Kotak Focused Fund: Strong performance and potential to generate alpha for long term investors

Current Market Scenario

The market rebounded from its 52 week low after ceasefire was agreed between United States and Iran. Strait of Hormuz remains shut and crude oil prices shot up again. The market is range bound but continues to be volatile. Even though global markets may bounce back if lasting ceasefire can be agreed, prolonged disruption to global energy flows can have impact on global economic growth and inflation expectations, making it difficult for central banks to cut interest rates. In the current environment of uncertainty, stock specific strategy may be beneficial for long term investors.

Valuations have moderated across all market cap segments

The sharp correction has brought down valuations from their previous peaks across all market cap segments. The correction can provide investment opportunities in high quality stocks at reasonable valuations.

Source: NSE, as on 31^st March 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 21^st April 2026

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

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

Source: Advisorkhoj Research, as on 21^st April 2026

Outperformed the category average

Source: Advisorkhoj Research, as on 21^st April 2026

Consistently in the top 2 quartiles for several quarters

Kotak Focused Fund was in the top 2 quartiles 6 times in the last 8 quarters (see the graphic below). It has been in the top 2 quartiles for the last consecutive 5 quarters and in the topmost quartile for last 3 consecutive quarters.

Source: Advisorkhoj Research, as on 31^st March 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 21^st April 2026

Superior Risk adjusted return

Market rallies and crashes are both realities of equity investing. A mutual fund scheme which outperforms both in up markets and down markets is likely to give superior risk adjusted returns and outperform other funds in the long term. The Up Market Capture Ratio of the Kotak Focused Fund in the last one year was 109% while the Down Market Capture Ratio was 77% (source: Advisorkhoj Research, as on 31^st March 2026), proving that the fund has been consistent with the benchmark when the markets were up and outperformed the benchmark by capturing the downsides when markets crashed.

Current Market Scenario

Source: Advisorkhoj Research, as on 31^st March 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.