Market Voice: Nitin Rakesh, Motilal Oswal AMC's MD & CEO

'We'll invest in companies insulated from global markets'

Motilal Oswal Asset Management Company has announced the launch of Motilal Oswal MOSt Shares M50, an open-ended exchange-traded fund. The company’s Managing Director and CEO, Nitin Rakesh, tells Priya Kansara Pandya how the fund is different from the other funds in the market. Excerpts:

Please tell us about your new fund, M50. What is its structure and objective?
We have launched MOSt Shares M50 — an open-ended exchange-traded fund (ETF). Here, the benchmark is MOSt 50 Basket, which has the same companies as the S&P CNX Nifty Index (Nifty).

The fund will invest in securities comprising the MOSt 50 Basket, in a similar proportion. Their weight will take guidance from MOSt 50 Basket’s methodology, or parameters like return on equity, net worth, earnings and market prices.

Higher weights will be assigned to companies with superior financial performance and reasonable valuation.

Also, since it is an ETF (exchange-traded fund), it will give benefits of a fund and can also be traded like a share.

How is your fund different from an index fund, since you have the same benchmark (Nifty)?
In an index fund, a company is given weight according to its price, which drives the market cap. We are trying to correct that, as we are giving more importance to fundamentals. The market cap is driven more by market sentiments and movements rather than fundamentals.

Talking about markets, what is your strategy in the current scenario?
The US and Europe are now mature economies and will see a slow but steady growth in future. Though the savings rate has moved up from zero to 10 per cent in the last two years, it has come at the cost of consumption. They went through a phase of high spending and low saving, which needs to be corrected. Thus, our strategy is to find companies that are relatively insulated from global markets, or those with domestic consumption stories, like banking, automobiles, capital goods and FMCG.