Kotak FinTech Investment Approach

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About Kotak

One of the leading Indian suppliers of portfolio management services, Kotak PMS (registered with SEBI), is a member of the prestigious Kotak Mahindra Group and runs under the direction of Kotak Mahindra Asset Management Company. The main purpose of Kotak PMS is to invest on our clients’ behalf to assist them reach their financial and personal goals.

Fund Snapshot

Name of Investment approach FinTech Investment Approach
Types of securities Listed Equity
Appropriate benchmark India FinTech Index
Indicative tenure or investment horizon Open Ended, minimum investment of 3 years
Risk associated Moderate Risk
Fund Manager Anshul Saigal
Inception Date March 2018
Minimum Initial Investment 50 Lakhs

Investment Objective

Our investing strategy’s primary goal is to achieve capital appreciation through medium- to long-term equity investments.

Investment Approach

The portfolio will primarily invest in securities relating to the banking and financial services (BFSI) and information technology (IT) sectors. With this portfolio, our guiding principle will aim to spot undervalued opportunities in the BFSI and IT sectors. We would search for businesses that trade below their true worth or may develop unexpectedly. Understanding the causes of intrinsic value discounts and the catalysts for value unlocking will be our goal. There would be a mix of small, medium, and large cap enterprises in the diversified portfolio.

Basis of selection of such types of securities as part of the investment approach

The portfolio will primarily invest in securities relating to the banking and financial services (BFSI) and information technology (IT) sectors. With this portfolio, our guiding principle will aim to spot undervalued opportunities in the BFSI and IT sectors. We would search for businesses that trade below their true worth or may develop unexpectedly. Understanding the causes of intrinsic value discounting and the catalysts for value unlocking will be our goal.

Allocation of portfolio across types of securities

There would be a mix of small, medium, and big cap enterprises in the diversified portfolio.

Why Kotak?

Kotak FinTech Investment Approach – Portfolio Strategy

Portfolio Participating in 2 Key trends

Portfolio Focus = Strong franchises with healthy earnings growth + reasonable valuations

Financialisation of savings

  • Online Transactions
  • Fintech Biz
  • Banks / NBFCs
  • Life / General Insurance
  • Capital market plays
  • Asset Mgmt companies

Digitization + IT Outsourcing

  • IT Services Outsourcing
  • Cloud Computing
  • Internet of Things
  • Artificial Intelligence
  • Robotics
  • Cybersecurity

Unique Portfolio Positioning

  • The portfolio consists of ~20 stocks concentrated portfolio holding quality Banks, NBFCs, Insurance (BFSI) and Technology stocks.
  • IT sector growth is secular with COVID-19 led disruption acceleration the transforming to Cloud, adoption of AI, Machine Learning and new technologies
  • Banks/NBFCs & Insurance were impacted but worst is behind + recovery ahead. 

Overall positioning

  • Quality portfolio, offers ~20% earnings CAGR over FY22-24E with 20-21% FY23 ROE as per Bloomberg estimates
  • IT portfolio stocks offer 12-13% EPS CAGR, 4.4% FCF with ROEs of 27%
  • BFSI stocks offer avg 27-30% earnings CAGR with RoEs of 15-16%

Portfolio composition: Tech helps reduce volatility on the downside and Financials provide to make the most of post-COVID macro recovery

Top 5 Holdings

  • HDFC Bank Ltd
  • Axis Bank Ltd
  • ICICI Bank Ltd
  • Tata Consultancy Services Ltd
  • Infosys Ltd

About Fund Manager

Anshul Saigal : Head-PMS

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Anshul is in charge of KMAMC’s Portfolio Management Services (PMS) division. He is an authority on the value investing principles of capital preservation and outperforming the market. In the Indian capital market, Anshul has more than 20 years of expertise. Of those years, he worked with Kotak Portfolio Management Services for about 14 years. Anshul formerly studied stocks and corporate credit while employed by JP Morgan (Equity Research), ICICI Bank, and Standard Chartered Bank. Anshul obtained his Industrial Engineering degree from SIT, Tumkur, and his MBA in Finance from the Management Development Institute, Gurgaon.

Sector Allocation

BFSI 58.8%
INFORMATION TECHNOLOGY 38.0%
CASH & CASH EQUIVALENT 3.2%

Market Capital Allocation

LARGE CAP 81.7%
MID CAP 9.2%
SMALL CAP 8.5%
CASH & CASH EQUIVALENT 0.7%

Top 5 Sectoral Allocation

IT – Software 40.6
Banks 38.3
Finance 13.7
IT – Services 6.7
Cash & Cash Equivalent 0.7

Key Contributors

  • ICICI Bank Ltd
  • Axis Bank Ltd
  • Sundaram Finance Ltd

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Disclaimer: Investing Involves Risk. This document is for information purposes only and should not be viewed as a legal offering document or solicitation. Offers to invest in this fund are made only by the Discretionary Portfolio Management Services Agreement. Past performance does not guarantee future results and there is no assurance that the managed accounts will necessarily achieve their objectives. We do not guarantee any returns in the hand of investors not we take any sort of accountability for the performance of the scheme. The above-mentioned data is collected from the respected Fund house please verify the same at SEBI website.