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It has good exposure auto and healthcare as well. In consumer space, it is overweight on discretionary and underweight on staples. It is neutral on IT and underweight on capital intensive and cyclical sectors such as energy, power utilities and metals.
Kotak Bluechip has gained from exposure to traditional sectors such as cement, gas utilities, capital goods, industrials and automobiles. “Over last three-six months, we have reduced weight of IT and gone overweight on pharma from neutral. We have booked profits in capital goods and industrials but are still overweight on auto and auto ancillaries,” says fund manager Harish Krishnan. “Our fund has three sleeves–Nifty50, NiftyNext50 and the mid-cap universe. In Nifty50, the focus is on eliminating companies with low pricing power and less competitive advantage. We haven’t owned 20-30 companies from Nifty50 in last eight years. In Nifty Next50, we pick companies with clear earnings visibility and higher growth than others. These are our high conviction names. Then comes the mid-cap universe,” says Krishnan.
2.Mid-cap
MID-CAP FUND managers hunt for multi-baggers that can grow to become large-caps. As per Sebi classification, companies ranked 101 to 250 in market capitalisation are known as mid-cap companies. Mid-cap fund managers have to create 65% of their portfolio from this basket. The rest can be large-caps, small-caps or cash.
The top three mid-cap funds, according to the study, are PGIM India Midcap Opps Fund, Kotak Emerging Equity Fund and Nippon Midcap Fund. “We focus on companies with strong cash flows and clean balance sheets. We don’t like companies with debt or corporate governance issues. These are our safety parameters. This helps us eliminate bad businesses,” says Aniruddha Naha, head, equities, PGIM India. Data from PrimeInvestor shows the fund has generated alpha across periods (one year, three years and five years) compared to its benchmark Nifty150 Midcap index. The fund has delivered 4.88% in one year, 38.67% in three years and 19.43% in five years as on November 25, 2022. In comparison, Nifty150 Midcap Index has generated 2.51%, 24% and 11.41% in one, three and five years, respectively.
Kotak Emerging Equity has been managed by Pankaj Tibrewal since inception from March 30, 2007. Arjun Khanna co-manages the fund with him. “Kotak Emerging fits five-seven year and longer portfolios. It can be used as the only mid-cap exposure or along with another mid-cap fund or aggressive large- and mid-cap fund depending on your investment amount. You must cap mid-cap exposure at 30% no matter how high a risk-taker you are,” PrimeInvestor says in its report on this fund.
Tibrewal says the fund’s top three sectors are capital goods and manufacturing, consumer discretionary (footwear, wedding apparel) and financials. “Around 68% funds are in mid-caps. The rest are in small-caps, large-caps and cash,” he says. The ₹22,500-odd crore fund has beaten its benchmark Nifty150 across time frames by delivering 6.78%, 26.21% and 14.95% over one, three and five years, respectively.
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