- The fund uses a top down approach to select outperforming sectors, and takes concentrated sector bets.
- The fund has returned 11.55% in the last 5 years, and 22.9% in the last 3 years.
- Today, there are 9 funds in the Flexicap category larger than ₹10,000 crore AUM compared to only one in 2015.
In March 2023, The Kotak Flexicap Fund had assets under management (AUM) of ₹36,056 crore. The fund has returned 11.55% in the last five years, and 22.9% in the last three years. The fund has also withstood different market cycles over the years, generating Alpha even during times of demonetisation, Covid, and other market corrections.
Let us take a closer look at this fund.
First, let us understand what a flexicap fund is.
Flexicap funds are mutual funds that have the flexibility to invest in companies of any market capitalisation, ranging from
large-cap to
small-cap stocks. The term "agility" in the context of flexicap funds refers to the fund's ability to adapt, and adjust its portfolio allocation based on market conditions, and investment opportunities.
With the flexibility to invest in companies of different sizes and sectors, flexicap funds can swiftly respond to changing market dynamics, and adjust their holdings accordingly. This agility allows the fund managers to capitalise on emerging trends, and potentially generate attractive returns for investors.
Since different sectors perform varyingly across market/economic phases, the Kotak Flexicap fund uses a top down approach to select outperforming sectors, and takes concentrated sector bets. Then it takes a bottom-up stock picking approach across different sectors. Being a flexicap fund, it has the flexibility to move across market capitalisation ranges.
“Even today, while the name has changed, the approach has remained the same. It is a blend of top down approach to select a few sectors which are likely to do well. Depending on the sectors which are likely to do well, we take concentrated sector exposure,” says Harsha Upadhyaya, President, and Chief Investment Officer, Equity, Kotak Mahindra Asset Management Company.
Performance of Kotak Flexicap Fund - Direct Plan
| Kotak Flexi Cap (% return)
Fund - Direct
Plan - Growth
| Nifty 50
TRI (%return)
|
Since Inception
| 15.75
| 12.70
|
Last 1 year
| 7.86
| 6.91
|
Last 3 years
| 22.90
| 23.78
|
Last 5 years
| 11.55
| 12.31
|
As of 30th April 2023Changing regulations The fund was launched in 2009, when it was called the Kotak Select Focus Fund. In 2017 the name was changed to Kotak Standard Multicap Fund, because the ‘Focus’ name was associated with a different category. “But the investment approach remained the same,” says Upadhyaya.
During the pandemic, Sebi decided that
multi-cap funds need to have at least 25% investment in each category- small-cap,
mid-cap and large-cap. However, converting existing multicap funds would have led to a huge impact on the funds, and the market at that point of time. Sebi gave an option to switch to the new multicap category where a fund had to invest 25% in each market cap, or to a flexicap category which was similar to the earlier multi-cap. Here, there was no investment restriction, it could go from 0-100 in any bucket without any restriction. Then the Kotal Flexicap Fund was born.
What you should consider before investing Today, there are nine funds in the Flexicap category larger than ₹10,000 crore AUM compared to only 1 in 2015, showcasing the healthy growth across the industry.
“Our fund has performed strongly. As on 30th June 2023, the 10-year CAGR is 17.6% with an alpha of 2.6%. The 1-year performance is 25.3% with an alpha of 1.4%. The long term track record and positive alpha in recent performance proves size isn't a barrier to positive returns. In short, size is not a constraint,” says Upadhyaya.
Returns of Flexicap Funds
|
| Return (%)
|
Scheme Name
| Category
| 1 Year
| 3 Year
| 5 Year
|
360 ONE FlexiCap Fund - Regular Plan
| Equity: Flexi Cap
| -
| -
| -
|
Aditya Birla Sun Life Flexi Cap Fund
| Equity: Flexi Cap
| 22.97
| 24.07
| 11.93
|
Axis Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 19.25
| 18.54
| 11.91
|
Bandhan Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 22.36
| 22.21
| 9.52
|
Bank of India Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 24.84
| -
| -
|
Baroda BNP Paribas Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| -
| -
| -
|
Canara Robeco Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 22.23
| 23.02
| 14.31
|
DSP Flexi Cap Fund
| Equity: Flexi Cap
| 28.16
| 23.23
| 14.26
|
Edelweiss Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 25.44
| 26.22
| 12.82
|
Franklin India Flexi Cap Fund
| Equity: Flexi Cap
| 25.29
| 28.43
| 13.43
|
HDFC Flexi Cap Fund
| Equity: Flexi Cap
| 30.84
| 32.92
| 16.21
|
HSBC Flexi Cap Fund
| Equity: Flexi Cap
| 25.68
| 23.02
| 10.66
|
ICICI Prudential Flexicap Fund
| Equity: Flexi Cap
| 24.49
| -
| -
|
IDBI Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 23.15
| 24.03
| 12.09
|
Invesco India Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 26.17
| -
| -
|
ITI Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| -
| -
| -
|
JM Flexicap Fund
| Equity: Flexi Cap
| 32.21
| 28.07
| 15.57
|
Kotak Flexicap Fund Regular Plan
| Equity: Flexi Cap
| 24.16
| 21.87
| 12.26
|
LIC MF Flexi Cap Fund
| Equity: Flexi Cap
| 23.49
| 18.11
| 10.96
|
Mahindra Manulife Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 26.94
| -
| -
|
Mirae Asset Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| -
| -
| -
|
Motilal Oswal Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 20.36
| 15.82
| 6.68
|
Navi Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 24.92
| 23.34
| -
|
Nippon India Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 21.42
| -
| -
|
Parag Parikh Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 26.21
| 27.75
| 18.40
|
Quant Flexi Cap Fund
| Equity: Flexi Cap
| 26.99
| 39.28
| 21.14
|
Samco Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 23.01
| -
| -
|
SBI Flexicap Fund
| Equity: Flexi Cap
| 20.32
| 24.07
| 12.35
|
Sundaram Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| -
| -
| -
|
Tata Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 19.22
| 19.36
| -
|
Taurus Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 20.21
| 19.23
| 7.64
|
Union Flexi Cap Fund
| Equity: Flexi Cap
| 23.24
| 25.62
| 14.33
|
UTI Children's Career Fund-Investment Plan - Regular Plan
| Equity: Flexi Cap
| 20.35
| 22.88
| 11.16
|
UTI Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| 17.45
| 22.34
| 12.53
|
WhiteOak Capital Flexi Cap Fund - Regular Plan
| Equity: Flexi Cap
| -
| -
| -
|
Source: Value Research, Returns as on 30 June, 2023 Dhirendra Kumar, CEO, Value Research, offers a different point of view. “This is an equity fund and has a great track record. However, since it has become very big, it is very heavily tilted towards large caps. By design it is a flexicap fund, but by compulsion it is dominantly a large-cap fund.”
Kumar suggests that investors may look for relatively smaller flexicap funds. They may also consider multicap funds which will definitely have large-cap, mid-cap and small-cap allocation.
They may also go for an index fund, because if you are going to invest in a large-cap fund, there is around 1.5% expense, while you can buy a large cap index fund which will have a 10 basis point expense. If a large cap fund does as good as the index then you are losing out, it has to generate higher returns than the index for it to make investment sense.
Return of Index Funds with a 5-year track record
|
| Return (%)
|
Scheme Name
| Category
| 1 Year
| 3 Year
| 5 Year
|
Aditya Birla Sun Life Nifty 50 Index Fund
| Equity: Large Cap
| 22.04
| 23.53
| 12.76
|
Bandhan Nifty 50 Index Fund - Regular Plan
| Equity: Large Cap
| 22.12
| 23.77
| 13.20
|
Franklin India NSE Nifty 50 Index
| Equity: Large Cap
| 21.95
| 23.46
| 12.51
|
HDFC Index Fund - S&P BSE Sensex Plan
| Equity: Large Cap
| 23.07
| 23.83
| 13.54
|
HDFC Index Fund Nifty 50 Plan
| Equity: Large Cap
| 22.32
| 23.94
| 13.08
|
ICICI Prudential Nifty 50 Index Fund
| Equity: Large Cap
| 22.32
| 23.84
| 12.95
|
ICICI Prudential Nifty Next 50 Index Fund
| Equity: Large Cap
| 19.69
| 19.21
| 9.03
|
ICICI Prudential S&P BSE Sensex Index Fund
| Equity: Large Cap
| 23.09
| 23.73
| 13.56
|
IDBI Nifty 50 Index Fund
| Equity: Large Cap
| 21.65
| 23.04
| 12.33
|
IDBI Nifty Next 50 Index Fund
| Equity: Large Cap
| 19.60
| 18.86
| 8.93
|
Kotak Flexicap Fund Regular Plan
| Equity: Flexi Cap
| 24.16
| 21.87
| 12.26
|
LIC MF Nifty 50 Index Plan
| Equity: Large Cap
| 21.64
| 23.03
| 12.41
|
LIC MF S&P BSE Sensex Index Plan
| Equity: Large Cap
| 22.42
| 23.00
| 12.94
|
Nippon India Index Fund - Nifty 50 Plan
| Equity: Large Cap
| 21.98
| 23.17
| 12.39
|
Nippon India Index Fund - S&P BSE Sensex Plan
| Equity: Large Cap
| 22.54
| 23.49
| 13.20
|
SBI Nifty Index Fund
| Equity: Large Cap
| 22.21
| 23.75
| 12.77
|
Tata Nifty 50 Index Fund - Regular Plan
| Equity: Large Cap
| 22.13
| 23.60
| 12.89
|
Taurus Nifty 50 Index Fund - Regular Plan
| Equity: Large Cap
| 21.54
| 23.63
| 12.77
|
UTI Nifty 50 Index Fund - Regular Plan
| Equity: Large Cap
| 22.47
| 24.14
| 13.30
|
UTI Nifty Next 50 Index Fund - Regular Plan
| Equity: Large Cap
| 19.63
| 19.25
| 9.19
|
