Motilal Oswal tweaks exit load rule to discourage early redemption in smallcap, midcap funds
Sebi's warning on froth building up in pockets of the broader market, Motilal Oswal has increased the tenure of the holding period for exit load calculation in its smallcap and midcap mutual funds.
The exit load for midcap and smallcap funds is changed to 1% if redeemed on or before one year from the date of allotment. Earlier the tenure for this was on or before 15 days. No exit load if redeemed after one year from the date of allotment. The tenure for the same was 15 days earlier.
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The fund house informed about this change to its unitholders through notice-cum-addendum.
The changes are effective from March 18, 2024.
A switch-out or a withdrawal shall also be subject to the exit load like any redemption. The changes mentioned above in the exit load of midcap and smallcap schemes will be applicable on a prospective basis for investments made on or after March 18, 2024, and shall be in force until further notice.
This notice cum addendum forms an integral part of the SID and KIM of the schemes above. The SID and KIM of the schemes of MOMF shall be suitably modified. All other terms & conditions of them shall remain unchanged.
The fund house released its stress test report, which shows that Motilal Oswal Midcap Fund requires five days to liquidate 25% of the portfolio and 10 days to liquidate 50% of the portfolio.
Motilal Oswal Small Cap Fund requires two days to liquidate 25% of the portfolio and three
