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Kotak Opportunities Fund: Upturn in performance
Thu, Nov 10, 2016
Source : Yash Jashnani, Citrus Interactive

Kotak Opportunities Fund is an open ended large cap equity diversified fund. The primary objective of the fund is to generate capital appreciation from a diversified portfolio of equity and equity related securities. The fund has an AUM of Rs. 867 Crore as on 30th September 2016 which has increased by Rs. 175 Crore compared to last year as on 30th September 2015. The fund has a 1% exit load for redemption or switch outs within one year from the date of allotment of units.

 

Performance

The fund’s performance across various time horizons is extremely good as seen in the table given below. It has beaten its benchmark in all the time periods. It has also beaten the category average in all the time periods except in the 3 Year and 5 Year period.

 

Scheme Name

YTD

6 Months

1 Year

3 Years

5 Years

Since Inception

Kotak Opportunities Fund

17.6

19.61

16.24

23.51

17.18

20.4

 NIFTY 500

11.44

13.84

9.75

17.17

12.11

14.83

Category Average

13.62

16.86

13.19

25.13

17.33

NA

Rank

30/155

46/155

41/152

70/139

57/133

NA

Figures are in % as on 30th October 2016; Returns above 1 year in Compounded Annual Growth Rate (CAGR)

In terms of the calendar year returns the fund has beaten its benchmark in all time periods except in the year 2012. It has generated lower returns than the equity diversified category in all time periods as shown in the table below.

Scheme Name

2011

2012

2013

2014

2015

Kotak Opportunities Fund

-22.85

30.14

4.23

49.95

3.27

 NIFTY 500

-27.19

31.84

3.61

37.82

-0.72

Category Average

-19.65

34.18

5.44

54.29

3.83

Rank

81/155

87/132

88/136

68/138

71/147

 

Risk: In terms of measures of risk such as standard deviation the fund has taken higher risk as compared to its category median and in terms of measures of risk such as Beta (measured over the last 3 years), the risk taken by the fund is lower as compared to the category median.

 

 

Standard Deviation

Beta

Kotak Opportunities Fund

0.93

0.92

Category Median

0.9

0.93

All figures in % as on 30th September 2016

 

Risk-Adjusted Return: In terms of Treynor & Sharpe ratio (measured over the last 3 years) the fund has provided higher risk-adjusted returns than the category median.

 

Treynor

Sharpe

Kotak Opportunities Fund

0.09

0.1

Category Median

0.08

0.08

All figures in % as on 30th September 2016

 

Portfolio

Sector concentration: The fund’s concentration in the top 3 and 5 sectors is lower compared to its category median and top 10 sectors is higher compared to its category median.

 

 

Top 3

Top 5

Top 10

Kotak Opportunities Fund

31.89

44.83

65.79

Category Median

34.18

45.86

64.91

All figures in % as on 30th September 2016

Company concentration: The fund’s Concentration in the top 3, 5 and 10 companies is lower than the category median.

 

Top 3

Top 5

Top 10

Kotak Opportunities Fund

13.12

20.05

34.88

Category Median

16.59

24.21

40.4

All figures in % as on 30th September 2016

Sector and Company Concentration signifies that the funds maintain a fairly diversified portfolio.

Number of Equity Holdings: The fund currently holds 56 stocks in its portfolio (30th September 2016), which is Higher than the median stock count of the equity diversified category, which currently stands at 46. In the last 5 years the equity holding averaged 54.

 

Cash Equivalent:        

Its cash equivalent for September was 3.52 per cent. The average cash allocation for the last five years is 3.22 per cent. Its maximum allocation to cash over the last two years is 6.91 percent in February 2016 and lowest was -0.34 percent in August 2014. In 2016 it had an average cash allocation of 1.91 per cent.

 

Portfolio Characteristics:

The top 5 sectors include Bank-Private, Refineries, Cement & Construction, IT-Software & Automobiles - Passenger Cars.

In the last 6 months the fund has bought stocks of Equitas Holdings Ltd., GAIL (India) Ltd. and ICICI Prudential Life Insurance Company Ltd.

Stocks of Bharat Forge Ltd., Colgate- Palmolive (India) Ltd., D-Link (India) Ltd., Dr. Lal Path labs Ltd., Max India Ventures & Industries Ltd., & MBL Infrastructures Ltd. Stocks of Max India Ventures & Industries Ltd. & Zee Entertainment Enterprises Ltd.

 

Process

The scheme would invest 65-100% in Equity & Equity Related Securities and 0-35% in Debt and Money Market Securities. The scheme will not invest in Securitized Debt.

The Scheme will invest in a mix of large and mid cap stocks from various sectors, which look promising, based on the growth pattern in the economy. For the purpose of determining mid cap stocks, the market capitalisation of companies will be considered in line with the methodology which is used to determine the Value Research Market Capitalisation Classification of listed stocks on the BSE.

The Scheme will invest across sectors based on performance and potential of companies within the sectors. It will invest in a mix of large cap and mid cap stocks. This portfolio diversification is with a view to derive superior performance compared to other diversified equity schemes. Allocations between asset classes as well as the portfolio mix between large cap and mid cap stocks will be driven by the overall macro economic situation. The portfolio construction will be based on bottom up investment ideas.

The Scheme may invest in listed/unlisted and/or rated/unrated debt or money market securities, provided the investments are within the limits indicated in the asset allocation pattern. Investment in unrated debt securities would be made with the prior approval of the Board of the AMC. The portfolio turnover will not normally exceed 300%.

 

Fund Manager

Harsha Upadhyaya

Mr. Upadhyaya, CFA serves as the Chief Investment Officer of Equity and Fund Manager at Kotak Mahindra Asset Management Company Limited. He has been managing the fund since August 2012. Mr. Upadhyaya has 18 years of experience spread over equity research and fund management.

He served as Senior Vice President and Portfolio Manager of DSP BlackRock Investment Managers Pvt. Ltd. He previously served as a Senior Vice President and Head of Equity at Kotak Mahindra Asset Management Company Limited. He served as Vice President and Fund Manager of Equities at UTI Asset Management Company (P) Ltd. until July 21, 2011. His prior stints have been with companies such as DSP BlackRock, UTI Asset Management, Reliance Group, and SG Asia Securities.

Mr. Upadhyaya has received the CFA charter from the CFA Institute. He received a PGDM in Finance from the Indian Institute of Management, Lucknow in 1996. Mr. Upadhyaya also earned a Bachelor of Engineering in Mechanical Engineering from the National Institute of Technology, Suratkal in 1993.

 

Our View

The fund has shown a good consistency in terms of beating its benchmark. Its performance has shown a good recovery in recent times compared to its peer set and has displayed a good return-risk profile. The fund manager also has a good track record. It can be considered for large cap allocation in your portfolio.  

 

 
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