Kotak Multi Cap Fund - Investing Across Market Caps

Kotak Multi Cap Fund is an open ended equity scheme that invests across large cap, mid cap and small cap companies in line with SEBI’s multi cap category guidelines. The scheme aims to generate potential long term capital appreciation by maintaining a minimum of 25% allocation in each market cap segment and following a structured investment process based on bottom-up stock selection and the BMV (Business, Management, Valuation) framework. As stated in the SID the fund may also invest in debt, money market instruments, Units issued by REITs & InvITs. There is no assurance that the scheme’s objective will be achieved

Key Takeaways 

• As per the MultiCap Fund Meaning defined by SEBI the scheme maintains a minimum 75% allocation to equities with at least 25% each in large cap, mid cap and small cap companies ensuring true multi segment divers
• Follows a diversified, multi cap structure to help reduce concentration risk
• Uses a bottom up investment approach supported by the BMV framework
• Flexibility to invest in debt, money market instruments, REITs/InvITs and overseas securities as allowed in the SID
• Suitable for investors with a long term investment horizon and ability to handle equity market volatility

Why Consider Kotak Multi Cap Fund?

1. Multi-Cap Allocation as per SEBI Mandate

Kotak Multi Cap Fund follows SEBI’s regulation that requires

• Minimum 25% in Large Cap companies
• Minimum 25% in Mid Cap companies
• Minimum 25% in Small Cap companies

This structure ensures diversification across market segments and prevents over exposure to any single category. The fund’s approach also helps investors understand the difference between flexicap and multi cap strategies as Multi Cap funds maintain fixed allocation across segments while Flexicap funds can dynamically shift weights based on market conditions. This balance offers relative stability, possible growth opportunities and long term wealth building potential.

2. Diversified Portfolio Across Sectors and Market Caps

The scheme aims to create a diversified equity portfolio by investing across sectors as permitted in the SID. Such spread helps reduce risk associated with single sector downturns and allows the fund to participate in multiple growth themes of the economy.

3. Structured BMV (Business Management Valuation) Investment Approach

The scheme follows a disciplined Multicap Investment Strategy using Kotak AMC’s BMV framework to pick the right companies across large, mid and small caps

This process driven approach ensures that stock selection is based on fundamental analysis aligned with the scheme’s objectives

4. Bottom Up Stock Picking 

Kotak Multi Cap Fund follows a bottom up investment strategy focusing on identifying businesses with sustainable growth potential rather than relying solely on short term market trends. This supports the scheme’s objective of achieving possible long term capital appreciation

5. Potential to Capture Multiple Market Cycles

Investing in large, mid and small caps allows the Multicap fund to benefit from different market phases

• Large caps help lower volatility
• Mid caps offer balanced growth
• Small caps provide potential high growth opportunities

This multi cap structure enables the portfolio to adapt across market cycles, making it suitable for long term compounding

6. Flexibility to Invest Beyond Equities (as per SID limits)

While the fund primarily invests in equities (minimum 75% as per SEBI rules) it also has the flexibility to invest in

• Debt and money market instruments
• Units of REITs/InvITs
• Overseas securities

Such flexibility can help manage liquidity and market volatility when required.

7. Experienced Fund Management

The scheme is managed by experienced fund managers supported by Kotak AMC’s strong research team. Their disciplined investment process, market understanding and sector expertise contribute to consistent portfolio construction aligned with the scheme’s stated objectives.

8. Risk Managed Through Diversification & Active Monitoring

The portfolio risk is managed through:

• Sector diversification
• Market cap balancing
• Active monitoring of portfolio companies

This reduces the impact of concentration risk and aligns with the scheme’s focus on long-term wealth creation.

9. Low Entry Barrier & Suitable for SIP

The fund’s minimum investment amount starts at ₹100 making it accessible to a wide range of investors. Additionally, SIPs help:

• Average out market volatility
• Build wealth gradually
• Maintain disciplined investing

10. Suitable as a Core Equity Allocation

Because the scheme invests across all three market cap segments it can serve as a primary equity fund for many investors. It offers broad market participation through a single scheme backed by a research driven framework.

Who Should Invest in Kotak Multi Cap Fund?

• Long Term Investors: Anyone willing to stay invested for 5 years or more to allow compounding and potential growth across large, mid and small cap companies
• Investors Seeking Equity Diversification: Those who want a single mutual fund that provides exposure across all three market cap segments (large, mid and small caps) rather than managing separate funds for each
• Moderate to High Risk Tolerant Investors: Since the fund invests significantly in mid and small cap stocks it is suitable for investors who can absorb higher volatility in return for potential long term gains. The scheme’s risk is classified as Very High
• SIP Investors: Suitable for individuals planning to make systematic investments (SIP). The minimum SIP amount is ₹ 100 which makes it accessible for regular and disciplined investing
• Supporters of Professional, Active Management: Suitable for investors who prefer their equity exposure to be managed by a team of professionals who make allocation decisions based on research, valuation and market trend

Key Risks & Considerations

• Market Volatility: Exposure to mid/small companies can lead to more pronounced short term fluctuation
• No Guaranteed Returns As with all equity schemes past performance doesn’t guarantee future returns
• Long Holding Needed To fully realize compound growth and ride through market cycles a long term commitment is essential

Conclusion

Kotak Multi Cap Fund provides investors with a structured and diversified equity investment approach by maintaining the SEBI mandated minimum allocation across large, mid and small cap companies. Its investment framework built on bottom-up stock selection, the BMV (Business Management Valuation) model and disciplined sector diversification supports the scheme’s stated objective of generating long term capital appreciation.

With flexibility to invest in debt, money market instruments, REITs/InvITs and overseas securities within the SID defined limits the fund is positioned to navigate different market phases while managing liquidity and risk.

Investors with a long term horizon, willingness to accept equity related volatility and preference for professional active management may consider this scheme as part of their broader financial plan depending on their risk profile and asset allocation needs

FAQs

1) What type of scheme is Kotak Multi Cap Fund?

It is an open ended equity scheme investing across large cap, mid cap and small cap companies in compliance with SEBI’s multi- ap category norms requiring a minimum 25% allocation to each market cap segment

2) What is the investment objective of the scheme?

The investment objective of the scheme is to generate long term capital appreciation from a portfolio of equity and equity related securities across market capitalization There is no assurance that the investment objective of the Scheme will be achieved.

3) What is the recommended investment horizon?

Since the fund invests in mid and small cap companies which tend to be more volatile a long-term horizon of at least 5 years is generally suitable for investors looking to benefit from compounding and market cycles

4) What is the risk level of Kotak Multi Cap Fund?

The scheme carries a Very High Risk rating as per the riskometer due to significant exposure across equity segments including mid and small caps.

For latest riskometer investors may refer to an addendum issued or updated on website at www.kotakmf.com

5) Can the scheme invest in non-equity instruments?

Yes. As permitted in the SID, the scheme may invest in debt securities, money market instruments, REITs/InvITs and overseas securities within specified limits as mentioned in SID.

6) Is there any exit load?

As per the scheme’s current exit load structure, 1% exit load is applicable if more than 10% of units are redeemed or switched out within 1 year from the date of allotment. Investors should refer to the latest SID/addendum for updated load details

7) Are returns guaranteed?

No. Mutual fund investments are subject to market risks. Returns are not guaranteed and past performance does not indicate future performance

8) How does the fund select stocks?

Stock selection is based on a bottom up research approach using the BMV framework, evaluating business strength, management quality and valuation parameters

Disclaimers

Kotak Multicap Fund

Investors may consult their Financial Advisors and/or Tax advisors before making any investment decision.

These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.  The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.