Invest Wisely: Kotak Select Focus Fund Guide

Investing in the Kotak Select Focus Fund is a good option for those looking to create wealth over a long period, particularly with an investment horizon of five to seven years. It is a multicap scheme that invests across market capitalisations, making it ideal for regular investors. It is always a good time to invest, provided you have specific goals in mind and choose the right investment vehicle. Systematic Investment Plans (SIP) or Systematic Transfer Plans (STP) can help investors continue with their investments and benefit from volatility, maximising returns over time.

The minimum investment amount

The Kotak Flexicap Fund is a mutual fund scheme from Kotak Mahindra Mutual Fund. It falls under the Flexi Cap category, which means it is an open-ended, dynamic equity fund that invests across various market capitalisations (large-caps, mid-caps, and small-caps).

The fund has been in existence for over 14 years or 11 years, having been launched on 5 August 1994 or 1 January 2013, depending on the source. As of 11 October 2024, the fund had an asset under management (AUM) or total value of assets of ₹4,39,120 Cr or ₹53,844 Crs.

The expense ratio of the fund is 0.59%, which is close to what most other Flexi Cap funds charge. The expense ratio is an annual fee that investors pay to the mutual fund company for managing their investments in the fund.

The fund has a minimum SIP (Systematic Investment Plan) of ₹100 and allows for a lumpsum investment of ₹100 as well. SIP is a method of investing a fixed amount in a mutual fund scheme at regular intervals.

It is important to note that mutual funds are subject to market risk, and past performance does not guarantee future results. Investors should carefully consider their investment objectives, risk tolerance, and charges before investing.

The types of investment

The Kotak Select Focus Fund is considered a good equity multicap scheme, investing across market capitalisations. Multicap or diversified equity schemes are ideal for regular investors looking to create wealth over long periods.

The fund has a minimum investment amount of ₹100 for both SIP and lumpsum investments. It has an expense ratio of 1.44% or 1.45%, depending on the source. The expense ratio is the annual fee that investors pay to the mutual fund company for managing their investments in the fund.

The fund has a 'Very High' risk rating according to SEBI's Riskometer. It is important to note that investors should only invest in this fund if they do not need to redeem their investment in less than five years.

The fund's performance

The Kotak Select Focus Fund is a good equity multicap scheme that invests across market capitalisations. Multicap or diversified equity schemes are ideal for regular investors looking to create wealth over a long period.

The fund has generated average returns but has done so with exceptional consistency. It has delivered average annual returns of 15.12% since its inception 14 years ago. Over the last year, the fund has returned 33.28%, and over the last 3 years, it has returned 15.45% annually. The average annual return of this fund stands at 33.28%.

The Kotak Select Focus Fund has generated the highest return among Flexi Cap funds in the last 10 years. It has also demonstrated the highest AUM growth in the last 12 months in the Flexi Cap category. However, the fund ranks lower in terms of protecting against volatility within its category, and it is underperforming relative to its category.

The fund has a majority of its money invested in the top 5 sectors: Banks, IT-Software, Aerospace & Defence, Cement & Cement Products, and Chemicals & Petrochemicals. The fund's top 5 companies are ICICI Bank Ltd., Bharat Electronics Ltd., HDFC Bank Ltd., Larsen and Toubro Ltd., and Infosys Ltd.

The fund has a consistency rating of 3.0, indicating that it has not generated great returns, and even those are not very consistent.

The Kotak Select Focus Fund has an expense ratio of 1.44%, which is what most other Flexi Cap funds charge. The direct plan has a lower expense ratio of 0.59%.

The fund's asset allocation

The Kotak Select Focus Fund is a multicap or diversified equity scheme that invests across market capitalisations. It is a good investment vehicle for those looking to create wealth over a long period, ideally with an investment horizon of five to seven years.

The fund seeks to generate long-term capital appreciation from a portfolio of equity and equity-related securities, generally focusing on a few selected sectors. As of 31 July 2024, the fund had invested 98.28% in equity, 1.61% in cash and cash equivalents, and 0.11% in debt.

The fund's top 5 sectors are Banks, IT - Software, Aerospace & Defence, Cement & Cement Products, and Chemicals & Petrochemicals. The top 5 companies of equity are ICICI Bank Ltd., Bharat Electronics Ltd., HDFC Bank Ltd., Larsen & Toubro Ltd., and Infosys Ltd.

Taxation

If you sell your mutual fund units within a year of the purchase date, short-term capital gain tax will be applicable. The current tax rate is 20%. If you sell after 1 year from the purchase date, long-term capital gain tax will be applicable. The current tax rate is 12.5% if your total long-term capital gain exceeds 1.25 lakh. Any cess or surcharge is not included in the tax rate. No tax is to be paid as long as you continue to hold the units. Dividends are added to the income of the investors and taxed according to their respective tax slabs. If an investor's dividend income exceeds Rs. 5,000 in a financial year, the fund house also deducts a TDS of 10% before distributing the dividend.

Frequently asked questions