Kotak Mutual Fund today announced the launch of Kotak India Growth Fund Series 4. This multi-cap fund – a three year close ended equity scheme investing across large cap, midcap and small cap stocks will open for subscription on January 29, 2018 and close on February 12, 2018.
The fund aims to generate capital appreciation from a diversified portfolio across market capitalisation and sectors.
The fund has will use ‘put option’ strategy, through which in a declining market; the scheme would seek to limit downside by purchasing around three years At The Money (ATM) Nifty 50 Put option with strike price around current levels. Thus, a Nifty 50 Put option will increase in value when Nifty goes down from the strike price and vice versa. The fund house claims that the risk of loss for an option buyer is limited to only the premium paid.
Put option positions can be sold at a profit in a staggered manner to create cash flow for buying stocks at attractive valuations, if markets correct significantly in the interim period, said the fund house.
Harsha Upadhyaya, CIO (Equity), said, “Kotak India Growth Fund Series 4 aims to construct a diversified portfolio of stocks across sectors and the flexibility to move across market capitalisation ranges. Combined with a strategy to limit downside using long dated ATM (At The Money) Put option of around three years and staggered unwinding of Put option position in correcting markets to create cash flow for buying stocks at lower levels."
