Motilal Oswal Asset Management Company (MOAMC) today announced the launch of Motilal Oswal Hedged Equity Multifactor Strategy AIF. Known for launching an array of passive funds, the new offering from Motilal AMC is an open-ended quantitative equity fund in the Category III AIF segment.
The Motilal Oswal Hedged Equity Multifactor Strategy AIF, is a first of its kind strategy that combines multifactor, model-driven investing approach along with tail-hedging. This scheme is designed in such a way that it has a low overlap with Nifty50 companies and correlation of about 65-70% leading to a differentiated portfolio exposure.
The Equity portfolio is 100% systematic with no human intervention in stock selection and weighting. The equity strategy uses investment factors such as Quality, Low Volatility, Value, and Momentum to form a concentrated portfolio of 20-25 equity stocks.
Tail-Hedging is designed to protect the investor from black swan events which are unpredictable but at the same time have been the most significant contributors of portfolio losses. The fund seeks to provide this protection by creating a low-cost ‘long volatility’ position that benefits when market volatility invariably shoots up during such periods.
During the span of 10 years starting from 2011, the back-tested returns of the strategy was able to consistently generate higher returns at lower volatility as compared to the NIFTY 500 TRI, which is the scheme’s benchmark.
Mr. Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company Ltd said, “Motilal Oswal AMC have always been pioneers in bringing innovative investing solutions to investors. The Motilal Oswal Hedged Equity Multifactor Strategy AIF is a unique offering that combines the benefits of rules-based investing and tail-hedging with the objective of delivering superior portfolio outcomes across various market conditions.”
Commenting on the launch, Mr. Sankaranarayanan Krishnan, Fund Manager, PMS & AIF schemes, Motilal Oswal Asset Management Company Ltd said, “The fund has a differentiated portfolio, with a low overlap with the NIFTY 50 index and lower BFSI exposure, leading to a much lower correlation with the NIFTY 50 index. The portfolio is based on a model that combines factors such as Quality and Low Volatility, which have historically delivered alpha in falling markets, along with factors like Value and Momentum, which have traditionally done well in rising markets. The addition of Tail Hedging not only protects the portfolio from severe losses but also provides capital to invest in market lows.”
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