The Hindu Business Line : Kotak Opportunities: Hold

UNITHOLDERS may retain their holdings in Kotak Opportunities. Launched last August, the fund was perhaps among the first to introduce the concept of investing in stocks across market capitalisations, a theme that has spurred several new fund offers in recent months.

Over the past year, the fund has delivered a return of 48 per cent, outpacing its benchmark — the broad-based S&P CNX 500 — by about five percentage points.

The fund also figures in the upper quartile of the performance rankings on a three-month and six-month basis.

Its performance, would, however have to be evaluated over a longer period before fresh exposures are considered.

Suitability: Typically, diversified funds tend to have a clear positioning, with a tilt towards either large-cap or mid-cap stocks. Some funds tend to specify a ceiling on the amount they would invest across market capitalisations.

Kotak Opportunities, on the other hand, has the mandate to invest in stocks across market caps, without any restrictions. It also can take concentrated exposures to certain sectors. The absence of restrictions gives the fund manager a free hand to capitalise on opportunities, depending on the market situation.

This flexibility might help the fund deliver superior returns over the long term. The strategy, however, involves a higher degree of risk.

The fund is better suited for an aggressive investor. It should not be the only fund in your portfolio, but rather an addition, to perk up returns.

Portfolio overview: The fund has a small asset base of less than Rs 70 crore. This provides it scope for investing in smaller cap stocks.

The portfolio currently sports a fair blend of mid-cap and large-cap stocks; about 65 per cent of its assets are invested in stocks with a market capitalisation of less than Rs 3,000 crore. The stock has about 35 stocks in its portfolio. Offbeat picks such as Assam Company and Simbhaoli Sugar figure in its top ten holdings.

FMCG stocks, which were neglected for most of 2004, figured early in its portfolio.

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