Mutual Funds

Kotak Equity Opportunities: Beats volatility over long term

Yoganand D | Updated on April 04, 2020 Published on April 04, 2020

Nippon India stopped accepting lumpsum investment in the small cap fund on March 26 and capped STP and SIP to ₹1 lakh per instalment   -

Has outdone its benchmark, Nifty 200 TRI, over past one-, three- and five-year periods

The Covid-19 pandemic has intensified the volatility in the global as well as domestic equity market. The correction provides buying opportunity for investors with a long-term horizon. Investors with a moderately high risk appetite looking to invest in the large- and mid-cap category can accumulate units of Kotak Equity Opportunities. Investing through the systematic investment plan (SIP) route can mitigate market volatility.

The fund has steadily outperformed its benchmark index, the Nifty 200 TRI over the past one-, three-and five-year periods. In the longer term, for instance, over the past seven- and 10-year periods, the fund has outpaced the benchmark by 2-3 per cent. The fund has been rated five-star by BusinessLine Portfolio Star Track MF Ratings.

In the last one year, the fall in the scheme’s NAV has been lower than its benchmark’s — the fund has tumbled 23.3 per cent, whereas the Nifty 200 TRI has plummeted 28.9 per cent.


Performance and strategy

After marginally outperforming the category in 2017, the fund turned an underperformer in 2018.

But it bounced back strongly in 2019 and registered category-beating returns. It has been in the top quartile of the category over the past three- and five-year periods. The scheme is best suited for disciplined investors who can remain invested in it for more than four years. Kotak Equity Opportunities has outpaced some of its peers in the long run, namely DSP Equity Opportunities, SBI Large & Midcap and L&T Large and Midcap.

The fund has to invest at least 35 per cent each in both large- and mid-cap stocks. In the recent months, it has increased the mid-cap allocation, possibly due to the significant correction in valuation in these stocks. The recent allocation between large- and mid-cap is 45 per cent each, and small-cap has 6 per cent allocation. It also takes debt and cash call. Kotak Equity Opportunities hold 55 stocks in the kitty. The top 10 stocks constitute 39 per cent and the top three sectors is 36 per cent of the portfolio. Banks, gas and cement are the current top preferred sectors. The banking sector portfolio is dominated by private banks such as ICICI Bank, HDFC Bank and Axis Bank.

The fund has upped its allocation to consumer non-durables and added auto ancillary as well as paper sectors in the last six months.

Besides, it is overweight in industrials and cement sectors compared with the benchmark.

On the other hand, it is underweight in financials, FMCG and auto. Hindustan Unilever, United Breweries and Kotak Mahindra Bank were added to the portfolio recently.

Published on April 04, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.