Kotak Select Focus Fund

Transcription

1 Kotak Select Focus Fund 1

2 About the Fund

3 Investment Approach Investment Style & Philosophy Style: Growth at reasonable price (GARP) Philosophy to remain fully invested as per mandate and not to take active cash calls, cash limited to maximum of 7.5% Investment Strategy Top-down sectoral approach supplemented by bottom-up stock picks Focus on select sectors of economy Concentrated sector bets diversified at stock level Investment across market capitalization ranges Portfolio Construction Generally invests up to 50% in Mid and Small cap stocks Flexibility to move across market capitalisation ranges within above band Portfolio Composition: 45 stocks Maximum sector exposure: 33% No. of sectors Min 4, Max 9 Top 10 holdings: Around 35% 40% of portfolio

4 Critical Ingredients for Portfolio Scalable & competitive business model Valuation comfort Critical ingredients for Portfolio Strong management bandwidth Steady cash flow generation Efficient capital allocation

5 Wealth Creation Opportunities GARP (Growth At Reasonable Price) Portfolio Valuations similar to market, however expected earnings growth is higher Banking Domestic Focus Domestic economy gradually improving, domestic growth to outpace global growth Operating Leverage Banking Existing excess capacities to aid profitability when demand picks up Banking

6 INDIA:Greater Sector Diversity vis-à-vis Peers Scope For Diversification Sector focus can enhance alpha creation as the strategy presents sizeable opportunity in India India (Nifty 200) China (Shanghai Composite) Taiwan (Taiex) Brazil (Bovespa) Philippines (PSEI) Top 3 Sectors allocation (%) Top 5 Sectors allocation (%) Number of sectors above 8% Sector Weights (%) Financials (39 members) Consumer Discretionary (29 members) Information Technology (14 members) NA Consumer Staples (13 members) Energy (8 members) Materials (26 members) NA Industrials (26 members) Health Care (25 members) NA Utilities (13 members) Telecommunication Services (5 members) Real Estate (3 members) Note: Data as of 31st Jan The sectors are as defined as per Global Industry Classification Standard sourced from Bloomberg.

7 The Underlying Investment Opportunity Sectors perform differently over years No sector consistently outperforms or underperforms the CNX200 Index Different sectors outperform/underperform the CNX200 Index over years Annual Returns (%) of Sectoral Indexes Outperforming CNX 200 Underperforming CNX 200 Indices CY CY CY CY CY CY CY CY CY CY CY CY S&P BSE AUTO S&P BSE Bankex NIFTY PSU BANK S&P BSE Consumer Durable Index S&P BSE Capital Goods Index S&P BSE FMCG Index S&P BSE IT Index S&P BSE Oil & Gas Index S&P BSE Power Index S&P BSE Realty N.A N.A N.A S&P BSE TECK S&P BSE Healthcare NIFTY Commodities NIFTY Energy NIFTY Media N.A NIFTY Metal NIFTY Pharma NIFTY Service Sector S&P BSE Public Sector Undertakings Index Nifty Source: MFI Explorer ICRA, data as of 31 st Dec 2016

8 Uniqueness Of Kotak Select Focus Strategy Different sectors perform varyingly across market/economic phases Top-Down investment approach to select outperforming sectors Concentrated sector bets Bottom-up stock picking within selected sectors Diversified portfolio at stock level Flexibility to move across market capitalization ranges 8

9 Thematic overlay to sector selection Various approaches to sector selection Cyclical / non-cyclical Global / Local Private / State-owned Reforms Dependent / Independent Valuation Filter Sector Selection Consumption / Investment Driven Commodity producer / Users Growth / Value Urban / Rural 9

10 Asymmetric Performance Within Sectors Identifying the right sub-sectors within the sector is crucial Private Banking State Owned CY 2016 BSE Bankex Index 7.4 Nifty PSU Bank Index 4.1 Oil & Gas Upstream Downstream CY 2016 BSE Oil & Gas Index 27.2 Downstream Oil Segment 49.9 (%) Utilities Power Utilities CY 2016 S&P BSE Power Index 1.5 Gas Utilities 24.4 Gas Utilities Source: Bloomberg For Downstream Oil Segment we have taken average CY returns of IOC, HPCL and BPCL and For Gas Utilities IGL, GAIL, Gujarat Gas and Gujarat State Petronet

11 Stock Selection Approach to Intra-sector stock selection (Examples) Banking and Finance Private / Public / NBFC Retail / corporate Lenders Global Presence / Local Fee Dependant / Fund Based Valuation Filter Stock Selection Oil and Gas Private / Public Subsidy / non-subsidy Upstream / Downstream 11

12 Portfolio Stance

13 Current Investment Focus Domestic Plays Portfolio stance domestic and pro-cyclical tilt Largely insulated from possible global shocks/ currency volatility Focus on domestic cyclicals with high operating leverage increasing demand to sweat existing excess capacity and result in better profitability Portfolio stocks are low on financial leverage Average Net Debt to Equity ratio of just 0.16 (as on 31 st Jan 2017 based on FY16 financials, excluding banking sector)

14 Current Investment Focus 2 Key Themes 7 th pay Commissio n Bottlenecks Cleared Consumption Growth Infrastructure Revival Stronger Corporate Health Rural Focus Policy Initiatives States Spending Centre Spending Sectors likely to Benefit Sectors likely to Benefit AUTO CEMENT DURABLES CAPITAL GOODS RETAIL PRIVATE SECTOR BANKS ENGINEERING

15 The Infrastructure Opportunity More Than Asset Owners A MULTI-SECTORAL OPPORTUNITY Demographics Outsourcing India Story Infrastructure Logistics Industrials Oil and Gas Infrastructure Financing Utilities Urban Infrastructure Construction Airport and Air Transport Real Estate Ports and Shipping Cement Power SEZ Development Road and Railways Telecom Universe comprises about 300 companies with market cap of US$400bn (Rs 25,00,000 cr) 15

16 Key Sectoral Stance Kotak Select Focus - Sectoral Stance Overweight Sectors Underweight Sectors Sector Exclusions Cement Information technology Media Oil & Gas Pharmaceutical Telecom Auto & Auto Ancillary FMCG Metals Capital Goods & Engineering as on 31 st Jan

17 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Kotak Select Focus - UW/OW Movement Auto & Auto Ancillary Banking & Finance FMCG Information Technology

18 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Jan'17 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Jan'16 Feb'16 Mar'16 Apr'16 May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Kotak Select Focus - UW/OW Movement Cement Oil & Gas Pharmaceutical 0 Telecom

19 Performance & Portfolio

20 PERFORMANCE CONSISTENCY ACROSS QUARTERS Outperformance in 23 out of 28 quarters Year Q1 Q2 Q3 Q4 KSF CNX200 Alpha KSF CNX200 Alpha KSF CNX200 Alpha KSF CNX200 Alpha CY CY CY CY CY CY CY Past performance may or may not be sustained in the future, data as on 31 st Dec 2016 Source:ICRA 20

21 Growth At Reasonable Price Source: Bloomberg Scheme Name Earnings Growth %* P/E FY17E FY18E FY17E FY18E Kotak Select Focus Fund - Reg - Growth Nifty Portfolio expected earnings growth higher than market Portfolio valuations largely inline with that of market Kotak Select Focus Offers higher growth at reasonable valuation *Portfolio as on 31 st Jan 2017, Price as on 31/01/

22 Portfolio Action Banking & Finance Top Sector Allocation as on 31st Jan 2017 (%) Oil & Gas Auto & Auto Ancillary Cement & Cement Products FMCG Capital Goods & Engineering Information technology Pharmaceutical Source : KPAX (Internal System) 22

23 Portfolio Action Top 10 Companies Portfolio Weights 0% 1% 2% 3% 4% 5% 6% HDFC Bank Ltd. Reliance Industries ITC Ltd. Hero MotoCorp Ltd. Ultratech Cement Maruti Suzuki India The Ramco IndusInd Bank Ltd. State Bank Of India Shree Cement Ltd. as on 31 st Jan 2017 Source : KPAX (Internal System) 23

24 Performance As On 31 st December 2016 Kotak Select Focus Fund - Growth Date Scheme Returns (%) ^ Nifty 200 # (%) Nifty 50 # # (%) Current Value of Standard Investment of Rs in the Kotak Select Focus Fund - Growth Returns (%) ## Scheme (Rs) Benchmark #(Rs) Additional Benchmark # # (Rs) Since Inception till December 31, ,005 17,422 16,949 December 31, 2015 To December 31, December 31, 2014 To December 31, December 31, 2013 To December 31, Not applicable ^Past performance may or may not be sustained in future.*all payouts during the period have been reinvested in the units of the scheme at the then prevailing NAV. Returns <= 1 year: Absolute; Returns > 1 year: CAGR (Compounded Annualised Growth Rate). N.A stands for data not available. Note: Point to Point (PTP) Returns in INR shows the value of 10,000/- investment made at inception. Source: ICRA MFI Explorer. # Name of Scheme Benchmark. ## Name of Additional Benchmark. Please refer slide no. 24 for schemes managed by Mr. Harsha Upadhyaya.

25 Other Schemes Managed by Mr. Harsha Upadhyaya Date Kotak Opportunities - Growth Scheme Returns (%) ^ Nifty 500 # (%) Nifty 50 # # (%) Current Value of Standard Investment of Rs in the Returns (%) ## Scheme (Rs) Benchmark #(Rs) Additional Benchmark # # (Rs) Since Inception till December 31, December 31, 2015 To December 31, December 31, 2014 To December 31, December 31, 2013 To December 31, ,791 49,936 49,641 Not applicable Kotak Tax Saver Scheme Growth Scheme Nifty 500 # (%) Nifty 50 # # (%) Current Value of Standard Investment of Rs in Returns (%) ^ the Returns (%) ## Scheme (Rs) Benchmark #(Rs) Additional Benchmark # # (Rs) Since Inception till December 31, ,267 30,959 31,380 December 31, 2015 To December 31, December 31, 2014 To December 31, Not applicable December 31, 2013 To December 31, ^Past performance may or may not be sustained in future.*all payouts during the period have been reinvested in the units of the scheme at the then prevailing NAV. Returns <= 1 year: Absolute; Returns > 1 year: CAGR (Compounded Annualised Growth Rate). N.A stands for data not available. Note: Point to Point (PTP) Returns in INR shows the value of 10,000/- investment made at inception. Source: ICRA MFI Explorer. # Name of Scheme Benchmark. ## Name of Additional Benchmark.

26 Disclaimers Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 26

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