Fund of Fortnight

This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. 

Reason for recommendation
We are probably in the midst of one of the sharpest market movements without any major interruption. From the lows of March 2020 all the equity indices have almost doubled except for a few of them. Such a vertical rise has led to a feeling of discomfort among investors about the sustenance of the movement. In such circumstances, it is advised to invest in large-cap-dedicated funds which tend to generate more consistent returns and are better placed in terms of risk reward.

Kotak Bluechip Fund is one of the best funds from the large-cap category when it comes to diversification. It is one of the best diversified funds among the large-cap-dedicated funds when measured through its diversification ratio. Besides, what also favours the fund is its capture ratio. It has a capture ratio of 1.064 compared to 0.98 for the category. It has up-capture ratio of 100 per cent, which means when its benchmark goes up by 10 per cent, the NAV of the fund also moves up by 10 per cent. It has downside capture ratio of 94 per cent, which means if the benchmark goes down by 10 per cent, the fund’s NAV drop by 9.4 per cent.

The fund has always remained in the top two quartiles in terms of performance every year since 2019. At the end of the August 2021, the fund had 53 stocks and contained names such as HDFC Bank, ICICI Bank and Infosys, among others. The fund is overweight on technology sector and FMCG. The fund is underweight on healthcare and infrastructure. The fund is suitable for moderate risk-taking investors with investment horizon of at least three years.