Kotak Manufacture In India Fund: NFO Review – Should You Invest?

Kotak Manufacture in India fund targets to invest in manufacturing companies.
Will this fund add value to your portfolio?
Will this be a good investment opportunity to create wealth.?
Let us explore.

SYNOPSIS:

• Kotak Mutual Funds
• Configuration Of NFO
• Investment Objective
• Investment Strategy
• Outlook of the Manufacturing Theme
• Pros – Investing In Kotak Manufacture In India Fund
• Cons – Investing In Kotak Manufacture In India Fund
• Final Takeaway

Kotak Mutual Funds:

Kotak Mutual Funds has a wide range of schemes based on equity-oriented, debt-oriented, FoFs, etc. It ranks 5th in India based on total assets, the fund currently has an Asset Under Management (AUM) of Rs. 2.70 Lakh Cr.

Configuration Of Kotak Manufacture In India Fund Nfo:

Investment Objective Of Kotak Manufacture In India Fund:

The scheme seeks 

• to generate capital appreciation 
• by investing in a diversified portfolio of companies that follow the manufacturing theme.

Investment Strategy Of Kotak Manufacture In India Fund:

The Nifty India Manufacturing Index aims to track the performance of stocks that represent manufacturing sectors in India. The fund will be invested in companies having the potential to bring higher returns by making use of technological/ Procedural abilities to operate and create value for customers.

On rolling  return-based analysis, ‘Nifty India Manufacturing Index’ has outperformed ‘Nifty 500’ in the 5 years and above range. Key factors supporting Kotak Manufacture in India Fund are: 

• Phased manufacturing program
• PLI scheme
• 100% Automatic FDI
• Tax cuts
• Single window clearance
• Electronic clusters
• Import duty protection

Outlook of the Manufacturing Theme:

The new Manufacturing firms  have been doubled when compared to last two years. Manufacturing Industry in India contributes about 15% of the country’s GDP and has the potential to reach the US $ 1 trillion by 2025. Nifty India Manufacturing Index outperforms over Nifty 500 Index in recent years.

Manufacturing GFCF (Gross Fixed Capital Formation) as of % of  GDP is expected to have a steady rise in the upcoming years. The Indian government has started to encourage manufacturing sectors with the launch of the “Make in India” campaign to project the country as a global manufacturing hub.

Pros – Investing In Kotak Manufacture In India Fund- NFO:

• This fund has the potential to outperform NIFTY 500 in the long run.
• Suitable for Investors seeking long-term capital growth.
• Returns will be better if manufacturing industries perform well.

Cons – Investing In Kotak Manufacture In India Fund -NFO:

• The emergence of new variants of covid may impact the targeted sector to underperform.
• A rise in commodity prices and inflation will increase the cost of capital.
• Geopolitical developments may limit the availability of raw materials.
• Manufacturing theme-based securities are expected to have higher concentration risk compared to a regular diversified equity scheme.
• if the invested theme tends to fail, then it can take a longer time to recover.
• Returns may be impacted by any change or regulation in government policies of the selected theme.
• This fund is not suitable for your core portfolio.

Final Takeaway On Kotak Manufacture In India Fund – NFo:

Thematic funds are loaded with high risk when compared to diversified equity funds. This fund is not suitable for conservative investors. 

Also, there are similar existing funds. Even for an aggressive investor, similar existing funds are better.

 It’s better to ask an opinion from your financial planner since this fund is subjected to high risk. 
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