PMS and Alternatives, MOAMC (Fund Manager) Mr. Manish Sonthalia heads the Equity Portfolio Management Services at Motilal Oswal Asset Management Company Ltd. He also, serves as the Chief Investment Officer and the Director of the Motilal Oswal In
Slide 33: Disclaimer
Disclaimer Disclaimer: This presentation has been prepared and issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact
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