Let's be real for a second. If you’ve looked at the Motilal Oswal Midcap Fund over the last year, you might have felt a bit of a sting. In a market where everything seemed to be going up, this fund decided to take its own path. A path that, quite frankly, left it sitting at the bottom of the charts for the 2025 calendar year. It dropped about 11.8% while the benchmark was out there making gains.
Ouch.
But here is the thing about midcaps. They are moody. And the way Motilal Oswal plays the game is even moodier. They don't do the "safe" thing of holding 60 or 70 stocks to hide their mistakes. They go narrow. They go deep. We are talking about a portfolio that often holds fewer than 30 stocks—sometimes as low as 22. When you're that concentrated, you’re either a hero or a zero in the short term. Right now, a lot of folks are looking at that "zero" phase and wondering if the magic is gone.
Honestly, it isn't. Not if you actually understand how this engine is built.
The "QGLP" Philosophy: More Than Just an Acronym
Most mutual funds talk a big game about their "process." Motilal Oswal is basically obsessed with theirs. They call it QGLP—Quality, Growth, Longevity, and Price.
It sounds like standard marketing fluff, right? But in practice, it’s why the fund looks so weird compared to its peers. Niket Shah and his team aren't looking for "okay" companies. They want the winners of tomorrow. They want businesses with massive moats and the ability to grow earnings at 20% or more for years.
Why the concentration matters
When you hold just 25 stocks, every single one has to pull its weight. If one big bet like Jio Financial Services or Kalyan Jewellers hits a rough patch, the whole NAV feels the heat.
- Risk: High. If they're wrong, they're really wrong.
- Reward: When they're right, they don't just beat the market; they crush it.
You've got to have a stomach for this. If seeing a 15% dip in your portfolio while the Nifty is flat makes you want to sell everything, this fund is definitely not for you. It's built for people who can "Sit Tight"—which is the second half of their "Buy Right, Sit Tight" mantra.
Motilal Oswal Midcap Fund Performance: The Long Game
If you look at the five-year or ten-year charts, the story changes completely. As of early 2026, the fund's five-year CAGR is sitting around 23.7%. That’s still ahead of the Nifty Midcap 150 TRI.
It's a classic case of the "tortoise and the hare," except the tortoise occasionally stops to take a very long nap while the hare zooms past. Then the tortoise wakes up and runs at Mach 5.
Recent Portfolio Moves
Looking at the latest data from January 2026, the fund is heavily leaning into:
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- IT Services: Big bets on companies like Persistent Systems and Coforge.
- Consumer Discretionary: Names like Kalyan Jewellers and Dixon Technologies are mainstays.
- Financials: They’ve held onto high-conviction plays even during the recent volatility.
The AUM (Assets Under Management) has swelled to over ₹36,880 crore. That’s a lot of money to manage with such a concentrated strategy. Usually, when funds get this big, they start diversifying more just to manage liquidity. But Motilal Oswal has largely stuck to its guns, which is either incredibly brave or incredibly stubborn. You decide.
The Elephant in the Room: The 2025 Underperformance
Why did it tank last year? Basically, some of their high-conviction tech and consumer bets faced a "valuation recalibration." That's a fancy way of saying they got too expensive, and the market pulled the rug out.
Plus, the fund has a high Portfolio Turnover Ratio, often over 120%. This means the fund managers are active—kinda hyperactive, actually. They aren't just sitting there; they are constantly trimming winners and trying to find the next big thing. In 2025, those moves didn't pay off as expected.
But history shows that this fund often follows a "worst to first" cycle. It underperforms, people panic and leave, and then it goes on a massive tear.
Is the Expense Ratio Worth It?
The direct plan has an expense ratio of around 0.74%. For an active fund, that's not terrible, but it's not the cheapest either. You’re paying for the research and the "conviction."
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If you wanted "average," you’d buy an index fund for 0.15%. You buy Motilal Oswal because you want that alpha—that extra return that comes from someone picking winners. Just remember, you're also paying for the "alpha risk."
Quick Facts for the Busy Investor
- Fund Manager: Led by Ajay Khandelwal and Niket Shah.
- Exit Load: 1% if you bail before a year. (Don't do that).
- Risk Level: "Very High" on the risk-o-meter. No kidding.
- Top Holding Concentration: Usually, the top 10 stocks make up more than 50% of the fund.
What You Should Actually Do
Investing in the Motilal Oswal Midcap Fund isn't a "set it and forget it" move for the faint of heart. It’s a tactical play for the aggressive part of your portfolio.
Stop looking at the 1-year return. In midcaps, one year is noise. Look at the 3-year and 5-year rolling returns. If the fund is still beating the benchmark over those periods, the process is working.
Don't go all in. Because this fund is so concentrated, it shouldn't be your only midcap exposure. Pair it with a more diversified midcap fund or a large-cap index fund to smooth out the ride.
Use the SIP route. Seriously. With a fund this volatile, trying to time your entry is a loser's game. Let the monthly installments do the heavy lifting. When the NAV drops (like it did recently), your SIP just buys more units at a discount.
Check your horizon. If you need this money in 2027 or 2028, walk away. This is a 7-to-10-year commitment. You need to give the "Quality" and "Growth" parts of the QGLP formula time to actually show up in the stock price.
The bottom line? This fund is for the believers. It's for those who trust that a few great companies will always outperform a basket of mediocre ones. It’s been a rough ride lately, but for the patient investor, these are often the best times to double down rather than fold.
Your Tactical Next Steps
- Audit your current allocation: Check if your total midcap exposure exceeds 20-30% of your portfolio. If it does, adding more here might be too risky.
- Review the Portfolio: Look at the latest factsheet. If you don't believe in the future of Indian IT and domestic consumption, you won't like what's inside this fund.
- Commit to a Timeframe: Write down why you are buying this fund and under what conditions you would sell. "Because it went down 10%" shouldn't be on that list.