But considering the uncertain and volatile nature of equity markets it would be prudent to invest in a fair mix of large and mid cap stocks through actively managed large & mid cap funds.

Kotak Equity Opportunities Fund (KEOF) is one such large & mid cap fund that looks for opportunities in large and mid cap stocks across sectors with an aim to generate capital appreciation.

KEOF was launched in September 2004 and currently has an asset size of Rs 3,188 Crore. Mr Harsha Upadhyaya is the fund manager of the scheme (since August 2012) who has over two decades of experience spread across equity research and fund management.

Graph 1: Growth of Rs 10,000 if invested in Kotak Equity Opportunities Fund 5 years ago

Graph 2: Kotak Equity Opportunities Fund's year-on-year performance

 

Table: Kotak Equity Opportunities Fund's performance vis-a-vis category peers

Scheme Name	Corpus (Cr.)	1 Year (%)	2 Year (%)	3 Year (%)	5 Year (%)	Std Dev	Sharpe
Mirae Asset Emerging Bluechip	9,806	11.42	7.87	16.95	20.03	13.75	0.16
Invesco India Growth Opp Fund	2,447	7.31	9.37	15.18	14.09	12.17	0.19
Sundaram Large and Mid Cap Fund	1,110	7.77	8.78	14.92	13.82	13.25	0.15
Canara Rob Emerg Equities Fund	5,625	4.17	4.53	14.48	17.51	14.62	0.14
LIC MF Large & Midcap Fund-	639	6.84	6.23	14.42	12.08	13.19	0.14
Kotak Equity Opp Fund	3,188	9.06	5.81	12.94	13.66	12.34	0.13
Essel Large & Midcap Fund	107	8.54	5.05	12.71	NA	13.28	0.08
Principal Emerging Bluechip Fund	2,202	1.24	2.51	12.60	15.66	14.64	0.09
Edelweiss Large & Mid Cap Fund	512	6.37	7.48	12.37	11.55	12.00	0.16
DSP Equity Opportunities Fund	5,663	6.91	4.51	12.18	13.49	13.11	0.09
IDFC Core Equity Fund	2,780	2.05	3.35	11.65	11.67	13.01	0.07
Tata Large & Mid Cap Fund	1,631	11.10	7.07	11.62	12.45	11.81	0.11
SBI Large & Midcap Fund	2,978	5.79	5.48	11.23	12.43	12.50	0.11
ICICI Pru Large & Mid Cap Fund	3,277	4.15	2.94	9.91	9.38	12.03	0.01
L&T Large and Midcap Fund	1,350	-0.06	0.80	9.90	10.23	13.71	0.05
Aditya Birla SL Equity Advantage Fund	5,039	2.20	0.47	9.34	12.48	14.53	0.05
HDFC Growth Opp Fund	1,384	4.20	3.21	8.80	6.49	13.25	0.03
BOI AXA Large & Mid Cap Equity Fund	186	-0.60	0.65	8.20	7.78	15.70	0.05
Quant Large & Mid Cap Fund	4	1.03	-0.07	8.02	14.52	12.33	-0.03
Franklin India Equity Advantage Fund	2,623	1.25	2.58	7.97	9.85	12.24	0.01
NIFTY 200 - TRI		6.48	7.16	12.56	10.31	12.06	0.10

Returns are on a rolling basis and in %, calculated using Direct Plan - Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on February 26, 2020
(Source: ACE MF) *Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

KEOF outpaced the benchmark and category average across rolling time period, except for 2-year rolling period where it trailed the benchmark. The recent outperformance has helped it figure among the top quartile performers and has even scaled up its performance across time periods.

The fund stood among the category toppers on a 1-year rolling return basis and also veered ahead of many of peers on 2-year, 3-year and 5-year rolling return basis. Some of the other top performers in the category include Mirae Asset Emerging Bluechip Fund, Invesco India Growth Opportunities Fund, Sundaram Large and Mid Cap Fund, and Canara Robeco Emerging Equities Fund.

In terms of risk-reward parameters, KEOF's volatility has been lower than the category average though slightly higher than the benchmark. Its risk-adjusted returns as denoted by Sharpe are higher than the benchmark and many category peers.

Investment strategy of Kotak Equity Opportunities Fund

Categorised as large & midcap fund, KEOF invests predominantly in a mix of large cap and mid cap stocks with an aim to derive superior performance compared to other diversified equity schemes. The fund invests across sectors based on performance and potential of companies within the sectors. It adopts a bottom up approach to portfolio construction.

Allocation between large and mid caps are driven by the overall macro-economic conditions, choice of sectors, business environment & valuations. The fund has the flexibility to invest up to 30% of its assets in other equity instruments as well as debt and money market instruments.

Graph 3: Portfolio allocation and market capitalisation trend in Kotak Equity Opportunities Fund

Graph 4: Top portfolio holdings in Kotak Equity Opportunities Fund

Holding (in %) as on January 31, 2020
(Source: ACE MF)

KEOF usually holds a well-diversified portfolio of around 50 to 55 stocks. As on January 31, 2020, the fund held as many as 54 stocks in its portfolio across various sectors and market caps. The top 10 stocks constitute 40.7% of its portfolio with no individual stocks having concentrated allocation. ICICI Bank has the highest stock allocation of 5.9%, followed by other large cap names like HDFC Bank, Reliance Industries, L&T and Infosys forming another 19% of its portfolio.

Sector wise, the fund has the highest exposure to Banking at 17.6% with another 8.1% in Finance. Engineering, Oil & Gas and Cement are the other top sector holding. The other prominent sectors include Infotech, Petroleum Products, Consumption, Auto ancillaries, Fertilisers, and so on.

Top contributors

In the last one year, KEOF benefitted immensely from its holdings in ICICI Bank, Indraprastha Gas, SRF, Gujarat Petronet, Bata India, AU Small Finance Bank, HDFC Bank, Coromandel International. These stocks together contributed weighted return of around 12% to the portfolio.

However, stocks like Indian Bank, GAIL (India), Healthcare Global Enterprises, Cummins India, Schaeffler India, Edelweiss Financial Services, etc. eroded some of its gains.

Suitability of Kotak Equity Opportunities Fund

KEOF's carries an impressive track record across market cycles. The fund has rewarded its long term investors with superior returns at reasonable level of risk. Its diversified portfolio of stocks and sectors across market caps, mainly large and mid caps, enabled it to boost its performance. Though the high concentration towards financial sectors has benefitted it so far, it can lead to short term underperformance if the sector moves out of favour. The presence of mid and small caps in the portfolio makes it suitable for aggressive investors with an investment horizon of 5 years or more.

Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

Editor's note: The last few years have not been among the best for equity mutual funds. While most funds have underperformed or are struggling to match the returns of the benchmark, there are few funds that have the potential to constantly generate alpha for its investors. And we have identified five such high alpha generating funds, in our latest report 'The Alpha Funds Report 2020'. Do not miss our latest research finding. Get your access to this exclusive report, right here!

 

DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014

About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

Terms and condition on which its offer research report

For the terms and condition for research report click here.

Details of associates

1. Money Simplified Services Private Limited;

2. PersonalFN Insurance Services India Private Limited;

3. Equitymaster Agora Research Private Limited;

4. Common Sense Living Private Limited;

5. Quantum Advisors Private Limited;

6. Quantum Asset Management Company Private Limited;

7. HelpYourNGO.com India Private Limited;

8. HelpYourNGO Foundation;

9. Natural Streets for Performing Arts Foundation;

10. Primary Real Estate Advisors Private Limited;

11. HYNGO India Private Limited;

12. Rahul Goel;

13. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest

1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;

3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

Disclosure with regard to receipt of Compensation
 

1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

General disclosure

1. The Research Analyst has not served as an officer, director or employee of the subject Company.

2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

Click here to read PersonalFN's Mutual Fund Rating Methodology

Subject Company means Mutual Fund Schemes

Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021.

Email:info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013

Add Comments