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Kotak Pharma & Healthcare

Scheme Rating

IME Scheme Rating

3 of 5 stars

A call on the specific theme: We typically do not recommend Thematic funds to investors, since it requires getting in and out of the theme at the right time. Typically a strong contra approach (investing in themes when they are out of favour, and getting out when they are popular) leads to better performance, but this is very hard to actually implement in practice given strong behavioural instincts against such an approach (investors often end up entering themes post a run-up, which can often be the worst time to invest). In our view, thematic funds are primarily suitable for more astute investors who have a deep underlying understanding of the investment merits of the theme.

IME Strategy Rating

3 of 5 stars

Pharma Focused Strategy: Driven by the attractiveness of the specific sector. The pharma sector has proven to be a long-term value creator, and Kotak PMS Pharma Fund is one of the few pharma-specific PMS strategies that allow for more concentrated exposures to the pharma space. It follows value-driven investment philosophy, and given the stability of the investment team this strategy has been followed to a reasonable extent.

PMS Scheme Ratings are driven by IME’s Proprietary Scheme Rating Methodology, which takes into account our ratings of the Scheme’s investment strategy, its maturity, the investment team, and our separate rating on the AMC that runs this particular scheme. Our views on each of these individual criteria are available via the IME RMS – which you can view by reaching out to one of our relationship managers (using either the live chat or book appointment feature on this site).

IME View on Kotak Pharma & Healthcare

Type: Healthcare | Sectoral | AUM (29.1 cr) | Inc Date (20 Sep 2016)

Investment Strategy

Kotak Pharma Fund is a sector-focused strategy, that invests predominantly in opportunities in the Pharma & Healthcare sectors. The Pharma & Healthcare sectors have proven to be sustainable value creators on the back of a secular growth outlook, insulation against business cycles, scalable business and attractive financial ratios.

Investment Philosophy

Kotak PMS follows a value investing style (i.e. buying stocks at a significant discount to their underlying value). The aim is to invest in well-managed and high-quality companies, that may be currently out of market favor, but with identified triggers that can act as catalysts to unlock value.

Investment Parameters 

Invest under the following parameters:

  • Management Quality – Assess management Quality by analysing 3 parameters–> Operations Management, Capital Allocation
  • Growing Market Opportunity – They believe it is difficult for a business to grow if market is not growing and may lead to a turf war. 
  • Returns on Invested Capital- Gauge competitive strength of a company. Usually, high returns on invested capital should attract competitors. 
  • Strong Financials and Earnings Growth- Look for businesses that have ability to resist changes in the economy. Reason why they look for businesses with low leverage. 
  • Fair Valuations- Seek for mispriced opportunities in order to take advantage of risk-reward. 

Trailing Performance

1yr 3yr 5yr Since Inception
Kotak Pharma & Healthcare 42.8 14 26.4 15.1
S&P BSE 500 TRI 38.9 21.1 22.5 15.5
Alpha over Broad Mkt BM 3.9 -7.1 3.9 -0.4

Performance as of: 31-Jul-24 | Inception Date: 20-Sep-16

Fund Managers

Fee Structure

Fee StructureFee
Fixed Fee Structure2.5
Variable Fee Structures1.5% fixed + 20% above 10% hurdle
Exit Fees1yr(2%), 2yr(1%)

AMC

AMC: Kotak PMS (click link for detailed AMC review)

Not a top recommendation due to being an MF-driven PMS: Within MF-driven PMS houses, Kotak PMS is one of the better-run PMS platforms. This is primarily driven by a relatively stable investment team and a more differentiated & defined investment style (relative to other AMC PMSs, but not pure-play investor-promoted PMS funds), which combined with the benefits of being a part of a larger financial conglomerate make it a reasonable choice for PMS investments.

AMC Rating

3 of 5 stars

AMC Pedigree

3 of 5 stars

AMC Size

4 of 5 stars

Team Pedigree

2 of 5 stars

Inv Philosophy

3 of 5 stars

Performance

1 of 5 stars

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Note: PMS AMC & Scheme Reviews and Ratings are based on IME Capital’s Proprietary Review and Rating Methodology (read more here: AMC Rating & Scheme Ratings). These reflect the unbiased views of our central research team, based on our assessment of the investment value of these PMS/AIF strategies for our investors. We follow a highly stringent rating-criteria, where approximately 50% of PMS AMC’s & strategies would be rated 2-star or below (this is not meant to indicate that these funds are not investment-worthy, but that they do not currently fulfill the requirements we focus on for recommending funds to our investors — based on our internal views on the merit of the AMC/strategy relative to peers). Reviews & Ratings are primarily based on research of publicly available information (SEBI disclosures, PMS websites, PMS-aggregation platforms, webinar recording, media interviews etc.) and no explicit consent is required from AMCs for the same. While we endeavour to do further due-diligence via direct interactions with the investment teams of AMCs, this is typically restricted to AMC’s that meet our foundational fund selection criteria (reviews on lower-rated AMCs are often based solely on publicly available information). The views reflected in our Reviews & Ratings, are our independent views and may not be shared by the AMC’s and the investment teams. Please read detailed disclaimer for more.

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