Kotak Mahindra AMC on Monday launched a new fund offer (NFO) for Kotak Banking & Financial Services Fund, an open-ended equity scheme investing in the banking and financial services sectors.
The NFO runs from February 6 to 20, 2023. The minimum subscription amount is Rs 5,000, and after that, in multiples of Re 1 and Re 0.01 for switches during the NFO period.
This actively managed fund aims to generate long-term capital gains by investing in equity and equity-related securities of banking and financial services companies (BFSI).
The fund house said that banks are generally seen growing at 1.5 to 2.0 times the rate at which the economy grows. Hence, the economy’s continued growth will likely aid this sector.
Shibani Sircar Kurian, senior executive vice president, fund manager, and head of equity research, at Kotak Mahindra Mutual Fund, in a press release, said, “In India, the BFSI sector has a long way to go, considering the under penetration as compared to the global average, be it in mutual funds where only 7 per cent of the Indian population has a fund folio compared to 23 per cent globally.”
Life insurance, he said, represented only a “3 per cent premium proportion to GDP vis a vis 10 per cent of top five countries.” Non-life insurance penetration is less than 1 per cent compared to 4 per cent globally. Also, there are just 15 bank branches per 1,000 population compared to 27 branches in developed countries. “All of this offers a growth potential within the sector,” Kurian added.
Investors looking for long-term growth in the banking and financial space can opt for this scheme.
Key Features:
· The fund offers diversification opportunities within the segment, including investment in banks, non-banks, insurance, broking, asset management, and fintech.
· The fund would also look for investment opportunities across all market caps and sub-sectors in the banking and financial services space.
· The fund manager would apply a bottom-up approach to identify companies with strong fundamentals using the business, management, valuation (BMV) method.
In September last year, Kotak AMC launched the Business Cycle Fund, focusing on companies and sectors that can stay resilient during all business cycles or during highs and lows in the market. It aims to capture the various stages of expansion, moderation, and contraction a company or a sector undergoes.
According to the government’s “Economic Survey 2022-23,” the inflows in mutual funds saw a significant reduction during April-November 2022 compared to the same period last year.
However, despite the dip, the assets under management (AUM) rose 8.1 per cent YoY in November 2022. Growth and solution-oriented equity schemes witnessed significant inflows compared to the previous year. The number of demat accounts also surged 39 per cent YoY in the month.
