Mutual Funds

Kotak Select Focus: INVEST

Parvatha Vardhini C | Updated on March 10, 2018

IW16 Spot1 Kotak.eps

Kotak Select Focus is a good choice for investors looking to diversify their equity fund holdings. This fund has performed consistently, churning sectors and stocks with efficacy.

Although a steady performer, the only factor that pegs up the risk a bit is the limited track record of the fund. Launched just as the markets were gaining steam after the 2008-09 crash, it has been around for about four years now. But the fact that the fund invests predominantly in large-caps provides a level of comfort.

About 85 per cent of its current holding is in large-caps.

Performance and strategy

Kotak Select Focus is a large- and mid-cap oriented fund benchmarked to the Nifty. Over one-, two- and three-year time frames, the fund has outperformed the benchmark by up to two percentage points. During these periods, its returns have also bettered some established funds in its category.

In the short time it has been in existence, the fund has impressed with its performance during market rallies and falls. In 2011, when the Nifty fell about 24.5 per cent, the fund managed to contain the fall in its NAV (Net Asset Value) to only 22 per cent, bettering the category average. While it remained invested in equities at over 90 per cent throughout this period, right sector calls helped it sail through. During this fall, it stepped up on defensive sectors.

Its consumer non-durable exposure, for example, moved up from about 12 per cent in January 2011 to 18 per cent by December. At the same time, it exited the industrial capital goods space by mid-2011. In rallies too, it has churned sectors quite well, stepping up on winning horses such as pharma and IT in 2010.

Besides, its stock choices have also paid off. In 2012, when mid-caps caught the fancy of the markets, the fund benefited from its holdings in stocks such as Federal Bank and entered top performers such as MRF.

It also got it calls right in the auto sector, be it the exit from Hero MotoCorp by July 2012 or the gradual increase in holdings in Mahindra & Mahindra.

Over all, the fund is among the mid-quartile performers in its category and is ideal for those looking for consistent rather than top-of-the-class returns. The NAV of the growth option is Rs 12.5. Harsha Upadhyaya is the fund manager.

Published on June 15, 2013

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