Fund of Fortnight

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 Emerging Equity Fund - Direct Plan (Growth)



Reason for recommendation : The mid-cap category is gaining traction now after underperforming for more than two and a half years. Further, the mid-cap funds on an average are yet to reach the peak that was formed in the month of January 2018. Hence, in the last two and half years they have grossly underperformed the large-cap funds and have generated negative returns. Since in the long run mid-cap funds tend to perform better than the large-cap funds, going by reversion to mean, we may see mid-cap funds start outperforming large-cap funds from here on. Kotak Emerging Equity Fund, a mid-cap dedicated fund is one of such fund that will help you to ride the mid-cap rally.

The fund has the potential to deliver capital growth for the long term. Looking at its asset allocation, it invests 73.29 per cent of its assets in mid-caps. In terms of sector allocation, it is overweight on chemicals, engineering and construction sectors which is a good thing as these sectors would benefit the most from economic recovery. It has invested in 67 stocks at the end of October 2020. Its current portfolio consists of quality stocks like Supreme industries, PI Industries and the Ramco Cements.

In terms of investing strategy, they seek investing in growth stocks that are available are undervalued. Though the risk taken is on the higher end when compared with its peers, but in terms of risk-returns metrics like Sharpe ratio and Sortino ratio, this fund stands better than its peers. Not just that, but this fund has one of the lowest expense ratios in the category. Aggressive risk-takers can definitely look at investing in this fund.

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DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

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