Top MFs: Kotak Bluechip Fund

Objectives

Kotak Bluechip Fund is a Large Cap mutual fund scheme from Kotak Mahindra Mutual Fund. This fund has been in existence for 9 yrs, having been launched on January 2013. Kotak Bluechip Fund mainly invests in companies with large market capitalization segment across various sectors.

It tries to generate capital appreciation from a portfolio of predominantly equity and equity related securities.

Fund Key Highlights

Kotak Bluechip Fund has ₹3,652 Crores worth of assets under management (AUM) and is medium-sized fund of its category.

It is benchmarked against NIFTY 50 Total Return Index.

The expense ratio of the fund is 2.09% for Regular plan as on Oct 31, 2021.

Kotak Bluechip Fund attract an Exit Load, "For units in excess of 10% of the investment,1% will be charged for redemption within 365 days.

Minimum investment required is Rs 1000 and minimum additional investment is Rs 1000. Minimum SIP investment is Rs 100.

Return track record

 Kotak Bluechip Fund returns of last 1-year are 27.54%. Since launch, it has delivered 15.88% average annual returns. The fund has doubled the money invested in it every 2 yrs.

 Its trailing returns over different time periods are: 33.74% (1yr), 18.91% (3yr), 15.92% (5yr) and 18.56% (since launch). Whereas, Category returns for the same time duration are: 33.68% (1yr), 16.58% (3yr) and 16.06% (5yr).

Sector wise and stock wise holding

The fund has the majority of its money invested in Financial, Technology, Energy, Construction, FMCG sectors. It has taken less exposure in Financial, Technology sectors compared to other funds in the category.

The fund's top 5 holdings are in Reliance Industries Ltd., Infosys Ltd., ICICI Bank Ltd., HDFC Bank Ltd., Tata Consultancy Services Ltd.

Asset Allocation & Portfolio Composition

1. The asset allocation of the fund comprises around 96.84% in equities, 0.0% in debts and 3.16% in cash & cash equivalents.

2. While the top 10 equity holdings constitute around 49.11% of the assets, the top 3 sectors constitute around 57.28% of the assets.

3. The fund largely follows a Growth oriented style of investing and invests across market capitalisations - around 83.75% in giant & large cap companies, 15.74% in mid cap and 0.51% in small cap companies.

Tax Implications

1. Gains are taxed at a rate of 15% (Short-term Capital Gain Tax - STCG) if units are redeemed within 1 year of investment.

2. For units redeemed after 1 year of investment, gains of upto Rs. 1 lakh accruing from those units in a financial year shall be exempted from tax.

3. Gains of more than Rs. 1 lakh will be taxed at a rate of 10% (Long-term Capital Gain Tax - LTCG).

4. For Dividend Distribution Tax, the dividend income from this fund will get added to the income of an investor and taxed according to his/her respective tax slabs.

5. Also, for dividend income in excess of Rs 5,000 in a financial year; the fund house shall deduct a TDS of 10% on such income.

Expert Comment

Kotak Bluechip Fund try to identify companies that are relatively stable in comparison to the broader market and pick stocks based on financial strength of companies, management strategies and reputation, track record and liquidity. The scheme's ability to deliver returns consistently is higher than most funds of its category. Its ability to control losses in a falling market is above average. The suggested investment horizon of investing in this scheme is over 3 years in order to reduce its downside risk and ensure that the returns become more predictable.