Kotak Emerging Equity Fund Review 2025 Should You Invest

Are you looking for a fund with strong growth potential? The Kotak Emerging Equity Fund could be a great option. Since it started in 2007, the fund has turned a Rs.10,000 monthly SIP into over Rs.1.32 crore in 18 years. While it has slightly underperformed its benchmarks over the long run, it has done better than most funds in its category.

So, is it a good choice for your investments in the long term? Let’s take a closer look.

What is the Kotak Emerging Equity Fund?

In a short overview, the Kotak Emerging Equity Fund belongs to Mid Cap Mutual Funds, which focuses on investing in growing businesses with strong potential. It started in 2007 and mainly invests in mid-sized companies but also includes some small and large companies in its portfolio.

The goal of the fund is to beat the market in the long run by finding stocks that are undervalued. Even though the fund faced some challenges in 2023, it has delivered solid returns over time, with an annual return of 25.2% over the past five years.

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What is the Return of Kotak Emerging Equity Fund?

Let's see the rolling returns that will help you know how consistent the fund's performance is over different time frames.

While comparing the Kotak emerging equity fund vs. Nifty IT TRI, it is seen that in the last 3 years the fund delivered 22.8% returns and in 5 years it gave 19.19% returns, outperforming the benchmark return of 20.86% and 17.95% respectively.

Moreover, it achieved this with a consistency of 90% on average.

You can check the graph below for the data:

Return of Kotak Emerging Equity Fund

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What Makes Kotak Emerging Equity Fund a Good Investment?

A unique investment style, strong and quality portfolio management, is what makes the Kotak emerging equity fund a good and worthy investment for 2025.

Let's see what sets this mid cap fund apart from its peers, proving it to become a good investment alternative in the market:

Consistent Returns
It has a strong track record of delivering strong and consistent returns and is widely known for its ability to protect against volatility in its category. How? As a matter of fact, it delivered a 15.71% annual return in 70% of the time for investors' investment for at least 5 years.

Investment Style
The Kotak emerging equity fund combines growth and value investing. It uses top down market approach to analyze macro trends in some of the promising sectors like consumer durables and chemicals.

Quality Stock Selection
This mid-cap fund by the Kotak Mutual Fund looks for scalable businesses with having sustainable competitive advantage. This strategy gives strong earnings and ensures a consistent cash flow. Moreover, using the attractive valuation metrics like PE Ratio (Price-to-Earnings ratio) to tip the scale towards growth.

Robust Portfolio Management
The portfolio is well diversified amongst 65-66 stocks in emerging sectors, seeking exposure in mid-cap companies. Furthermore, the fund has a low turnover ratio at 43.14% vs. category average of 134.05%, suggesting a buy-and-hold strategy to minimise churn.

What Makes Kotak Emerging Equity Fund a Good Investment

To gather the answer to whether this scheme by is Kotak Mutual Fund good or bad, let’s see what’s inside its portfolio.

Kotak Emerging Opportunities Fund Portfolio Review

This fund has smartly laid its foundation with a strong portfolio. Let's discuss the Kotak emerging equity fund portfolio in detail:

1. Asset allocation

This mid cap fund has 95.53% allocation in equity and 0.22% in debt funds, all the while holding 4.25% for the cash & cash equivalents.

Well, suppose you compare the mid-cap category average, which is 93.46% in equity, 6.41% in others and 0.13% in debt. In that case, you might find the Kotak emerging equity fund portfolio over-weighted towards equities and under-weighted in others.

You can see the figure for yourselves in the graph below:

Asset allocation

2. Market Cap Allocation

The fund belongs to a mid cap category, which is why the major allocation of about 64% is invested in mid-cap stocks, promoting the growth and value investing led by the scheme.

Look at the chart below for the data:

Market Cap Allocation

Likewise, 33% allocation is done towards the large cap companies to give stability in the portfolio and keep the risk to a minimum. Lastly, only 3% is allocated to small-cap companies for speedy growth.

However, it could be a smart move to manage risk as small cap stocks are more volatile & can give unpredictable returns.

3. Sector Allocation

The fund has a balanced sector allocation with a major allocation in the technology sector of 17.02%, much higher than the category, suggesting the prime focus of Kotak Emerging Equity Fund is on tech-driven and innovation companies. It targets companies involved in digital transformation and software and IT services.
Let's take a look at the graph below for specific details:

Sectoral Allocation

Seeing the above graph, the Kotak emerging equity fund portfolio is overweight in sectors like healthcare, financials, industrials and materials, higher than their category average.

Is Kotak Emerging Equity Fund Good for Long Term?

The main target of mid cap mutual funds is to generate long-term capital through investment in quality mid-cap companies, giving consistent and risk-adjusted returns rather than chasing the momentum or market fad stocks.

Likewise, the recommended time for investment for a mid-cap fund by experts is 10+ years, making it a good alternative for the long term.

Lastly, the quality of stocks also plays an important role in making the Kotak Emerging Equity Fund a good investment to start SIP in 2025.

Let's discuss Kotak emerging equity fund review in terms of stock quality:

Fundamental Ratios	Values
Sales Growth	12.63%
Earnings Growth	12.12%
Cash Flow	10.94%
PE- Valuations	26.72%

The P/E ratio (Price-to-earnings) of 26.72 for the Kotak Emerging Equity Fund shows that the stocks in the fund are a bit more expensive when compared to the category average, which is 19.74.

However, this higher ratio shows that investors believe in the Mutual Funds potential for future growth.

The earnings growth of 12.12% indicates that the companies in the fund are making profits, but at a slower pace compared to the category average of 16.22%. Similarly, the sales growth of 12.63% is a bit lower than the category average of 13.56%, meaning the companies are growing but not at the fastest rate in the sector.

What stands out is the strong cash flow growth of 10.94%, much higher than the category average of just 1.76%. This suggests that the companies in this fund are generating a lot of cash, which points to good financial health, strong debt management and the ability to either reinvest or return money to investors.

So, even though the fund has slightly slower earnings and sales growth compared to its peers, it focuses on companies with solid cash flow and strong long-term growth potential.

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To Conclude Kotak Emerging Equity Fund Review

To wrap up the Kotak Emerging Equity Fund review, this mid-cap scheme has been awarded a four-star rating, moderately outperforming its benchmark and category and putting a strong forefront amidst varying market conditions.

Furthermore, due to the correction in the Nifty Midcap 150 index by 12.64% in the last three months, this fund has become a talk while becoming the second largest midcap fund that turned a Rs.10000 monthly SIP into Rs.1.32 crores in 18 years since its inception.

The last thing to note is that investors planning to invest in this fund must have a 10-year-plus view to build long-term wealth.