Should I start SIP in Kotak Standard Multicap Fund (Erstwhile Kotak Select Focus)?
A Large-Cap Diversified Fund (Kotak Select Focus Fund) with a track record of over 7+ years now, has been steadily making a new mark every time in the equity universe showcasing consistency since launch. Trailing returns of 15.95% over a 7 years period, while its benchmark (Nifty 200) had given 10.36% in the same duration.
Trailing returns prevails enough to answer above question that should I start Sip in Kotak Standard Multicap Fund (Erstwhile Kotak Select Focus) or Not.
Kotak select Focus Fund name changed to Kotak standard Multicap fund after the categorization in 2018, is one of the most dynamic Large-cap funds today, it has performed consistently and been able to generate considerable returns over the different time periods.
Due to focus on bottom up stock selection strategy, the fund has not outperformed its benchmark only across multi trailing periods of time but has outperformed its category with good considerable margin generating 20.41% and 15.95% returns in 5 years or 7 years respectively.
The Fund endeavors to select the sectors that are likely to do well over a period and continues to have a share of domestic businesses that are lucrative as compared to export/or global business on account of better earnings growth.
Kotak Standard Multicap fund (Kotak select focus fund) Sector allocation
Kotak Standard Multicap Fund (Erstwhile Kotak select focus) having overweight to financial services, Basic Materials & consumer cyclical with 37.07%,10.12% and 13.92% respectively.
It follows the Bottom up approach and picks fundamentally sound companies that are trading at a substantial discount from their intrinsic value with an objective of long term capital appreciation over business cycle.
Source : MorningStar
Top 10 companies under Kotak Standard Multicap Fund (Erstwhile Kotak select Focus Fund)
Source: Kotak Mutual Fund As on 30th April 2018
Risk and Return analysis of Kotak standard Multicap fund (Erstwhile Kotak select focus fund)
Metrics to analyze the fund Risk and Return Ratio
#Alpha measures the difference between a fund’s expected returns based on its beta and its actual returns. A positive alpha indicates the fund has performed better than its beta would predict. A negative alpha indicates a fund has underperformed, given the funds beta.
#Beta measures a fund’s sensitivity to market movements. A beta greater than one indicates the investment is more volatile than the market. If beta is less than one, the investment is less risky than the market.
#R-Squared reflects the percentage of a fund’s movements that are explained by movements in its benchmark index. A higher R-squared indicates a more useful beta figure. A lower R-squared (less than 70%) is less relevant to the fund’s performance.
#Standard Deviation measures the range of a fund’s performance. The greater the standard deviation, the greater the fund’s volatility.
#Sharpe Ratio indicates the reward per unit of risk by using standard deviation and excess return. The higher the Sharpe ratio, the better the fund’s historical risk-adjusted performance.
What It tell us about the Fund
If we look in to fund Alpha that say how much it is able to generate excess return as compared to benchmark expectation. In Large cap category it is generating considerable alpha , but to the reliability on the Alpha that depends on Beta & R squared .
If R squared is more than 70% then we can easily rely on the beta Or alpha.
On this parameter we can safely say Kotak Select focus fund( Kotak standard Multicap fund) stands at par on the Risk and Return analysis.
The fund manager seeks to maintain a balanced portfolio (beta close to 1), which ensures that the portfolio is not carried away in adverse market movement and any gain in the portfolio can be attributed only due to stock selection and not due to market timing.
Market Volatality Measures for Kotak Standard Multicap Fund (Erstwhile Kotak Select Focus Fund)
The up-market capture ratio is the statistical measure of an investment manager’s overall performance in up-markets. The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen.
The down–market capture ratio is a statistical measure of an investment manager’s overall performance in down–markets. It is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped.
Performance evaluation of Kotak Standard Multicap Fund ( Erstwhile Kotak Select Focus Fund)
Kotak Select Focus Fund which is now Kotak Standard Multicap fund was launched in september 2009 and has done quite well since then. The fund has over 19,228 cr of asset under management for the quarter end as of 3oth april 2018.
Fund Manager for Kotak Standard Multicap Fund
Harsha Upadhyaya is the Head of equity investments for Kotak Asset Management Company and has been the fund manager for Kotak Select Focus since August 2012.
Prior to joining Kotak, Upadhyaya was the Senior Vice President/Fund Manager at DSP BlackRock Investment Managers Ltd.
He has been the fund manager with UTI Asset Management Company as well and has over 15 years of experience in the fund management industry.
Mr Upadhyaya holds a Post-Graduate Diploma in Management (PGDM) from IIM, Lucknow and has a CFA charter conferred by the CFA Institute, USA.
Upadhyaya has a sharp knowledge in his domain that equiped him to scruitinize the good stock with their intrinsic value , that replicate the performance of the fund and gave a good place to Kotak select focus fund in its category.
Trailing Returns for Kotak Standard Multicap Fund (Erstwhile Kotak Select Focus Fund)as on Jun 01, 2018
If we would have invested 10,000 Rs in inception with Kotak Select Focus Fund then it would be worth of 32,828 Rs. as on 1 st June 2018
But in the same period Index would have generated 25,382 Rs and category have garnered 24,988 Rs.
Source : Morning star
The Kotak Standard Multicap Fund (Erstwhile Kotak Select Focus fund) has delivered strong performance since inception . This fund is suitable for investors with a long time horizon.
Investors, who are looking for long term capital appreciation with limited downside risks, can consider investing in the scheme through the systematic investment plan (SIP) or lump sum route.But as we always suggest that investors should align every investment with their Financial Goals then only it can serve the primary objectives for Investment