The investment focus has always remained long term, with relatively low portfolio turnover. These simple rule has enabled this fund to register outperformance through both sector allocation as well as stock selection.
Kotak Standard Multicap Fund (formerly known as Kotak Select Focus) scheme was launched on September 11, 2009. The AUM of the scheme as on 31st July, 2018 is Rs 21,271.15 crore.
The investment objective of the scheme is to generate long-term capital appreciation from a portfolio of equity and equity-related securities, generally focused on select sectors. The scheme endeavours to identify sectors that are likely to do well over the medium term and takes focused exposures to the same.
There is no restriction on which type of sectors the scheme can take exposure to and the portfolio is diversified at the stock level across market capitalisation.
Harsha Upadhyaya, an IIM Lucknow Alumni and a CFA charterholder, heads the equity desk at Kotak Mahindra AMC, and also directly manages funds such as Kotak Standard Multicap Fund, Kotak Equity Opportunities and Kotak Tax Saver. He has been managing Kotak Standard Multicap Fund and Kotak Equity Opportunities from August 4, 2012, and Kotak Tax Saver scheme from August 25, 2015.
He has over two decades of experience spread across equity research and fund management with various AMCs.
The investment strategy of Kotak Standard Multicap scheme is built on the premise that different sectors of the economy perform varyingly over different periods of economic cycle. So, the investment focus of this fund is to invest in select sectors that are likely to outperform broader market at various points of time.
“Once the sectors are selected through top-down analysis, the individual investment ideas within those sectors are picked up through bottom-up approach,” says Harsha Upadhyaya.
“Over the years, we have stuck to investment philosophy and investment mandate of the fund irrespective of market phases. The investment focus has always remained long term, with relatively low portfolio turnover. These simple rules have enabled us to register outperformance through both sector allocation as well as stock selection,” the fund manager adds.
Portfolio composition in present scenario
In the backdrop of higher than average market valuations and emerging macro headwinds, now there is barbell approach in portfolio composition. The portfolio has a good mix of cyclical and defensive bets at present. In this fund domestic businesses with operating leverage continue to dominate the portfolio as compared to export/global businesses due to better earnings trajectory. However, exposure to IT sector has gone up in the recent months.
The top overweight sectors in the fund are cement and financials and is underweight on FMCG and metals. The major exclusions from the fund are utilities and telecom sectors.
The fund is allocating 77.24% of the total corpus to large-cap funds, 13.54% to mid-cap funds, 3.54% to small cap and 5.68% to cash as on 31st July, 2018.
Should you invest now?
Investors should consider investing in multi-cap fund category in present scenario. This funds have the freedom to invest across market capitalisations and sectors without any pre-specified caps.
Manish Kothari, Director & Head of Mutual Funds, Paisabazaar.com, says, “Given the recent upsurge in the valuations of large cap companies and significant correction in the mid and small cap zone, multicap funds will be best placed to exploit opportunities and manage risk arising out of changing valuations and other fundamental and technical factors.”
“Kotak Standard Multicap Fund has consistently outperformed its benchmark index and category average since its launch on September 11, 2009. It has also managed the market fall of 2011 better than its peer funds. The scheme focuses on select sectors based on their upside potential in the medium term,” adds Kothari.
“Being overweight on cements and financials, the scheme will benefit from the Government’s focus on increasing private consumption and infrastructure spending. The steady increase in the scheme’s IT exposure will also benefit it in case of further depreciation in the rupee. Hence, we would recommend investors to consider Kotak Standard Multicap for their long and mid-term financial goals,” he says.Follow @thanawala_hiral