Kotak select focus fund is a multi-cap mutual fund with a mandate to take concentrated sector risk. A discussion on how it has performed.
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Although the fund can have up to 35% debt exposure and can pick stocks from the BSE 200 universe, it can be viewed as a multi-cap fund with a large-cap tilt.
The current asset allocation is,
The “select focus” refers to the freedom (not a necessity) that the fund management has to increase exposure to certain sectors which in their opinion (based on analysis) has higher growth potential. The number of sectors would be about half the number represented by Nifty 50. Ex- Kotak AMC employee, Ashish Deshpande says the fund will only have between 4-8 sectors at all times.
The latest sector allocation
Stocks of financially sound companies available at a market price lower than the intrinsic value will be selected.
Source: scheme information document
Although the fund has risk mitigation measures in place, one can expect this fund to be a bit more volatile than a diversified multi-cap fund.
The fund is benchmarked to NSE 200. For the analysis below, I use BSE 200 total returns index.
5-year Rolling SIP analysis
Each dot below is a 5Y SIP return.
3-year rolling lump sum returns
There are 987 points in the blue curve. Each point is a 3-year lump sum return
Quantum Long term Equity vs Kotak Select Focus
Here fund A = Kotak Select focus and fund b = Quantum long term equity. The Kotak fund has nudged past QLTE in the recent past.
However, the Ulcer index ( a measure of how stressfull holding the fund has been) for the Kotak fund is a higher. This is probably due to the concentrated sector strategy.
I think the fund has a reasonably impressive track record. If you are comfortable with a concentrated sector strategy and are comfortable with Kotak, then I think this is a good fund to invest in directly (the expense ratio is only 1%). With an AUM of ~ 5,900 Crores it is a quiet enough fund 🙂