Investing in Indian equities lately feels like trying to ride a bicycle through a monsoon. One minute you're coasting on a high of domestic liquidity, and the next, a global sell-off splash hits you right in the face. Honestly, if you've been tracking the Motilal Oswal Large and Midcap Fund lately, you know exactly what I’m talking about. It’s a fund that doesn't just "participate" in the market; it basically tries to outrun it, for better or worse.
Most people look at a fund name and think they’re getting a safe, 50-50 split of steady giants and growing teenagers. But this fund is different. It's aggressive. It's concentrated. And in the opening weeks of 2026, it’s been a wild ride.
The Strategy Nobody Tells You About
You’ve probably heard the marketing pitch: "Buy Right, Sit Tight." It sounds like a cozy Sunday afternoon. In reality, the Motilal Oswal Large and Midcap Fund operates more like a high-conviction sniper than a broad-market net.
As of early 2026, the fund is sitting on a massive AUM (Assets Under Management) of roughly ₹15,055 crore. That’s a lot of weight to throw around. While the regulatory mandate requires at least 35% in large caps and 35% in mid caps, the fund managers—currently a team including Ajay Khandelwal, Niket Shah, and Rakesh Shetty—often use that remaining 30% to take big swings.
Sometimes, those swings land on small caps. Recently, the small-cap exposure was hovering around 23.9%. That’s high. It explains why the fund can feel like a rocket during a bull run but hurts like a stubbed toe when the market corrects.
Why the Recent Dip Isn't Just "Market Noise"
If you check the NAV as of mid-January 2026, you'll see it’s around ₹32.28 for the Regular plan and ₹35.47 for Direct. The numbers look a bit bruised. In the last three months, the fund has been down over 7%.
Why? Because the portfolio is heavily concentrated in sectors like Industrials (40%) and Consumer Cyclicals (22%). When the Nifty 50 took a 2.5% hit in the first few days of 2026 due to FII selling and global jitters, these high-beta sectors got hammered.
- Concentration Risk: The top 10 holdings account for about 41% of the entire portfolio.
- The "Eternal" Factor: Their top holding, Eternal Ltd, makes up over 5.5% of the fund. If that one stock has a bad week, the whole fund feels the heat.
- Active Churn: This isn't a "buy and forget" setup. The portfolio turnover is around 42% to 48%, meaning the managers are constantly swapping pieces of the puzzle to find growth.
Performance: The Long Game vs. The Short Pain
Look, nobody likes seeing red in their portfolio. But let's be real—1-year returns for this fund have been sluggish, even underperforming the Nifty LargeMidcap 250 TRI benchmark recently.
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But zoom out.
The 3-year and 5-year numbers tell a different story. We're talking about a 3-year CAGR of roughly 25%. That’s massive. It outpaced the category average by a significant margin during the 2023-2025 stretch. Basically, this fund is a beast in a trending market but lacks a "defensive" gear. It doesn't have a "safety first" mindset; it has a "growth at a reasonable price" (GARP) mindset, which is very different.
The Portfolio Mix (As of Jan 2026)
It's fascinating to see where they're putting the money right now. They’ve been trimming some winners and doubling down on others.
- Financial Services: About 15.4%. Names like Bajaj Finance and Muthoot Finance have seen their allocations increase lately.
- Tech and Real Estate: They've kept a smaller but steady foot in these areas, with PB Fintech (PolicyBazaar) and Prestige Estates popping up in the top lists.
- The New Age Bets: They hold Zomato and One97 Communications (Paytm). These are polarizing stocks. You either love them or you hate them, but they represent the fund's willingness to bet on the "digital India" theme.
What Most Investors Get Wrong
The biggest mistake? Treating this like a Core Large Cap fund. It’s not.
If you want stability, you go for a Nifty 50 Index fund. You pick the Motilal Oswal Large and Midcap Fund because you want "alpha"—that extra bit of return that comes from a manager being smart (or lucky) enough to pick the next big winner.
The fund has a Beta of 1.16. In plain English: if the market goes up 10%, this fund aims to go up 11.6%. But if the market drops 10%? Yeah, you're looking at an 11.6% drop or worse. It’s more volatile than its peers. It’s built for people who don't panic when they see a 15% drawdown in a month.
The Expense Ratio Reality Check
For the Direct plan, you’re looking at an expense ratio of roughly 0.69% to 0.70%. Regular plans will set you back about 1.73%.
Is it worth it?
If the manager keeps delivering that 7.8% Alpha (excess return over the benchmark), then yes, the fee is a rounding error. But if the underperformance we've seen in early 2026 persists, that 1.73% for the regular plan is going to start feeling very expensive.
Navigating the 2026 Market Volatility
Current market sentiment in India is... weird. Domestic investors are pumping in SIP money like never before, but Foreign Institutional Investors (FIIs) have been dumping stocks. The Motilal Oswal team seems to be betting on a recovery in Capital Goods and Manufacturing.
They have heavy weights in Bharat Electronics (BEL) and CG Power. These aren't "glamour" stocks like tech, but they are the backbone of the government's "Make in India" push. If you believe the 2026 earnings recovery story that experts like Gautam Shah are talking about, then these holdings make a ton of sense.
Is This Fund Right For You?
Kinda depends on your stomach.
If you are 25 and have a 15-year horizon, the volatility is just a discount. If you are 58 and planning to retire next year, this fund might be a bit too spicy for your "low-salt" portfolio needs.
Wait, what about the exit load?
Standard stuff here. If you pull your money out within 365 days, they’ll clip you for 1%. After a year, it’s free to exit. This is a subtle hint from the AMC: "Don't treat us like a savings account."
Actionable Insights for Your Portfolio
If you're holding this fund or thinking about it, here's the reality:
- Don't Lump Sum Now: With the market showing "worst start in a decade" vibes in January 2026, staggering your entry via SIP is the only sane move.
- Check Your Overlap: If you already own a Midcap fund and a Smallcap fund, check if you're doubling down on the same stocks. This fund has nearly 24% small-cap exposure. You might be more "aggressive" than you realize.
- Taxation Awareness: Remember the new rules. Short-term gains (under 1 year) are taxed at 20%. Long-term (over 1 year) are at 12.5%. Plan your exits accordingly to avoid giving the government a bigger slice than necessary.
- The 5-Year Rule: Only invest money you don't need until 2031. This fund needs time for its high-conviction bets to play out.
The Motilal Oswal Large and Midcap Fund is a high-octane tool. It’s meant for the part of your portfolio that seeks to beat inflation by a wide margin, provided you can handle the bumps along the way.
To manage your risk effectively, ensure this fund doesn't exceed 15-20% of your total equity allocation. Monitor the quarterly portfolios to see if the managers are sticking to their "High Conviction" philosophy or if they're starting to follow the herd—because the moment they stop being different is the moment they stop being worth the premium.