Kotak Small Cap Fund Growth Direct Plan

Kotak Small Cap Fund – Growth – Direct Plan is an open-ended equity scheme that aims to generate capital appreciation by investing predominantly in small-cap companies. The fund follows a bottom-up approach to spot companies with high future growth potential and capitalise on their growth. The fund invests mainly in materials, consumer discretionary, capital goods, metals & mining, and chemicals sectors.

The fund is suitable for investors who are looking for very high returns and are ready for the possibility of higher losses in their investments. This is due to the fact that the fund has a very high risk-o-meter rating and an average performance among peers. The fund has a low expense ratio of 0.55%, which is less than the category average of 0.76%. The fund has delivered 16.06% returns in the last year, 48.03% returns in the last three years, and 18.42% returns in the last five years.

Key Parameters

Some of the key parameters of Kotak Small Cap Fund – Growth – Direct Plan are:

• The fund has a NAV of INR 196.043 as of 26th May 2023.
• The fund has an AUM of INR 9230 Cr as of 31st March 2023, which is more than the category average.
• The fund has an expense ratio of 0.55%, which is less than the category average of 0.76%.
• The fund has a very high risk-o-meter rating, which means it is suitable for investors who are looking for very high returns and are ready for the possibility of higher losses.
• The fund has delivered 16.06% returns in the last year, 48.03% returns in the last three years, and 18.42% returns in the last five years.

Taxation

The taxation on Kotak Small Cap Fund – Growth – Direct Plan can be explained as follows:

• Gains are taxed at a rate of 15% (Short-term Capital Gain Tax – STCG) if units are redeemed within 1 year of investment.
• For units redeemed after 1 year of investment, gains of up to INR 1 lakh accruing from those units in a financial year shall be exempted from tax.
• For gains exceeding INR 1 lakh, a Long Term Capital Gain Tax (LTCG) of 10% is applicable without indexation benefit.

Holdings

The holding of Kotak Small Cap Fund – Growth – Direct Plan as of May 2023 are:

• The fund has 95.41% of its investment in domestic equities of which 3.35% is in large-cap stocks, 16.81% in mid-cap stocks, and 62.62% in small-cap stocks.
• The fund has 4.59% of its investment in cash and cash equivalents.
• The fund has 0% of its investment in debt and other instruments.
• The top 10 holdings of the fund are Persistent Systems Ltd., Bharat Electronics Ltd., Sheela Foam Ltd., Supreme Industries Ltd., Ramco Cements Ltd., JK Cement Ltd., Thyrocare Technologies Ltd., Aarti Industries Ltd., Carborundum Universal Ltd., and Balkrishna Industries Ltd.

Return Potential

The return potential of Kotak Small Cap Fund – Growth – Direct Plan can be estimated by looking at its past performance and its risk profile. Some of the points to consider are:

• The fund has delivered 16.06% returns in the last year, 48.03% returns in the last three years, and 18.42% returns in the last five years.
• The fund has a very high risk-o-meter rating, which means it is suitable for investors who are looking for very high returns and are ready for the possibility of higher losses.
• The fund has a low expense ratio of 0.55%, which means it charges fewer fees than the category average of 0.76%.
• The fund has a well-diversified portfolio of equity and equity-related securities, with a focus on small-cap companies that have high future growth potential.
• The fund has outperformed its benchmark (NIFTY Smallcap 250 TRI) and its category average in the long term.

Given these pointers, we can say that the fund can potentially produce good returns if invested for at least 3 or more years.

Investment Objective of Kotak Small Cap Fund – Growth – Direct Plan

The investment objective of Kotak Small Cap Fund – Growth – Direct Plan can be summarised as follows:

• To generate capital appreciation by investing predominantly in small-cap companies.
• To have a well-diversified portfolio of equity and equity-related securities.
• To spot companies with high future growth potential and capitalise on their growth.
• To invest mainly in materials, consumer discretionary, capital goods, metals & mining, and chemicals sectors.

Minimum Investment and Lock-in Period

It is generally advised to investors that investing in the Kotak Small Cap Fund – Direct Fund requires an investment horizon of more than 3 years. The minimum investment required is INR 500 and the minimum additional investment is also INR 500. The minimum SIP investment is INR 500. The fund has an exit load of 1% for units in excess of 10% of the investment if redeemed within 365 days. The fund has an expense ratio of 0.55%, which is less than the category average of 0.76%.

Kotak AMC

Kotak Mahindra Mutual Fund is the asset manager of Kotak Mahindra Mutual Fund (KMMF) and a wholly-owned subsidiary of Kotak Mahindra Bank Limited (KMBL). It began its operations back in December 1998 and was the first AMC to offer a dedicated gilt fund for investing solely in Government securities. Kotak Mutual Fund provides mutual fund and portfolio management services under SEBI (‘Mutual Funds’) Regulations, 1996, and SEBI (Portfolio Manager) Regulations, 1993. As of 31st Jan 2021, the asset under management of Kotak AMC is 284617.8 crore. KMAMC has 86 branches spread over 82 cities in India and has 25.9 lakh unique investors.