Motilal Oswal Midcap Direct Growth INF247L01445

Motilal Oswal Midcap earns an Average Process Pillar rating.

The largest contributor to the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The process is limited by its parent firm's subpar risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.3 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

This strategy has tended to hold more growth stocks than others in the Mid-Cap Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Examining additional factor exposure, this strategy has constantly downplayed yield, with its portfolio holding fewer companies with high dividend or buyback yields compared with Morningstar Category peers in recent years. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. Different from its historical appetite, however, the strategy was more exposed to the Yield factor compared than its Morningstar Category peers in recent months. This strategy has also demonstrated more exposure to high-momentum stocks over peers in recent years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. In this month, the strategy also had more exposure to the Volatility factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in technology and consumer cyclical relative to the category average by 32.1 and 2.5 percentage points, respectively. The sectors with low exposure compared with category peers are financial services and basic materials, underweight the average by 19.3 and 6.7 percentage points of assets, respectively. The portfolio is positioned across 26 holdings and is quite concentrated. In particular, 54.8% of the fund’s assets are housed within the top 10 holdings, versus the typical peer's 23.2%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 95% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.