Due to the volatile nature of the equity market, it is advisable to have exposure across market caps so you can benefit from the diversification. Large and Mid-Cap Funds are a separate set of multi-cap strategy that offers investors an opportunity to diversify their investment across stocks of large and mid-sized companies.

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.

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

Graph 1

Past performance is not an indicator of future returns
Data as on July 26, 2022
(Source: ACE MF)  

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. However, it could not fully capitalise on the ensuing bull phase and has marginally trailed the benchmark and the category average. In the last 5 years, Kotak Equity Opportunities Fund has generated a compounded annualised return of around 12.6%, which is nearly at par with 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 18,134. The fund manager has proven his ability to timely identify and capture available opportunities and create significant wealth for long-term investors.

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 155 13.05 31.35 25.07 13.53 14.77 23.07 0.21
Axis Growth Opportunities Fund 7,071 1.05 30.10 22.18 21.18 0.22
Mirae Asset Emerging Bluechip Fund 20,664 2.14 29.89 21.92 15.11 17.54 23.08 0.21
Canara Rob Emerging Equities Fund 12,769 3.51 28.98 21.43 13.20 15.07 22.47 0.20
Edelweiss Large & Mid Cap Fund 1,270 4.36 29.56 20.13 14.03 12.95 21.82 0.18
ICICI Pru Large & Mid Cap Fund 4,973 14.48 35.21 19.89 12.27 13.25 24.21 0.18
Kotak Equity Opportunities Fund 9,223 5.32 27.04 19.41 12.63 13.59 22.06 0.18
SBI Large & Midcap Fund 6,394 6.10 32.38 19.41 13.03 12.69 23.66 0.17
HDFC Large and Mid Cap Fund 5,817 9.47 34.32 19.36 11.59 10.56 25.18 0.16
LIC MF Large & Midcap Fund 1,638 7.96 28.73 19.31 12.53 13.88 20.94 0.18
NIFTY LargeMidcap 250 – TRI 5.42 30.05 19.53 12.31 13.07 23.86 0.17

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 July 26, 2022
(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 has impacted its returns in short to medium term. However, the fund displayed its strength when the market started correcting from October 2021 onwards by limiting the downside risk better than the benchmark and the category average. Over the long-term period of 5-year and 7-year, Kotak Equity Opportunities Fund has outpaced many of its peers while its performance has shown reasonable growth compared to the benchmark.

Its standard deviation of 22.06% signifies that the fund’s volatility has been much lower than the category average (23.14%) and the benchmark (23.86%), whereas its risk-adjusted return (Sharpe ratio) that denotes the fund’s ability to reward investors is ahead of the category average as well as the benchmark.

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 2Graph 2

Holding in (%) as of June 30, 2022
(Source: ACE MF)  

Kotak Equity Opportunities Fund usually holds a well-diversified portfolio of around 50 to 55 stocks. As of June 30, 2022, the fund held as many as 60 stocks in its portfolio, with the top 10 stocks together constituting around 36.9% of its assets. ICICI Bank, SBI, Reliance Industries, SRF, and Infosys currently appear among its top portfolio holdings. Axis Bank, L&T, Linde India, ITC, and Coromandel International, 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 one year, SRF, Linde India, Schaeffler India, Thermax, Bharat Electronics, ICICI Bank, Reliance Industries, SBI, and Bharti Airtel were among the stocks that contributed to the fund’s gains, while it lost some value in Gujarat State Petronet, Dr Lal Pathlabs, The Ramco Cement, JK Cement, Max Financial Services, Jindal Steel & Power, and Indraprastha Gas, among others.

Kotak Equity Opportunities Fund’s portfolio is skewed towards Banking & Finance and Engineering sector that collectively account for around 41.2% of the portfolio. Infotech, Consumption, Auto Ancillaries, Pharma, Petroleum, Cement, Oil & Gas, and Chemicals are among the other core sectors in the fund’s portfolio. The top 10 sectors together account for nearly 75.4% of its assets. 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.

This article first appeared on PersonalFN here

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