Focus and playing to one’s limitations are themes that figure repeatedly in a conversation with Aashish P Somaiyaa, Managing Director & CEO of Motilal Oswal Asset Management Company (MOAMC).

The investing philosophy that the company swears by its ‘buy right and sit tight’. Motilal Oswal AMC has a few funds focusing on just a few stocks and eschews unnecessary diversification.

While others may launch thematic funds, opportunistic funds, seasonal funds, cyclical funds, and the like, MOAMC has decided that it will stick to the basics, identify quality stocks based on a process and hold on to them. He mentions pointedly that when the chaff is filtered out, there are perhaps about a hundred stocks out of the 7,000-odd listed stocks that would pass their test.

Aren’t there pressures to include more stocks in their investment decisions in order to diversify and control risks? Somaiyaa answers with a smile, “I am paid to say No.”

He also takes the question on diversification head on. “Once you start having more stocks for diversification, then very soon it takes on the character of a market portfolio. So how are you going to generate market beating returns?” he asks.

Somaiyaa is quite conscious that his funds contribute to a very small portion of the investment universe available — but he is happy to play within that space. “We are one of the many options for an investor and it is enough if we get a small fraction of his wallet,” he said.

He provides a colourful analogy to explain what MOAMC is trying to do vis-à-vis the rest of the industry. He said his fund is taking on the role of a character artiste in movies — of doing a limited job to perfection as compared to a couple of others that are mimicking what some megastars do — of playing all roles.

B2B model

When asked about opening new branches, Somaiyaa said they operate on a B2B model since that was economical. He said if a fund had to go to 200 towns, then the expenses on salesmen, rentals, IT infrastructure, customer service, administration and compliance alone would touch ₹200 crore. And to afford that, their equity fund size would have to be at least ₹10,000 crore. He said, “Retail customers are best served by intermediaries and aggregators being closer to their doors.”

MOAMC has assets under management of just under ₹4,000 crore. Somaiyaa expects that to double by the end of this fiscal.

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