Kotak Arbitrage Gr

All Cap

Commodities

India Debt Liquid Market

Liquid

Others

Emotionally driven

Investor Profile

1–7 yearsInvestment Horizon

HNI, UHNI, Retail Investor, Mass AffluentTarget Segments

SEBI registered equity mutual fund suitable for all investor categoriesRegulatory Fit

Kotak Equity Arbitrage Fund Growth invests in alternative assets for non-traditional growth opportunities.

What This Strategy Does

Kotak Arbitrage Reg Gr is an Equity Arbitrage fund which captures India's ₹1.5 trillion arbitrage opportunity through cash-and-carry strategies, deploying capital across financials, industrials, and basic materials to achieve benchmark-aligned compounding.

CW Expert Research Notes

Consistent Outperformance

The fund has demonstrated resilient benchmark-relative behavior, outperforming in 12 out of 12 years, highlighting its ability to deliver consistent outcomes across market cycles.

Differentiated Positioning

With a cash-heavy allocation of 92.72% and a bias towards financials and industrials, the fund's construction deviates from peers, expressing conviction through selective exposure to potential catalysts like capex revival and earnings revisions.

Defensive Risk Profile

Sporting a low volatility of 0.884 and a favorable Sharpe ratio of 1.036, the fund offers a compelling portfolio role as a risk-mitigating allocation, though its arbitrage strategy could be impaired by sustained market dislocations.

Performance and Risk Analysis

Historical returns, volatility patterns, and how this fund has performed relative to its benchmark.

Fund Performance

0.0% AnnuallyAlpha

+5.9% vs +9.5% benchmarkSince Inception

+6.8% vs +5.7% benchmark3Y Annualized

+6.3% vs +4.7% benchmark5Y Annualized

Kotak Arbitrage Gr

Benchmark Index

Benchmark Performance Comparison

Kotak Equity Arbitrage Fund

FD Returns

Given the product’s limited performance history, the assessment considers the fund house’s track record and the historical performance of comparable strategies managed by the same fund house, which follow similar investment approaches. Such comparisons provide historical context only and do not represent the performance of the new product or indicate its future returns.

Risk Profile

Standard Deviation0.7%

Sharpe Ratio0.69

Detailed Risks

Market Risk

Prolonged economic slowdown could reduce arbitrage opportunities, mitigated by diversified exposures.

Liquidity Risk

High mid-cap allocation risks liquidity stress during volatility spikes, mitigated by large-cap buffer.

Concentration Risk

Concentrated mid-cap exposure risks earnings misses or competitive pressures, mitigated by diversification.

Specific Strategy Risk

Regulatory changes impacting arbitrage strategies could disrupt execution, mitigated by monitoring.

Strategy Details

A closer look at the investment thesis, portfolio construction, and current holdings.

Core Investment Theme

Captures pricing inefficiencies between cash and derivative markets. This strategy aims to generate low-risk returns by simultaneously buying and selling securities at different prices, profiting from temporary mispricing. The impact is a steady income stream with low correlation to broader markets.

Broader Market View

Market Outlook

The equity markets appear to be in the early stages of a recovery phase, offering an attractive entry point as consumption and earnings normalize. Sectors like consumer discretionary, financials and industrials stand to benefit from this revival in domestic demand and capex cycle, though risks like margin pressures remain.

Why This Strategy is Attractive Now

This strategy seems well-positioned for the current environment with exposure across consumer cyclicals, financials and technology. The portfolio's diversification across around 70 holdings, including market leaders, offers a balanced mix of growth and defensive qualities. Its moderate beta and flexibility could allow for risk-adjusted participation in the recovery.

Investment Style & Process

Investment Style

The portfolio exhibits characteristics of a Quality Growth strategy, emphasizing companies with durable competitive advantages, robust profitability, and consistent earnings growth across market cycles.

Why it Makes Sense

In the current environment of moderating economic growth and elevated uncertainty, a Quality Growth approach focused on market-leading franchises with pricing power and resilient business models could offer a compelling risk-adjusted return profile.

High-Level Investment Process

Sourcing: The strategy appears to source investment candidates from a broad universe of established and emerging companies across market capitalizations, with a focus on those demonstrating sustainable competitive advantages, strong management teams, and attractive growth runways. Selection: The selection process suggests a preference for companies with durable pricing power, high returns on capital, healthy balance sheets, and the ability to compound earnings through cycles. These characteristics are evaluated alongside valuation considerations. Construction: The portfolio construction process is consistent with a strategy aiming to balance growth opportunities with risk management, maintaining prudent diversification across sectors while allowing high-conviction ideas to emerge as significant holdings.

Portfolio Holdings Overview

SectoralAllocation

Utilities6.21%

Services13.38%

Technology4.23%

Consumers13.03%

Energy & Infra8.76%

Financial Services33%

Capital Goods21.39%

Geographic Allocation

Domestic100%

Top Stock Holdings

CompanySectorAllocation

Cash Offset For DerivativesUtilities74.51%

Kotak Money Market Dir GrUtilities9.68%

Kotak Ultra Short Term Dir GrUtilities4.53%

Axis Bank LtdFinancial Services3.51%

HDFC Bank LtdFinancial Services2.85%

Kotak Ultra Shrt to S/T Dir GrUtilities2.77%

ICICI Bank LtdFinancial Services2.47%

Reliance Industries LtdEnergy & Infra1.99%

HDFC Bank Ltd.Utilities1.92%

Bajaj Finance LtdFinancial Services1.80%

Fund House Management

The asset management company’s track record, AUM scale, and fund manager credentials.

Fund Manager Track Record

Hiten Shah

Lead Portfolio Manager

Mr. Hiten Shah has experience of 20 years. Manages 38 funds at Kotak Mahindra Asset Management Co Ltd with an AUM of approximately ₹1,10,024 Cr Holds a B.com degree.

CW Expert Take

Kotak brings banking-grade risk assessment to fund management. Their strength is in identifying mispriced opportunities while maintaining portfolio quality. The equity teams focus on sustainable business models, while their debt strategies emphasize credit selection and liquidity management—reflecting the parent group's risk culture.

20 years

Combined Team Experience

₹ 1,10,024 Cr

Assets Under Management

Firm Overview

AMCKotak Mahindra Asset Management Co Ltd

Total AUM₹5,80,249.31 Cr

Investment Professionals49+

Global Offices250 Cities

Investment Philosophy & Approach

Disciplined Approach

Kotak's investment philosophy emphasizes a disciplined, research-driven approach to portfolio construction.

Risk Management

Robust risk management practices are deeply ingrained in Kotak's investment culture.

Long-Term Focus

Kotak maintains a long-term perspective, focusing on sustainable capital appreciation.

Operational & Regulatory Details

What it costs to invest, transaction mechanics, and regulatory disclosures you should know.

Costs and Fees

Total Expense Ratio (TER)2.98%

Exit Load0.25

Regulatory & Tax Information

INF174K01302

ISIN

DailyDealing Frequency

LTCG | >1Year 12.5%% on gain above 1.25 Lakh

STCG | <1Year 20%%

Tax Implications (India)