Publish Date:
Kotak Mutual Fund has Introduced a new scheme – Kotak Business Cycle Fund
It is an open-ended equity scheme following business cycles based investing theme.
Accordingly, the investment objective of the scheme shall seek to generate long term capital appreciation by investing predominantly in equity and equity related securities with a focus on riding business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy.
However, there is no assurance that the objective of the scheme will be realized.
Under normal circumstances, Kotak Business Cycle Fund will hold an allocation of 80% to 100% of its assets in Equity and Equity Related Securities selected on the basis of business cycle, 0% to 20% in Other Equity and Equity Related Securities of companies, 0% to 20% in Debt and Money Market Securities and 0% to 10% in Units of REITs & InvITs.
As per the Scheme Information Document, the fund would follow top-down approach of portfolio construction to identify stages of business cycle, sector opportunities and subsequently using bottom up approach to identify strong companies within those sectors. The portfolio is therefore likely to be focused on few selected sectors which are likely to do well in a particular business cycle. Subsequently, for identifying companies within those sectors, the portfolio construction will be based on bottom-up stock picking using the Business, Management and Valuation (BMV) model.
The Fund Manager will evaluate the business environment that a company operates in, the capability of the management to execute and scale up the business and valuation of the company based on fundamentals like discounted cash flows and PE ratios, etc.
The Scheme would aim to follow the business cycle approach to investing by identifying such economic trends and investing in the sectors and stocks that are likely to outperform at any given stage of the business cycle in the economy. A business cycle is basically defined in terms of periods of expansion and contraction. Given below is an example of how the focus on sectors changes during different stages of the economic cycle.
Kotak Business Cycle Fund’s performance will be benchmarked against Nifty 500 Total Return Index
The scheme will be managed by Mr Pankaj Tibrewal (for equity), Mr Abhishek Bisen (for debt) and Mr Arjun Khanna (for foreign securities).
The NFO opens for subscription on September 07, 2022 and closes on September 21, 2022. The scheme will reopen for continuous sale and repurchase on October 06, 2022.
The fund’s NAV is priced at Rs 10/- per unit during the NFO period. The minimum subscription amount is Rs 5,000 and in multiples of any amount thereafter.
The scheme offers Regular Plan and Direct Plan each plan offers Growth and Income Distribution cum capital withdrawal option (IDCW) option.
[Read: Kotak Business Cycle Fund: Will this Theme Ride Your Portfolio Returns Higher?]