Kotak AMC’s new equity FoF explained: Strategy, allocation approach and key details

The Kotak Diversified Equity All Cap Omni FoF opened for subscription on August 5 and will close on August 19. The scheme will invest in underlying funds across large-cap, flexi-cap, multi-cap, large and mid-cap, mid-cap and small-cap categories.

The fund house said the strategy is aimed at maintaining exposure across market segments, as leadership among large, mid and small-cap stocks can shift across different market cycles.

Under the FoF structure, investors will get exposure to a mix of underlying equity schemes through a single mutual fund scheme. The portfolio will be actively managed, with fund managers selecting and rebalancing the underlying schemes based on market conditions and risk-return considerations.

Explaining the rationale behind the launch, Kotak Mutual Fund said different market-cap segments tend to perform differently over various phases of the market cycle. The scheme aims to provide diversification by combining active fund management with passive investment strategies.

Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company, said the fund has been designed around the idea that opportunities in equity markets emerge across segments over time and that diversification can help investors participate in these opportunities.

Devender Singhal, Fund Manager at Kotak Mahindra Asset Management Company, said the scheme seeks to combine active and passive approaches while retaining flexibility in allocation across market-cap segments.

The minimum investment amount for the scheme is ₹1,000 for initial purchase and ₹500 for additional purchases. Investors can start a systematic investment plan (SIP) with a minimum instalment of ₹500, subject to at least two SIP instalments.

As a fund of fund scheme, the returns of the product will depend on the performance of the underlying mutual fund schemes it invests in, along with associated costs and market movements.

Equity mutual funds are subject to market risks, and past performance does not guarantee future returns. Investors are advised to assess suitability based on their risk profile and investment goals.