Motilal Oswal Small Cap Fund: Make Your Investments Simple Now

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The Motilal Oswal Small Cap Fund is a popular investment option for those looking to diversify their portfolios with a focus on small-cap stocks. Managed by Motilal Oswal Asset Management Company, a well-established player in the Indian mutual fund industry, this fund offers several attractive features and benefits.

In this article, we will delve into the key features, performance, and benefits of the Motilal Oswal Small Cap Scheme to help you make informed investment decisions.

Key Features of Motilal Oswal Small Cap Fund

The key components of this scheme are mentioned below:

Investment Objective

The primary objective of the Motilal Oswal Small Cap Mutual Fund is to generate long-term capital appreciation by investing in small-cap stocks. These stocks have significant growth potential, making them an appealing choice for investors looking to capitalize on the growth of smaller companies.

Portfolio Composition

The fund boasts a diversified portfolio with significant investments across various sectors. Major sectors include Capital Goods, Services, Financial, Consumer Discretionary, and Healthcare. This diversification helps spread risk and capitalize on growth opportunities in different industries.

Top 5 Holdings of Motilal Oswal Small Cap Fund

The top five holdings in the fund are:

1.        Bharat Electronics Ltd.

2.        Vijaya Diagnostic Centre Ltd.

3.        V-Guard Industries Ltd.

4.        Triveni Turbine Ltd.

5.        Blue Star Ltd.

Expense Ratio

The fund has an expense ratio of 0.58%, which is relatively low compared to other funds in the same category. A lower expense ratio means that a larger portion of the fund’s returns is passed on to investors.

Exit Load

The fund charges an exit load of 1% if the investment is redeemed within one year. This encourages long-term investment, aligning with the fund’s goal of capital appreciation over the long term.

How Motilal Oswal Small Cap Fund Balance Risk?

The Motilal Oswal Small Cap Mutual Fund presents a very high-risk investment opportunity, making it ideal for investors who can tolerate significant fluctuations in their investment value for the potential of higher returns. Due to its focus on small-cap stocks, this fund is inherently more volatile and risky compared to funds investing in larger, more stable companies.

Small-cap companies’ share prices are more sensitive to market conditions, leading to dramatic ups and downs. Investors in the Motilal Oswal Small Cap Fund should have a higher risk appetite and a longer investment horizon, as they must be prepared for significant short-term value fluctuations.

The potential upside of investing in a small-cap fund like this lies in the possibility of earning outsized returns if the fund manager successfully identifies and capitalizes on the growth potential of lesser-known companies. However, this higher return potential comes with increased risk.

Therefore, before investing in the Motilal Oswal Small Cap Mutual Fund, investors should carefully assess their own risk tolerance and investment goals. It’s crucial to maintain a well-diversified portfolio and be willing to stay invested for the long term to weather the volatility associated with small-cap investing.

Motilal Oswal Small Cap Mutual Fund: Performance Analysis

It is important to analyse the performance of a fund to understand the consistency with which it will generate returns. Here is a detailed observation of this fund’s performance at different intervals:

Return Outperformance

The fund has generated the highest return among small-cap funds over the last three months. This indicates strong short-term performance and effective fund management.

Return/Risk Comparison

While the fund has performed well overall, it has performed poorly compared to its category. This suggests that while the fund is capable of high returns, it also carries higher risk.

1-Year Performance

Over the past year, the fund has returned 12.06%, outperforming the category average. This demonstrates the fund’s ability to deliver strong performance in the short term.

3-Year Performance

Over the past three years, the fund has returned 34.28%, which is lower than the category average. This indicates that while the fund has potential, its performance can vary over longer periods.

How is the Motilal Oswal Small Cap Fund Taxed?

Let us break down the tax implications of Motilal Oswal Small Cap Fund’s short-term and long-term investments:

Short-Term Capital Gains (STCG)

·        If you redeem your investment within one year, the gains you make are considered short-term.

·        These short-term gains are taxed at a rate of 15%.

·        So, if you make a profit on an investment you held for less than a year, you’ll need to pay 15% of that profit in taxes.

Long-Term Capital Gains (LTCG)

·        If you hold your investment for more than one year, any gains you make are considered long-term capital gains.

·        These long-term gains are taxed at a rate of 10%, but only if your total long-term capital gains exceed ₹1 lakh in a year.

·        This means that if your total long-term gains for the year are less than ₹1 lakh, you don’t have to pay any tax on those gains.

·        But if your total long-term gains cross the ₹1 lakh mark, you’ll need to pay 10% tax on the gains above ₹1 lakh.

In summary, short-term investments (held for less than a year) are taxed at 15%, while long-term investments (held for more than a year) are taxed at 10% only if the total long-term gains exceed ₹1 lakh in a year. This is an important consideration when planning your investment strategies.

How to Invest in Motilal Oswal Small Cap Fund?

The following steps will guide you to investing in this scheme:

Minimum Investment

The minimum investment in the fund is ₹500 for a lump sum investment and ₹500 for a systematic investment plan. This low minimum investment makes the fund accessible to a wide range of investors.


You can redeem your investments in the fund via online platforms or by contacting the fund house directly. This provides flexibility and convenience for investors.


The Motilal Oswal Small Cap MF is a good option for investors looking to invest in small-cap stocks with a focus on long-term capital appreciation.

Investors can start an early SIP to secure their chance to include this scheme in their portfolios. It will give flexibility and disciplined savings for a long duration.

Despite its high-risk profile, the fund has performed well in the short term and offers a diversified portfolio. Investors should carefully consider their risk tolerance and investment goals before investing in this fund. The potential for high returns makes it an attractive choice for those willing to accept the associated risks.

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Written by sharmajatin