Best Kotak Equity Mutual Funds

Kotak Mutual Fund is one of India’s largest fund houses in terms of asset under management. With Kotak Mahindra Asset Management Company Limited as the asset manager, this fund house operates as a wholly-owned subsidiary of Kotak Mahindra Bank Limited. 

Kotak Mutual Fund offers more than 35 schemes in various channels. These investment schemes comprise debt schemes, ETFs, hybrid funds, and the best Kotak equity mutual funds.

Equity funds are a type of mutual funds that predominantly invest in stocks of various companies across market capitalisations. The performance of these companies plays a key role in determining investors’ returns. 

A typical equity fund holds roughly 40-50 stocks in its portfolio. As a result, it dilutes the concentrated risk of investment. Among all other categories of mutual funds, equity mutual funds tend to deliver the highest returns to investors. 

Premised upon their investment objectives, an individual can choose the best Kotak equity mutual funds from a wide variety of EMF schemes. These include large-cap funds, large and mid-cap funds, mid-cap funds, and small-cap funds, among several others.

Like any other investment instrument, even the best Kotak equity mutual funds 2023 have their upsides and downsides. These schemes distribute wealth in equity and equity-related instruments with the potential to generate considerable returns. So, equity funds cater to investors seeking maximised capital appreciation in the long run by way of a diversified portfolio. 

However, equity instruments come with inherent volatility. An equity fund’s risk quotient can range from moderate to high, depending on various market conditions. As a result, these mutual funds are deemed suitable for long-term horizons and require investors to take calculated risks.

Currently, Kotak Mutual Funds has over 8 schemes under its category of equity funds.

Taxability

Prior to investing in any of the top Kotak equity mutual funds, it is imperative that prospective investors understand their tax treatment.

Short-term Capital Gains Tax: Investors realise short-term capital gains by redeeming their equity funds within a holding period of 1 year. These attract a Short-Term Capital Gains Tax or STCGT at a flat rate of 15%, regardless of one’s tax bracket.

Long-term Capital Gains Tax: Long-Term Capital Gains Tax or LTCG tax is levied on the sale of equity fund units after a holding period of 1 year. However, capital gains worth up to Rs.1 lakh a year are tax-exempt. On the other hand, capital gains exceeding Rs.1 lakh attract LTCG tax at a rate of 10%, with no benefit of indexation.

TDS: Dividend payouts exceeding Rs.5,000 are taxable at 10%.

Factors to Consider Before Investing

Besides their taxability, an investment in the best Kotak equity mutual funds also calls for investors to evaluate several other parameters.

Investment goal: The first step before investing in any scheme is to evaluate your investment objective. Based on your financial goals, you can choose to invest in any of the best Kotak equity mutual funds. Additionally, it is vital to ascertain a timeframe for achieving these goals. 

Expense ratio: Like any other organisation, asset management companies also incur annual expenses, such as management fees, administrative costs, etc. The expense ratio is a percentage of aggregate expense levied on an investor. For instance, an equity mutual fund offering 8.98% returns with an expense ratio of 1.75% extends 7.23% of actual returns to its investors. Hence, you must check an equity mutual fund’s expense ratio prior to investing in it. 

Portfolio analysis: All mutual funds come with a stated investment mandate to specify certain information. This includes detail about their allocation of assets between small or large companies and whether they exhibit growth characteristics. So, when investing in the best Kotak equity mutual funds, investors must analyse their portfolios. Moreover, equity mutual funds tend to carry moderate to high investment risk based upon their asset allocation. A review of a fund’s portfolio can offer an elementary idea of the risk involved. 

Experience of the fund manager: A check over a fund manager’s experience ensures that your investment is in competent hands. Additionally, it reveals the individual’s ability to sail a fund in various market cycles, i.e., during bear and bull phases.

Past performance of the fund: An equity mutual fund may or may not sustain its previous performance in future. Therefore, its past performance cannot be a parameter to gauge its probable returns. However, it can indicate a fund’s trends over various market conditions, which is an important factor to consider before investing.

Exit load: Fund houses levy an exit load on their investors if they sell units of an MF within a particular tenure. Most asset management companies charge this fee if investors sell their units within 1 year from the date of purchase. This exit load can vary depending on the type of mutual fund plan. Moreover, some schemes may not even feature any exit load. Therefore, it is wise to look into these aspects of a fund before investing.