Kotak Emerging Equity Fund: Fund review

In the past year, the Nifty Midcap 100 index has fallen close to 9.4%. In this steep fall, there are select quality midcaps which could show a reasonably good earnings recovery. Historical data point out that in a long-duration cycle (more than five years), the recovery in earnings growth in mid-sized companies has been far higher than big ones. Keeping this in mind, investors who intend to participate in such growth stories may consider investing in schemes that have particular focus on quality mid-sized companies.

Among such schemes, Kotak Emerging Equity is placed well as it has developed quite a diversified portfolio in the midcap universe. The scheme invests 80% of its corpus in mid caps, close to 7% in large caps and 12.25% small caps. Such diversification in size and themes (bottom-up stock selection approach) has paid off for the scheme as the scheme’s fund manager Pankaj Tibrewal has put up commendable performance especially in the longer duration. The scheme has given 11% and 23 % returns in the past three- and five year periods, while its benchmark index, Nifty Midcap 100 TRI, has given 10% an 18.5% in the same period, respectively. This scheme is strictly for investors who believe in the market wisdom of high risk, high return investment.

Portfolio change (Past 6 months)

New entrants	Complete Exits	Increase in allocation
Jindal Steel and Power	Equitas Holdings	AU Small Finance Bank
Voltas	ICICI Bank	PI Industries
Shree Cement	Bajaj Finance	Oberoi Realty
	Interglobe Aviation	Indraprastha Gas

Returns (in %)

Period	Category return	SIP CAGR return	Equity Marketcap Midcap- AVG CAGR Return (%)
1 Year	-12.70	-7.66	-13.32
3 Year	11.47	6.06	9.39
5 Year	22.93	13.09	18.76

Returns Peer Comparison (in %)

	1-Year	3-Year	5-Year
DSP Midcap Fund- Regular plan	-11.70	11.46	20.55
HDFC Mid-Cap Opportunities Fund	-12.62	11.75	21.11
Invesco India Mid Cap Fund	-7.35	11.16	20.89

Source: Accord Fintech, compiled by ETIG Database

Expert Take
Harshvardhan Roongta,
CFP, Roongta Securities
This is a pure mid-cap fund which has been in existence since 2007. For a mid-cap scheme it is important to evaluate its performance on the basis of how it has managed the sharp downturn in the markets. During the bearish phase, the scheme’s returns have fallen lesser than its benchmark index and in the bullish phase, it has given higher returns. This scheme is suitable for investors willing to take higher risks and hold it for at least five years.