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An Opportunistic Offer

Kotak MF has offered an aggressive and concentrated-play new fund offer (NFO)

Here’s yet another opportunity fund — India’s 17th and surprisingly, Kotak’s second. Interestingly, Kotak’s existing Opportunities Fund is the asset management company’s (AMC) largest equity fund.

The fund’s Value Research Rating is a high four stars.

According to the AMC, Kotak Select Focus Fund will take opportunistic and focused bets on sectors and companies likely to do well due to factors such as government-induced reforms, global influences, macro economic variables such as interest rates, other company-specific dynamics and valuations.

The portfolio will be managed actively without any restriction on exposure to a single sector or company.

Fund Manager

The fund has three designated fund managers – Krishna Sanghvi and Emmanuel Elango will manage equity investments and Abhishek Bisen to manage fixed income investments.

Krishna holds an MMS in Finance (NMIMS, Mumbai) and is a CFA (ICFAI). He has been with Kotak AMC since February 2006 and manages 8 other equity schemes. Emmanuel’s association with Kotak AMC dates back to July 2008. A PGDM holder from IIM-B, he manages 4 other equity schemes and has earlier worked with JPMorgan AMC and Franklin Templeton AMC. Abhishek is MBA (Finance) and manages all FMPs, an arbitrage fund and other debt schemes of the fund house.

Fund Family

Kotak Mahindra AMC started in June 1998. Today, it is the seventh largest fund house (June 2009), it had over Rs 30,000 crore of assets under management (AUM) of which equity fund assets form about 12 per cent. It has a lineup of 12 equity funds of which 2 are index funds, one tax planning fund, one emerging markets fund and the rest diversified equity funds. Aside from the 4-star rating of Kotak Opportunities Fund, Value Research has bestowed 4 other equity funds a 4-star rating, one each as 2-star and 1-star.

Suitability and Recommendation

Opportunity funds are aggressive bets. Due to their active and concentrated investing style, they are able to deliver good returns during bull runs. But this may also act against them in a falling market. For general investors, such funds are suited for a small portion of their portfolio.

Investors should, however, be wary of investing in this new fund. There are 16 existing opportunities funds, some of which already have a proved track record of good risk adjusted returns, one being Kotak Opportunities Fund itself. Those looking for adding an aggressive fund to their portfolio should be looking to pick one from the existing lineup.

Opportunities Funds
Fund  Ratings    Returns (%)    Assets (Rs Cr)  Launch
    YTD  1-Year  3-Year    
Birla Sun Life India Opportunities *  67.00 0.40 -0.22 42.99 Aug-03
DBS Chola Opportunities * * * *  69.71 8.22 22.55 62.11 Dec-03
DSPBR Opportunities * * *  59.97 14.36 14.27 888.12 Apr-00
Escorts Leading Sectors Not Rated 41.30 0.00 0.00 1.50 Aug-08
Fidelity International Opportunities Not Rated 48.76 4.01 0.00 816.31 Apr-07
Fortis Opportunities *  42.40 -17.72 2.31 95.31 Mar-05
Franklin India Opportunities * * *  52.10 4.57 11.04 612.94 Mar-04
HSBC India Opportunities * *  42.24 0.59 10.98 358.71 Feb-04
ING Domestic Opportunities * * *  57.23 6.52 12.11 99.63 Aug-04
Kotak Opportunities * * * *  55.76 7.36 17.57 918.95 Aug-04
LICMF Opportunities * *  45.90 3.37 6.74 81.26 Feb-05
Mirae Asset India Opportunities Regular Not Rated 66.62 21.07 0.00 160.90 Mar-08
Reliance Equity Opportunities * *  57.03 12.46 11.40 1541.48 Mar-05
Sundaram BNP Paribas Select Focus Reg * * * *  44.06 3.12 16.88 1203.78 Jul-02
Tata Equity Opportunities * * *  57.56 -1.34 12.21 389.88 Mar-03
UTI Opportunities * * * * *  68.06 29.80 18.67 562.61 Jul-05
Returns and Ratings Data as on 31 July 2009
Assets Data as on 30 June, 2009

Basic Details

Type: Open-End Equity Fund

NFO Opens: July 22, 2009

NFO Closes: August 20, 2009

Plan / Options: Growth and Dividend (reinvestment and payout) options.

Minimum Application Amount: Rs. 5,000/-

Minimum Additional Purchase / Redemption: Rs 1,000/-

SIP Facility: Available on monthly / quarterly basis (min. Rs 1,000 x 6 cheques).

Benchmark: S&P CNX Nifty

Load Structure (During NFO):

Entry Load: For investments of less than Rs 5 crore, 2.25 per cent

Exit Load: For investments of less than Rs 5 crore, 1 per cent for redemptions within 1 year.

Annual Recurring Expense (maximum): 2.50 per cent (including Investment Management fee of 1.25 per cent).