Kotak Standard Multicap Fund To Be Known As Kotak Flexicap Fund
   Dec 31, 2020

Kotak Mutual Fund has announced a change in fundamental attributes of the largest Multi Cap scheme ‘Kotak Standard Multicap Fund’.

Effective from February 01, 2021, the scheme will be categorized under the newly introduced Flexi cap funds category, and will be known as ‘Kotak Flexicap Fund’.

In an addendum released by the fund house, it has stated a few fundamental changes in the scheme, which includes the change in the scheme’s category, its name, and a provision to create a segregated portfolio.

Under Flexi Cap funds, the scheme will be positioned as an open ended dynamic equity scheme investing across large cap, mid cap, small cap stocks.

Accordingly, Kotak Flexicap Fund will have the freedom to invest across large cap, mid cap, and small cap stocks in any proportion. The corpus of the scheme will be invested in equity and equity related instruments, and various fixed income securities.

It will hold 65% to 100% of its assets in equity and equity related securities including convertible bonds and debentures and warrants carrying the right to obtain equity shares. 0% to 35% of its assets can be held in Debt & Money Market instruments, and 0% to 10% in Units issued by REITs and InvITs.

The current portfolio strategy of the fund where it holds a large cap bias with significant allocation to mid and small cap stocks satisfies the characteristics of “Flexi cap fund”.

In our view, the recategorization of Kotak Standard Multi Cap Fund to a flexi-cap and change in name to Kotak Flexicap Fund without any changes to the fundamental investment objectives or portfolio management approach will not have any significant impact on the way this fund is being managed.

Under the new flexi-cap category the fund will continue to follow its current investment strategy as it offers complete flexibility in terms of allocation across each market cap segment.

In addition, the fund house has also announced an inclusion of provision for creation of segregated portfolio for the debt portion of its portfolio, and investment in Units issued by REITs and InvITs.

Notably, after the SEBI allowed creation of segregated portfolios, almost all mutual fund schemes are creating an enabling provision of this nature in the debt portion of their schemes.

The new provision will be effected in the Scheme Information Document (SID) and Key Information Memorandum (KIM) of the scheme under the relevant section and will come into effect from February 01, 2021.

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