Last Updated on December 29, 2021 at 6:32 pm
In this article, we evaluate the performance consistency of Kotak Emerging Equity Fund, a mid cap fund. Launched in March 2007, the fund currently has an AUM of Rs. 16,705 Crores.
As we can see from the funds market cap allocation history, it changes from a mid and small cap fund to a mid cap fund to comply with the SEBI mutual fund categorization rules.
We will use three metrics to analyze performance consistency compared to the fund’s benchmark – Nifty Midcap 150 TRI. The data is taken from our monthly mutual fund screener.
1 Rolling return outperformance consistency: the fund returns are compared with category benchmark returns over every possible 3Y,4Y, 5Y period. Higher the outperformance consistency, the better. Suppose 876 fund returns were compared with 876 benchmark returns, and the fund has beaten the benchmark 675 times. The consistency score will be 675/876 ~ 77%.
🔥Secure your future with our Robo-advisory tool trusted by over 3,500 investors and advisors. From effortless retirement planning to funding your children’s biggest dreams, turn your financial goals into reality. 🔥
Subscribe for money management solutions via email! (Link takes you to our email sign-up form) Join 32,000+ readers in our community.
👉 New Tool Alert! NaviPlan: A Privacy-Focused Multi-asset Tracker and Goal Planner 👈
Three years
- No of rolling return entries Index (3 Years) 1454
- No of rolling return entries Fund (3 years) 1454
- No of times fund has outperformed the index (3 years) 1225
- Rolling return outperformance Consistency Score (3 years) 84%
Four Years
- No of rolling return entries Index (4 Years) 1209
- No of rolling return entries Fund (4 years) 1209
- No of times fund has outperformed the index (4 years) 1204
- Rolling return outperformance Consistency Score (4 years) 100%
Five Years
- No of rolling return entries Index (5 Years) 960
- No of rolling return entries Fund (5 years) 960
- No of times fund has outperformed the index (5 years) 960
- Rolling return outperformance Consistency Score (5 years) 100%
That is excellent performance consistency.
2 Upside performance consistency over every possible 3Y,4Y, 5Y: Higher the better. A score of 70% means, 7 out of 10 times, the fund performed better than the category benchmark when the benchmark was moving up. This is a measure of reward. It is computed from rolling upside capture data (see link below).
- Upside performance consistency (3 years) 19%
- Upside performance consistency (4 years) 5%
- Upside performance consistency (5 years) 0%
This is quite typical. Most funds do not exhibit consistent upside capture > 100% (higher returns than the benchmark’s positive monthly return). See for example: Strange, but true! How mutual funds beat the index!
3 Downside performance consistency over every possible 3Y,4Y, 5Y. Higher, the better. A score of 60% means, 6 out of 10 times, the fund performed better than the category benchmark when the benchmark was moving down. This is a measure of risk protection. It is computed from rolling downside capture data. Read more: An introduction to Downside and Upside Capture Ratios.
- Downside protection consistency (3 years) 65%
- Downside protection consistency (4 years) 77%
- Downside protection consistency (5 years) 92%
That is a reasonably consistent downside capture < 100%. That is, the fund’s monthly return typically tends to be higher when the benchmark monthly returns are negative.
In summary, Kotak Emerging Equity Fund has a consistent track record compared to the Nifty Midcap 150 TRI with good downside protection.