Kotak Gilt Fund: A 25-Year Journey of India’s First Gilt Fund

The history of mutual funds in India dates back to the mid-1960s. India’s first mutual fund was established in 1963, namely, Unit Trust of India (UTI), by an Act of Parliament and functioned under Reserve Bank of India (RBI).

In 1993, the private sector entered the mutual fund industry with the launch of Kothari Pioneer Mutual Fund, which was later acquired by Franklin Templeton Mutual Fund.

After five years, in 1998, Kotak Mahindra Mutual Fund launched India’s first Gilt fund- Kotak Gilt Long term fund (which is called Kotak Gilt Fund now)

The funds were allotted on 29th December, 1998: It recently completed its 25 years! (Source: KMAMC Fact sheet)

The fund continues to be a Triveni Sangam of sovereign credit, daily liquidity and no credit loss to investors in 25 years since inception. The Fund allocates 100% to sovereign and equivalent assets, including Triparty Repos, ensuring a relatively low credit risk. Furthermore, exposure to government securities and the inclusion of Floating Rate Bonds provide a cushion against rate shocks.

The fund's odyssey began in the wake of India's economic liberalization- it has not only witnessed many rate cycles, but has been a steady navigator, anchoring its investors' trust through major global and domestic financial storms. Like- the Asian Financial Crisis, the dot-com bubble, the 2008 global financial crisis, 2013 taper tantrum and the recent pandemic-led economic upheaval.

Since its launch on December 29, 1998, Kotak Gilt Fund has generated a CAGR of 8.98%, skilfully navigating the market's ups and downs. The Fund has strategically utilised various instruments, including Fixed Rate, Floating Rate, and Overnight Index Swap (Derivatives).  Kotak Gilt Fund has broadly outperformed the category average over long term, as of 31st January 2024.

The fund's resilience is mirrored in its average 1-year daily rolling return of 9.46% since inception, with no credit loss for the long-term investors. The recent addition of Indian Government Bonds to the JPM EM loss Bond Index also underscores the fund's and India's growing stature in the global financial bond market arena.

Source: ICRA. Data as on 31st January, 2024. The data given above is for Regular Plan - Growth option. Daily rolling returns are calculated from the inception of the scheme. Past performances may or may not be sustained in future.

Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company Ltd. (KMAMC) said, “Launched 25 years back in 1998, It has witnessed many rate cycles (no credit loss as investment is in gilts) to deliver to investors along with daily liquidity. Kotak gilt fund – Triveni Sangam of Sovereign credit, daily liquidity and 25 years of service to the investors.”

Abhishek Bisen, Head-Fixed Income and Fund Manager, KMAMC and Kotak Gilt Fund manager since 2008, has played a pivotal role in its success. Speaking on the Fund, he said, “As we approach the reversal of the RBI's interest rate cycle in CY2024 following the Fed's pivot, Kotak Gilt Fund is strategically positioned to potentially benefit from the changing market dynamics. With expectations of a Federal Reserve rate cut around mid-2024, driven by easing inflationary pressures in the US, declining Treasury yields, and a dovish shift in Fed policy, the fund is positioned favourably for the medium to long term.”

The Fund employs various risk management tools and processes, including system-based monitoring, daily monitoring statements, performance evaluations at different levels, internal and operations audits, and periodic reviews by the Risk Management Committee, to mitigate portfolio risk in accordance with SEBI regulations.

Disclaimers

Disclaimer: Source: ICRA. Data as on 31st January, 2024. The data given above is for Regular Plan - Growth option. Daily rolling returns are calculated from the inception of the scheme for the respective period. Past performances may or may not be sustained in future. Returns % are rounded to two decimal. For detailed scheme performance please refer disclaimer section.

Data as on 31st January 2024

To know about the more funds managed by the fund manager –

https://www.kotakmf.com/documents/Funds-Managed-by-Fund-Managers-Regular-Plan

KOTAK GILT FUND: An open-ended debt scheme investing in government securities across maturity. A relatively high interest rate risk and relatively low credit risk.

(Old name of the scheme was Kotak Mahindra Gilt Unit Scheme-98 Investment Plan which was realigned to Kotak Gilt Fund with effect from October 2019.)

The information contained in this (document) is extracted from different public sources/KMAMC internal research. All reasonable care has been taken to ensure that the information contained herein is not misleading or untrue at the time of publication. This is for the information of the person to whom it is provided without any liability whatsoever on the part of Kotak Mahindra Asset Management Co Ltd or any associated companies or any employee thereof. Investors should consult their financial advisors if in doubt about whether the product is suitable for them before investing.

The document includes statements/opinions which contain words or phrases such as "will", "believe", "expect" and similar expressions or variations of such expressions, that are forward looking statements. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with the statements mentioned with respect to but not limited to exposure to market risks, general and exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on the services and/or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc.

This is not intended for distribution or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. The distribution of it, in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this material are required to inform themselves about, and to observe, any such restrictions. The sector(s)/ stock(s) referred, if any should not be construed as any kind of recommendation and are for information/used to explain the concept.

Past performance may or may not be sustained in future. For detailed portfolio and related disclosures for the scheme(s), please refer to our website https://www.kotakmf.com/Information/forms-and-downloads. The portfolio and its composition are subject to change, and the same position may or may not be sustained in future. The fund manager may make the changes, as per different market conditions and in the best interest of the investors. To view the latest complete performance details of the Scheme(s), kindly refer to the factsheet on our website: https://www.kotakmf.com/Information/forms-and-downloads. Investors may consult their financial expert before making any investment decision.

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