With a track record of tiding well over volatile market phases, Kotak Select Focus is a good choice for investors. The fund has managed to beat its benchmark, the Nifty 200, every year since its launch in 2009. In the last one year, the fund has delivered a return of 15.2 per cent against a return of 11.8 per cent by its benchmark. The out-performance was wider in the last three years, with the fund giving an annualised return of 27.1 per cent as against the benchmark’s 16.4 per cent gains.

On a one-year rolling return basis, it has outdone its benchmark 98 per cent of the time in the last three years. The fund made hay in the 2014 rally, delivering a return of 57.9 per cent, outperforming its benchmark (22.3 per cent) by a wide margin. Its early bets on cement, auto as well as energy (especially oil-marketing companies) paid off handsomely then.

Portfolio

In terms of stocks, the fund is well-diversified, holding on an average 50 stocks in its portfolio. While it invests across market capitalisation, its portfolio primarily leans towards large-caps. This offers comfort in choppy markets.

Though the fund’s exposure to mid-caps has gone up to 25-30 per cent in the past, in recent years (two to three years) it has stayed below 20 per cent.

The fund also moves into cash and debt during market falls. For instance, in the falling market of 2011, the fund held 5-11 per cent in cash and debt. In the last one year, too, it has taken cash and debt calls to ride the choppy market.

The fund currently has a bias towards domestic business, with consumption and infrastructure as its constituent themes. According to its latest portfolio, 73 per cent of assets is into large-cap stocks while mid-caps and small-caps constitute another 18 per cent and 2 per cent, respectively. Cash and debt holdings put together were about 5.8 per cent.

Winners and losers

The fund is currently overweight on cement, oil and gas and capital goods (vis-à-vis that of Nifty 200 weights).Financial, energy, construction and auto are currently its top four sectors. Over the last one year, it has reduced exposure to public sector banks, software and tyre companies, while adding exposure to cement, oil refineries and auto (especially passenger cars).

HDFC Bank, Reliance Industries, Ultratech Cement, ITC and Hero MotoCorp are its top five picks. In the last one year, it added Reliance Industries, Hero MotoCorp and Mahindra and Mahindra while completely exiting from the counters of Colgate-Palmolive, Hindustan Unilever and Bosch, possibly on account of high valuations.

Bajaj Finance, Ramco Cements, Shree Cement and Petronet LNG were its top bets that paid off in the last one year, while Infosys and Larsen & Toubro contributed negatively to the fund’s returns.

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