Motilal Oswal Arbitrage Fund

Derivatives

India Debt Liquid Market

Liquid

Others

Aggressive growth Investor Profile

Investor Profile

1–7 yearsInvestment Horizon

HNI, UHNI, Retail Investor, Mass AffluentTarget Segments

SEBI registered equity mutual fund suitable for all investor categoriesRegulatory Fit

What This Strategy Does

Motilal Oswal Arbitrage Reg Gr is an Arbitrage fund which captures India's ₹2 trillion+ equity arbitrage opportunity through low-risk arbitrage strategies, deploying capital across financials and cyclicals to achieve benchmark-aligned compounding.

CW Expert Research Notes

Consistent Outperformance

The fund has demonstrated resilient benchmark-relative behavior, outperforming in 11 out of 11 years, highlighting its ability to deliver consistent outcomes across market cycles.

Differentiated Construction

The fund's construction differs from peers through its overweight in the financialServices sector and bias towards large-cap equities, expressing conviction in sector leaders and quality franchises.

Defensive Characteristics

With a low volatility profile and positive sharpe ratio, the fund exhibits downside protection characteristics, potentially serving as a risk-mitigating allocation within a broader portfolio.

Performance and Risk Analysis

Historical returns, volatility patterns, and how this fund has performed relative to its benchmark.

Fund Performance

0.0% AnnuallyAlpha

+0.0% vs +0.0% benchmarkSince Inception

+0.0% vs +0.0% benchmark3Y Annualized

+0.0% vs +0.0% benchmark5Y Annualized

Motilal Oswal Arbitrage Fund

Benchmark Index

Benchmark Performance Comparison

Motilal Oswal Arbitrage Fund

FD Returns

Risk Profile

Standard Deviation0.6%

Sharpe Ratio0.46

Detailed Risks

Market Risk

Prolonged economic slowdown could reduce arbitrage opportunities, mitigated by diversified exposures.

Liquidity Risk

High mid-cap allocation risks liquidity stress, mitigated by large-cap buffer.

Concentration Risk

Concentrated mid-cap exposure vulnerable to earnings misses, mitigated by diversification.

Specific Strategy Risk

Regulatory changes impacting arbitrage strategies could disrupt execution, monitored closely.

Strategy Details

A closer look at the investment thesis, portfolio construction, and current holdings.

Core Investment Theme

Captures pricing inefficiencies across asset classes through low-risk arbitrage strategies. This approach generates consistent returns with minimal volatility by exploiting temporary mispricings between cash and derivative markets. The impact is a steady income stream with low correlation to broader equity markets, providing portfolio stability and diversification.

Broader Market View

Market Outlook

Equity markets appear to be entering a mid-cycle phase, with consumption and earnings recovery gaining traction. This normalization backdrop, supported by trends like reviving capex and credit growth, presents an opportune entry point. However, risks such as margin pressures and competitive dynamics warrant a selective approach aligned with sectors poised to capitalize on domestic demand formalization.

Why This Strategy is Attractive Now

The strategy's balanced positioning across consumer, financial, and technology sectors seems well-suited to harness formalization tailwinds. The portfolio's diversification across around 70 holdings, including market leaders, offers exposure to cyclical upside potential tempered by defensive positioning. With a moderate risk profile, the strategy appears positioned to navigate the environment with risk-adjusted participation in areas of earnings strength.

Investment Style & Process

Investment Style

The portfolio exhibits characteristics of a Quality Growth strategy, emphasizing companies with durable competitive advantages, consistent earnings growth, and reasonable valuations relative to their long-term potential.

Why it Makes Sense

In the current environment of moderating economic growth and elevated uncertainty, a Quality Growth approach can provide exposure to companies with resilient business models and pricing power, potentially mitigating downside risk while participating in secular growth opportunities.

High-Level Investment Process

Sourcing: The strategy appears to focus on companies with strong franchises, sustainable competitive advantages, and attractive growth runways, sourced through rigorous fundamental research and analysis. Selection: The selection process suggests a preference for companies with consistent profitability, robust cash flow generation, and reasonable valuations relative to their growth prospects, aiming to balance growth potential with downside protection. Construction: Portfolio construction is consistent with a diversified, conviction-weighted approach, with an emphasis on managing risk through position sizing, sector exposures, and a focus on quality characteristics.

Portfolio Holdings Overview

SectoralAllocation

Capital Goods14.11%

Utilities0.8%

Services11.83%

Consumers14.88%

Financial Services42.24%

Energy & Infra11.6%

Technology4.53%

Geographic Allocation

Domestic100%

Top Stock Holdings

CompanySectorAllocation

Net Receivables / (Payables)Utilities69.57%

Motilal Oswal Liquid Dir GrUtilities11.48%

Reliance Industries LtdEnergy & Infra6.60%

Collateralized Borrowing & Lending ObligationUtilities6.18%

HDFC Bank LtdFinancial Services5.22%

Cholamandalam Investment and Finance Co LtdFinancial Services4.54%

Bharti Airtel LtdServices4.47%

Aditya Birla Capital LtdFinancial Services2.85%

Kotak Mahindra Bank LtdFinancial Services2.64%

IndusInd Bank LtdFinancial Services2.46%

Fund House Management

The asset management company’s track record, AUM scale, and fund manager credentials.

Fund Manager Track Record

Atul Mehra

Mr. Atul Mehra has experience of 8 years. Manages 98 funds at Motilal Oswal Asset Management Company Limited - Portfolio Managers with an AUM of approximately ₹689 Cr

18 years

Combined Team Experience

₹ 10,850 Cr

Assets Under Management

Rakesh Shetty

Co-Portfolio Manager

Mr. Rakesh Shetty has experience of 4 years. Manages 276 funds at Motilal Oswal Asset Management Company Limited - Portfolio Managers with an AUM of approximately ₹10,161 Cr

CW Expert Take

Motilal Oswal operates with a quantitative approach to arbitrage opportunities. Their investment process combines statistical models with risk management frameworks to identify and capitalize on pricing inefficiencies across asset classes. The fund house maintains disciplined portfolio construction, actively managing positions while adhering to predefined risk parameters.

Investment Philosophy & Approach

Disciplined Approach

Motilal Oswal AMC follows a disciplined investment approach focused on risk management.

Rigorous Research

The fund house employs rigorous research to identify investment opportunities.

Long-Term Perspective

Motilal Oswal AMC maintains a long-term perspective in portfolio construction.

Operational & Regulatory Details

What it costs to invest, transaction mechanics, and regulatory disclosures you should know.

Costs and Fees

Total Expense Ratio (TER)1.63%

Regulatory & Tax Information

INF247L01EG4

ISIN

DailyDealing Frequency

LTCG | >1Year 12.5%% on gain above 1.25 Lakh

STCG | <1Year 20%%

Tax Implications (India)