Kotak Equity Opportunities Fund: Identifying Opportunities Across Stocks and Sectors

Feb 16, 2023 / Reading Time: Approx. 10 mins

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Large & Mid Cap Mutual Funds are equity-oriented mutual funds that offer you an opportunity to create wealth by investing in an optimum mix of large-cap and mid-cap stocks, i.e., the leaders of today as well as the future leaders. Thus, you benefit from the stability of large-caps and the high growth potential of mid-caps through a single fund.

Large-cap stocks are known to provide steady returns, while mid-cap stocks have the potential to generate high returns. A combination of these stocks in the portfolio can help you to earn optimal risk-adjusted returns.

Click here to find out PersonalFN's list of best Large & Mid Cap Funds to invest in 2023.

Kotak Equity Opportunities Fund is an opportunities-style Large & Mid Cap Fund that has managed to generate benchmark-beating returns over the long run while keeping the risk level low.


Graph 1: Growth of Rs 10,000 if invested in Kotak Equity Opportunities Fund 5 years ago

Launched in September 2004, Kotak Equity Opportunities Fund is primarily an opportunities-style fund that looks for investment opportunities across various sectors based on the performance and growth potential of companies within the sectors. The fund holds a diversified portfolio of stocks spread across market caps by utilising the bottom-up investment strategy. This strategy helped the fund to contain the downside risk during bearish phases, including the market crash of 2020. In the ensuing bull phase though the fund has marginally trailed the benchmark, the performance was line with the category average. In the last 5 years, Kotak Equity Opportunities Fund has generated a compounded annualised return of around 13.8%, which is about two percentage points higher than the returns delivered by its benchmark Nifty LargeMidcap 250 – TRI. An investment of Rs 10,000 in the fund 5 years back would have now grown to Rs 19,059 compared to a valuation of Rs 17,553 for a simultaneous investment in its benchmark. The fund manager, Mr Harsha Upadhyaya, has proven his ability to timely identify and capture available opportunities and create significant wealth for long-term investors.

Graph 1
Past performance is not an indicator of future returns
Data as on February 15, 2023
(Source: ACE MF)

Table: Kotak Equity Opportunities Fund's performance vis-á-vis category peers

Scheme Name Corpus (Cr.) 1 Year 2 Year 3 Year 5 Year 7 Year Std Dev Sharpe
Quant Large & Mid Cap Fund 610 8.95 21.97 24.76 14.44 17.84 23.17 0.24
ICICI Pru Large & Mid Cap Fund 6,649 10.88 19.80 21.40 13.34 16.77 24.00 0.21
Mahindra Manulife Top 250 Nivesh Yojana 1,058 1.90 15.13 20.52 -- -- 22.00 0.22
HDFC Large and Mid Cap Fund 7,911 8.21 16.77 20.11 12.70 15.34 25.09 0.19
UTI Core Equity Fund 1,530 6.31 14.34 19.07 10.17 14.05 24.27 0.18
Mirae Asset Emerging Bluechip 23,703 -0.08 9.95 18.61 14.74 20.21 23.19 0.19
SBI Large & Midcap Fund 9,250 9.09 16.21 18.61 13.19 16.49 23.64 0.19
Edelweiss Large & Mid Cap Fund 1,683 4.81 12.21 17.53 13.49 16.50 22.04 0.19
Axis Growth Opp Fund 8,046 -1.61 11.94 17.39 -- -- 21.97 0.18
Kotak Equity Opp Fund 11,497 8.56 14.34 17.33 13.76 17.64 22.20 0.18
NIFTY LargeMidcap 250 - TRI 4.23 12.50 17.94 11.90 16.54 24.07 0.18
Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on February 15, 2023
(Source: ACE MF)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

Kotak Equity Opportunities Fund has a track record of outperforming the benchmark and the category average over longer time periods. Notably, the fund could not fully participate the bull phase of 2020-2021, wherein it trailed its benchmark Nifty LargeMidcap 250 - TRI and many of its peers by a noticeable margin. This impacted its returns in the short to medium term. However, the fund displayed its strength when the market started witnessing sharp volatility from October 2021 onwards by managing the risk better than the benchmark and the category average. Over the long-term period of 5 years and 7 years, Kotak Equity Opportunities Fund has outpaced the benchmark as well as many of its peers.

Its standard deviation of 22.20% signifies that the fund's volatility has been much lower than the category average and the benchmark, whereas its risk-adjusted return (Sharpe Ratio) that denotes the fund's ability to reward investors is competitive to the category average as well as the benchmark.

Kotak Equity Opportunities Fund: Identifying Opportunities Across Stocks and Sectors
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Investment strategy of Kotak Equity Opportunities Fund

Classified under the Large & Mid Cap Funds category, Kotak Equity Opportunities Fund is mandated to invest at least 35% of its assets in large caps with a simultaneous investment of at least 35% in mid-caps. Accordingly, the fund intends to hold a portfolio diversified across market caps. The current investment mandate still allows the fund to continue with its opportunistic investment style, where it looks for growth opportunities across sectors by investing in high-potential large and mid-cap companies within those sectors.

While selecting stocks for Kotak Equity Opportunities Fund's portfolio, the fund manager follows a combination of the top-down and bottom-up approaches to stock picking. The fund focuses on finding opportunities in certain sectors that the fund manager believes will perform better in the economy and applies the bottom-up approach to pick high-potential stocks within those sectors.

The fund manager has the flexibility to invest in a mix of large and mid-cap stocks from various sectors. The allocation between large caps & midcaps broadly depends on the choice of sectors, business environment & valuations. The fund's core portfolio comprises of 5-6 sectors together, totalling around 50-60% of its assets. Kotak Equity Opportunities Fund follows a buy-and-hold strategy for most of its core holdings, with many stocks being in the portfolio for well over 2 to 3 years.

Graph 2: Top portfolio holdings in Kotak Equity Opportunities Fund

Graph 2 Graph 2
Holding in (%) as of January 31, 2023
(Source: ACE MF)

Kotak Equity Opportunities Fund usually holds a well-diversified portfolio of around 55 to 65 stocks. As of January 31, 2023, the fund held as many as 64 stocks in its portfolio, with the top 10 stocks together constituting around 36.8% of its assets. SBI, ICICI Bank, Axis Bank, L&T, and Reliance Industries currently appear among its top portfolio holdings. Maruti Suzuki, Infosys, Bharat Forge, ITC, and SRF are the other top holdings in the fund's portfolio. Many of these stocks have been part of the fund's portfolio for a long time.

In the last two years, SRF, Jindal Steel & Power, Linde India, Bharat Electronics, and ICICI Bank were among the stocks that contributed to the fund's gains, while it also benefitted from its holdings in Schaeffler India, Cummins India, L&T, Thermax, Infosys, ABB India, and Reliance Industries.

Kotak Equity Opportunities Fund's portfolio is skewed towards Engineering and Banking & Finance sectors that collectively account for around 44.2% of the portfolio. Auto & Auto Ancillaries, Consumption, Infotech, Pharma, Cement, Petroleum, Fertilisers, and Oil & Gas are among the other core sectors in the fund's portfolio. Though the fund's portfolio is inclined more towards Cyclicals and Sensitive sectors, it is fairly diversified to defensive sectors as well.


Kotak Equity Opportunities Fund has been capable of generating market-beating returns for its investors at a reasonable risk. While the fund has managed the downside risk well and stood strong during bearish and highly volatile market phases, it has shown fair performance during positive market trends.

Kotak Equity Opportunities Fund carries an impressive track record under the supervision of Mr Harsha Upadhyaya and has turned out to be a rewarding proposition for its long-term investors. The fund manager has done well to keep overall volatility at a reasonable level and has delivered in terms of risk-adjusted returns. The superior long-term performance of the fund has been driven by its smart sector and stock selection strategy.

Kotak Equity Opportunities Fund is suitable for investors looking for a stable Large & Midcap Fund with an investment horizon of at least 5-7 years.


PS:  If you are looking for quality mutual fund schemes (including Equity-linked Saving Schemes) to add to your investment portfolio, I suggest you subscribe to PersonalFN's premium research service, FundSelect. PersonalFN's FundSelect service provides insightful and practical guidance on which mutual fund schemes to Buy, Hold, and Sell.

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Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.


DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.

Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.



About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

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  3. Equitymaster Agora Research Private Limited;

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  13. I V Subramaniam.

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  1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

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