The Hindu Business Line : Kotak Opportunities Fund: Hold

Investors can retain their units in Kotak Opportunities Fund, which now has a three-year track record. With a change in management in the last quarter, investors need to watch for any alterations in strategy before taking fresh exposures to the fund.

Kotak Opportunities generated a return of 58 per cent over the last three years, beating benchmark S&P CNX-500 by 15 percentage points. The fund’s mandate is to invest across market capitalisation segments and may be compared to flexi-cap funds. Over the past year, Opportunities saw a 30 per cent decline in assets under management (despite a steady climb in its NAV), although inflows were seen in several other diversified funds during the period.

The fund prefers exposures to large-cap stocks of late, the strategy having returned well during the recent rally. Mid-cap stocks with market capitalisation of less than Rs 5,000 crore were restricted to 17 per cent of the assets.

Suitability: Kotak Opportunities Fund actively churns its portfolio and appears to book profits as and when the opportunity arises as its mandate also permits a portfolio turnover of 300 per cent. Given this active portfolio management combined with a strategy to actively shift across sector and market caps, the fund would be more suitable for aggressive investors.

Performance: The fund’s NAV grew by 59 per cent over the past year and it outperformed the benchmark by 14 percentage points. Over a two-year period, the fund trailed its benchmark in eight of 24 months on rolling return basis.

Choice selection of stocks over the past year boosted its performance and placed it among the top quartile of the performance chart. Reduction in exposure to IT sector and increased holdings in banking, construction and minerals over the past quarter were among the fund’s deft moves that returned well. The fund’s addition of Sesa Goa to the portfolio in August was a well-timed move as the stock moved up 85 per cent since then.

Mr Krishna Sanghvi and Mr Anurag Jain replaced Mr Nikunj Doshi as fund managers from July 2007.

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