Stock markets are rising, interest rates have been falling and monsoons have been bountiful. There is a feel good factor in the air and the belief is that India and Indian companies can join the big league, globally. Kotak AMC wants to tap this positive spirit in its new diversified equity fund—Kotak Global India Scheme.
The fund thus aims to invest in globally competitive Indian companies. In terms of sectors, this translates into pharmaceuticals, auto ancillaries, engineering, textiles, business process outsourcing and IT services. Some examples of the possible companies are Bharat Forge (the worlds second largest forging company), Moser Baer (the world's third largest optical media manufacturer) and Essel Propack (the world's largest laminated tube manufacturer).
Kotak Global India scheme will not target any particular segment of the market in terms of capitalisation. As some of the potential companies are already well established, while others are emerging the portfolio will consist of large as well as mid-caps. In order to keep the portfolio diversified it is expected that the fund will not allocate more than 30-35 per cent of the corpus to any single sector. Due to the funds thematic approach there are no ready-made indices, which can be used to compare the funds performance. Nonetheless the fund has chosen the BSE Sensex as its benchmark index. In view of the range of capitalisation of the fund a broader index such as the BSE 100 or BSE 200 serve as a better benchmark index.
Currently there are three other funds, which have similar objectives. These are Birla India Opportunities, Chola Opportunities and IL&FS Global India Fund. All of these funds were previously technology sector funds, which have recently broadened their investment objective. In the case of IL&FS Global India Fund the new investment focus will come into effect from January 14, 2004.
Kotak Mutual Fund thus becomes the first to launch a totally new fund in this genre. Unlike other AMCs, which have diversified their technology offerings the move for Kotak was in the opposite direction. When Kotak Tech fund was launched it already had a broader investment universe. Its stock selection included companies in areas as diverse as biotechnology, space, farming and entertainment. At different points in time it held stock such as Dr. Reddys Labs, ICICI Bank, MTNL and Saregama India. Then in early 2002 it narrowed its focus exclusively to the information technology sector.
The fund's initial public offering extends between December 22, 2003 and January 16, 2003. The fund will re-open for continuous sale and repurchase from February 13, 2004.