The Hindu Business Line : Kotak-30: Invest

EXPOSURES may be considered in Kotak-30, as there is a greater consistency in performance now; the portfolio also appears well-positioned to capitalise on growth opportunities, and to weather any downward trend in the market.

Investors could, however, phase out their exposures using a systematic investment plan over a twelve-month period. This will ensure that a lump-sum is not locked up at one go and investors could also benefit from any weakness in the broad market.

Over the past three years, Kotak-30 has performed well in comparison to benchmark indices; it has turned in superior returns as compared to several peer funds over the past year.

This is a significant change for a fund whose performance tended to be inconsistent a few years ago.

The fund has invested about 80 per cent of its assets in large-cap stocks. With exposures in stocks such as Bharti Tele-Ventures, SBI, Reliance, Infosys and Larsen & Toubro, to name a few, the fund has chosen its core holdings in a manner that has delivered value. Its compact portfolio — just 25-30 stocks — should also be a positive, as equities are likely to deliver moderate returns over the next few years.

Suitability: The risk associated with the fund is in line with what one would expect of a diversified fund with a large-cap focus. Exposure to mid-cap stocks is also at modest levels and does not add to the risk element. While the fund has delivered returns that are more than commensurate to the risks, it would not be among our top picks.

If you have exposures in funds such as Magnum Contra, HDFC Equity, HDFC TaxSaver, Franklin Prima and Magnum Global, you could allocate a part of the portfolio to gain a large-cap exposure. Investors could opt for the dividend re-investment option, as it offers superior tax efficiency and also ensures that you remain invested.

Portfolio overview: The fund has a diversified portfolio. Banking, IT and engineering are the preferred sectors. The fund has exposures to mid-cap plays such as Deccan Chronicle, Television Eighteen, Andhra Sugars, Federal Bank and Navin Fluorine International. Mid-cap stocks account for about 15 per cent of the portfolio.

The small asset base of Rs 170 crore is a positive, as it provides for a high degree of flexibility in management.

Fund facts: Kotak-30 was launched in December 1998. The minimum investment is Rs 5,000. There is an entry load of 2.25 per cent on the NAV.

There is no exit load. The fund has delivered annual returns of about 60 per cent and 50 per cent over the past year and three years respectively. The fund manager is Mr Anand Shah.

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