In the last few years, the market-cap of small-cap has grown substantially to start from average market cap of ₹34,000 crore while that of micro-cap is about ₹12,000 crore.
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Motilal Oswal Mutual Fund believes staying focused on mid- and small-cap funds over the next 2-3 years will generate wealth on the back of better earnings growth.
Though the macro economic challenges including the uncertainty over the US tariff and forex risk remain elevated, the equity markets have been resilient on the back of continuous retail investment, it said.
Pratik Oswal, Chief of Business – Passive Funds, Motilal Oswal Asset Management Company, said investors should stick to asset allocation and should not attempt to rejig their portfolio based on last year performance as their are lot of moving parts.
It is a good time for investors to increase allocation to equities for creating long-term wealth and invest more in mid- and small-cap funds though large-cap will provide stability, he said at the launch of Motilal Oswal Diversified Equity Flexicap Passive FoFs which closed on January 15.
The one-of-its-kind fund invests 33 per cent each in Nifty 100 (large-cap) and Nifty Midcap 150, besides 17.5 per cent each in Nifty Smallcap 250 and Nifty Microcap 250.
At present, most of the actively managed flexi-cap funds invest 70-80 per cent in large-cap and provides very little opportunity to capture growth in mid- and small-cap stocks, he said.
“Our passive flexi cap fund will be rebalanced every three months but will be triggered only when the stocks in the portfolio gains 35 per cent or falls by 25 per cent to ensure that profits are protected,” he said.
In the last few years, the market-cap of small-cap has grown substantially to start from average market cap of ₹34,000 crore while that of micro-cap is about ₹12,000 crore.
“We are managing a micro-cap passive fund of ₹3,000 crore AUM with semi-annul reset and it has not faced any liquidity constrain till date,” he said.
Besides gold and silver, thematic investments have been gaining traction and the fund house plans to launch more thematic passive funds in this year, said Oswal.
Published on January 6, 2026
