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FE Investor Bureau
October 30: Kotak Mahindra Asset Management Company has filed the offer document with the Securities and Exchange Board of India to launch its maiden equity scheme. The AMC is launching a gilts fund. Christened K30, the open-end equity fund will generate returns through investment in equities and equity-related instruments in a basket of around 30 stocks. The minimum investment in the fund is pegged at Rs 10,000 and in multiples of Rs 1,000 thereafter. The fund is likely to hit the market for initial subscription by end of the current calendar. The AMC does not propose to charge any initial issue expense to the initial corpus. This means that the entire sum invested by a unitholder will be put in the equity markets. Besides, there will be no entry and exit loads.
The AMC has given the option to switch between the gilts fund, called KGilts and K30, depending on an investor's perception. According to the fund manager, investments will be confined to around 30 stocks since having a portfolio constituting agreater number of investments does not necessarily result either in superior returns or significant reduction in risk. The performance of K30 is expected to be benchmarked against the Sensex and the NSE Fifty Index.
The fund is likely to use derivatives to hedge exposures as and when and in a manner approved by SEBI. The fund will be aggressive in the equity markets since the portfolio turnover is likely to be around 150 per cent. The fund will invest upto 90 per cent in equities and the rest in money market to take care of redemptions.
The AMC will put money in stocks which priced at a material discount to their intrinsic value. Other parameters include : financial strength of the companies; reputation of the management and track record; companies that are relatively less prone to recessions; companies which pursue a strategy to build strong brands for their products or services and those which are capable of building strong franchises; and market liquidity of the stock.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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