Fund of Fortnight

Reason for recommendation

Kotak Small Cap Fund - Direct Plan (Growth)


The performance of the broader indices has been anything but good, in the last couple of years. In the past one year i.e., calendar year 2019, 32 per cent of the small-cap stocks from S&P BSE 250 Small Cap Index stocks have fallen by more than 30 per cent while, 11 per cent have fallen more than 50 per cent. From a long-term investment perspective, price decline and underperformance for such a long period gives an opportunity of investing in small-cap mutual funds. Thus, investors can use this opportunity for their long-term investment objectives. Kotak Small Cap Fund is one such fund that you should consider. The fund follows the philosophy of growth at a reasonable price. Their focus is on investing in quality businesses, run by a good management, generating higher return on capital and offering sustainable growth with a higher market potential, available at reasonable valuations. They essentially follow bottom-up stock picking approach with a wide-sectoral diversification to manage risks. The fund has a low concentration risk as they have diversified well by investing in 60 stocks. Moreover, the highest weighted stock forms less than 4 per cent of the portfolio while the top 10 stocks collectively weighted at 29 per cent of corpus. The top 10 holdings of the stock gave a weighted average return of 25.27 per cent in past one year, which in itself is phenomenal. It has strong holdings like JK Cement, Galaxy Surfactants and PI Industries, which may surely help this fund to rise further. Hence, an investor with a moderate to aggressive risk profile can consider investing in the fund.