Kotak Focused Fund: Outperforming benchmark and peers

Current Market Scenario

Markets turned volatile again due to heightened geo-political risks and uncertainties. FII flows turned negative in September after 2 months of net inflows. Net FII outflow on a year to date basis is Rs 2.5 lakh crores (source: NSDL, as on 15^th September 2026). Volatile market conditions persisting since the beginning of the year have brought down valuations from their previous peaks in large and midcap segments. The correction can provide investment opportunities in high quality stocks at reasonable valuations across market cap segments. The macros of Indian economy remain robust with strong GDP growth of 7.8% in Q1 FY 2026-27. Fiscal deficit in the first four months of the fiscal year FY 2026-27 narrowed compared the same period in the pervious year. In the current market conditions, a stock specific, focused approach may be suitable for long term investors.

Source: NSE, as on 31^st August 2026

What are Focused Funds?

Focused funds are equity mutual fund schemes that invest in maximum 30 stocks (as per SEBI's mandate). There are no market cap restrictions for these funds, in other words, they can invest across market capitalization segments. Though focused funds have higher concentration risks compared to more diversified funds which invest in a larger portfolio of stocks (e.g., 50 - 60 stocks), slightly concentrated holdings allow the fund manager to allocate higher weights to high conviction stocks which have the potential of creating alphas for investors over long investment horizon. Each stock has the potential to contribute significantly to the scheme's overall performance. Adding a focused fund to your equity mutual fund portfolio may potentially increase portfolio returns. In this article, we will review Kotak Focused Fund.

Kotak Focused Equity Fund - Investment strategy

• The fund follows the process of "Distilling Gold from Ore" for selecting stocks


• The fund aims to select high-quality companies at reasonable valuations


• Portfolio positioning follows a barbell approach, with domestic cyclicals on one side and some defensives on the other side

Outperformed the benchmark index in the last 1 year

Kotak Focused Fund outperformed the benchmark index over the last 12 months (see the chart below).

Source: Advisorkhoj Research, as on 15^th September 2026

Outperformed the benchmark index over 1 year rolling periods in the recent past

The chart below shows the 1 year rolling returns of Kotak Focused Fund versus the benchmark index over the last 3 years. You can see that over past couple of years, the scheme outperformed the benchmark index across different market conditions.

Source: Advisorkhoj Research, as on 15^th September 2026

The chart below shows the distribution of 1-year rolling returns of Kotak Focused Fund versus the benchmark index since the inception of the scheme. You can see that the scheme had lesser instances of negative returns than the benchmark. At the same time, the instances of 12%+ CAGR returns were significantly higher for the scheme compared to the benchmark index.

Source: Advisorkhoj Research, as on 15^th September 2026

Outperformed the category average over 1 year rolling periods in the recent past

The chart below shows the 1 year rolling returns of Kotak Focused Fund versus the category average over the last 3 years. You can see that over past couple of years, the scheme outperformed the category average across different market conditions.

Source: Advisorkhoj Research, as on 15^th September 2026

The chart below shows the distribution of 1-year rolling returns of Kotak Focused Fund versus the category average since the inception of the scheme. You can see that the scheme had lesser instances of negative returns than the category average. At the same time, the instances of 12%+ CAGR returns were significantly higher for the scheme compared to the benchmark index.

Source: Advisorkhoj Research, as on 15^th September 2026

Consistently in the top 2 quartiles

Kotak Focused Fund was in the top 2 quartiles 7 times in the last 12 quarters (see the graphic below).

Source: Advisorkhoj Research, as on 30^th June 2026

Limited downside risks for investors in market corrections

The chart below shows the drawdowns of Kotak Focused Fund versus the benchmark index, over the last 3 years. You can see that the fund was able to reduce downside risks for investors.

Source: Advisorkhoj Research, as on 15^th September 2026

Current portfolio positioning

Source: Kotak MF, as on 31^st August 2026

Who should invest in Kotak Focused Fund?

• Investors looking to invest in focused portfolio as a part of their Overall Asset Allocation


• Investors having high risk appetite


• Investors with a long-term investment horizon of 5 years or above


• Investors seeking potential higher returns with ability to withstand higher volatility.

Consult with your financial advisors or mutual fund distributors if Kotak Focused Fund is suitable for your investment needs.