Fund of Fortnight

This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.

Reason for recommendation

The performance of the broader equity indices has been anything but good year-till-date. Since the start of this year they have underperformed the frontline equity indices such as Nifty and Sensex. From a long-term investment perspective, price decline and underperformance gives an opportunity of investing in Small-Cap mutual funds. Thus, investors can use this opportunity for their long-term investment objectives. In this space, we believe Kotak Small-Cap Fund fits the best. The fund follows the philosophy of growth at a reasonable price. Their focus is on investing in quality businesses run by good management.

With an asset size of Rs 8,614 crore, this fund invests in 75 stocks with around 67 per cent in small-cap stocks, 23 per cent in Mid-Cap stocks and 4 per cent in Large-Cap stocks. This fund is quite diversified as only 31 per cent is contributed by its top 10 holdings while the top three sectors contribute 40 per cent. Some of its top holdings include Carborundum Universal, Century Plyboards (India), Ratnamani Metals and Tubes, etc. On the sectoral front, this fund is overweight on materials, consumer discretionary, chemicals and metals. It carries higher risk and hence is suitable for aggressive investors.