A turnaround in performance over the last one year, marked by the ability to outperform the benchmark in a volatile market, makes Kotak Opportunities Fund a good investment option from a three-five years perspective.
Even as the volatility in the equity market persists, with the rupee continuing to slide against the US dollar, sharp corrections in the market may be viewed as an opportunity to buy into good large-cap funds with a consistent performance track record.
Investors with a moderate risk appetite may consider investments in the fund.
WIDENING OUTPERFORMANCE
The fund has been successful in beating the record of its benchmark, CNX 500, across all time periods. In the last one year, while the CNX 500 Index lost 2.7 per cent, the fund managed to beat its benchmark returns gaining 0.9 per cent.
Over three- and five-year time-frames, it outperformed its benchmark by 2-3 percentage points. Kotak Opportunities has also fared better than its peers — Franklin India Opportunities and HSBC India Opportunities — during this period.
On a rolling returns basis, the fund’s one-year returns were higher than its benchmark 76 per cent of the time in the last five years. Over the years, it has been a mid-quartile performer in its category.
A systematic monthly investment of Rs 1,000 in the fund over the last five years would have fetched 6.2 per cent returns annually.
Kotak Opportunities has largely managed to contain downsides in falling markets. For instance, during November 2010-December 2011, the fund’s NAV declined 21 per cent compared with the 25 per cent fall in the CNX 500. Lower-than-benchmark allocation to power utility and realty stocks and increasing exposure to select IT stocks helped the outperformance. Also, avoiding volatile stocks, such as Aban Offshore, GE Shipping and GOL Offshore, aided performance.
DOWNSIDE CONTAINED
During phases of market recovery, the fund has managed to generate returns higher than the benchmark.
During the bull rally beginning March 2009, lasting up to November 2010, the fund gained 130 per cent compared with a 126 per cent increase in the benchmark. Adding banking and healthcare stocks to the portfolio lifted its NAV.
Though the fund’s returns were a tad lower than the CNX 500 during January-December 2012, its performance has improved over the past one year. Reducing exposure to cyclical sectors such as capital goods, engineering and power utilities helped.
Though the fund missed the rally in IT stocks and select energy stocks such as Oil India, it was compensated by higher allocation towards healthcare and telecom, which outperformed the markets by a good margin.
The fund has 53 stocks in its portfolio with an average market cap of over Rs 99,000 crore by end of July 2013. Large-cap stocks account for over three-fourth of the fund’s assets.
The fund has a more pronounced slant towards IT (17.6 per cent) and pharma (7 per cent). Continued weakness in the rupee is likely to help these sectors’ margins.
No comments:
Post a Comment