Fund of Fortnight
This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
Kotak Standard Multicap Fund - Direct Plan (Growth)
Reason for recommendation
The spread of corona virus and subsequent nationwide lockdown has had a significant impact on economy and the equity market. They are likely to remain under pressure for a while despite all the initiatives and action announced by the government and the RBI. We are entering into uncharted territory. In these uncertain times, it is always recommended to invest in funds having bigger exposure to large-cap stocks. The reason is simple: large-cap companies being leaders in their respective sectors can withstand tough times better than others. Kotak Standard Multicap Fund is one such multi-cap fund with higher exposure to large-cap stocks. At the end March 2020, the fund had 70 per cent exposure to large-cap stocks and 27 per cent invested into mid-cap stocks. The good part of the fund is that it has performed better in the current falling market while in a rising market it has kept pace with the category. Hence, overall it has posted a superior performance over a long-term period, which has placed it in the top quartile in its category in terms of performance. In a five-year period the fund has outperformed its category and index in excess of 300 basis points. The fund is well-diversified, holding 56 stocks at the end of March 2020 with the top 10 stocks comprising 43.08 per cent of
the corpus. In terms of portfolio, the fund has invested more in industry leaders. For example, in the financial sector the fund’s top holdings are HDFC Bank and ICICI Bank. In the construction sector, Ultratech Cement and Larsen & Toubro are its major holdings. Similar is the case with other sector holdings. This portfolio is likely to make the performance of the fund stable even in volatile times. Hence, the fund is suitable for those investors those who want to take moderate risk.
