This is a performance review of
The SEBI re-categorization did not affect the fund too much, and it still operates on paper as a fund that can invest across market cap and across sectors with a blend of growth and value styles. It has diluted its mandate of focussing on specific sectors after the SEBI regulations and also perhaps due to its increasing AUM.
- As on Jan 31st 2016: AUM 3,841.35 Crores
- As on Jan 31st 2017: AUM 7,850.84 Crores
- As on Jan 31st 2018: AUM 17842.85 Crores
- As on Nov. 30th 2018: AUM 21,469.29 Crores
So essentially a doubling in less than a year bet 2016 and 2018 (a 6X increase in this period!)
Kotak Standard Multicap Fund vs Nifty LargeMicap 250 (screener results)
For Dec 2018, I used the Nifty LargeMidcap 250 index to screen multicap funds. Nifty LargeMidcap 250 index is 50% of NIfty 100 and 50% of Nifty 150 Midcap. Here are the results for Dec 2108 freefincal fund screener to come up with such results.download the
- One year: Beat index 881 out of 1216 times (72%) with 77% downside protection consistently (meaning fund will fall less than the index)
- Two years: Beat index 747 out of 967 times (77%) with 96% downside protection consistency
- Three years: Beat index 639 out of 722 times (89%) with 100% downside protection consistency
- Four years: Beat index 476out of 476 times (100%) with 100% downside protection consistency
- Five years: Beat index 234 out of |234 times (100%) with 100% downside protection consistency
The last couple of years’ performance is still impressive and 100% outperformance over 4 and 5 years is more because of less no of data points.
Risk and return performance: one year
We shall now look at 1,2,3 and 4 year rolling risk and return performance. While the above data gives you a measure of overall consistency, it does not tell you when the outpeformance or underperformance occurred.
The fund uses Nifty 200 as a benchmark. In addition, I have considered, Nifty 100, Nifty next 50, Nifty largemidcap 250 as additional benchmarks.
Each coloured line above has 1238 (see picture) one year return data points.
Each of the 1238 data point above represents the standard deviation of standard deviation of daily returns over a one-year period. Lower the curve falls, lower the risk. Now observe similar data over 2,3 and 4 years
Risk and return performance: two years
Risk and return performance: three years
Risk and return performance: four years
If we consider the 2,3 and 4 year data, notice that the outperformance margin has noticeably dipped in the last few months. Is this a too much, too soon, AUM effect? My guess would be yes although it is impossible to say for sure.
One way to check is compare performance with
Volatility-wise Kotak Multicap is better than Mirae India Equity. Regarding returns, the pink line (Kotak Multi-cap) has dipped just below the white line (Mirae India Equity) in the last few months. Again not conclusive, but it is fair to suspect “the too much, too soon” effect playing a role here.
I have pointed out earlier that large AUM is not a problem but a large increase in AUM in a short time is a problem – for the fund manager in find opportunities. It is possible that the pressure has showed over the last year or more. This is the reason I keep saying prefer low AUM consistent performers and avoid herding.
I am an investor, what should I do?
The fund management has just about held its head above water. Perhaps one reason is because it always had a well-diversified portfolio. So stay invested, but keep an eye on performance, give Kotak Standard Multicap Fund 3 years to perform from when you invested (more on this next week) and if not satisfactory, exit and move on.
I do not have this fund in my portfolio. Is it worth considering?
The first question you should ask is, do I need this kind of fund in my portfolio. IF yes, then avoid Kotak Standard Multicap Fund, and look for an alternative in this category from the Dec 2108 freefincal fund screener.
Have you subscribed to the freefincal YouTube channel?
Here are the latest videos:
Subscribe and join the freefincal Youtube community!
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via: Feedburner
- We are also on Google PlusandPinterest
Do check out my books
Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner
The ultimate guide to travel by Pranav SuryaThis is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)
Free Apps for your Android PhoneAll calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)