Kotak Global Innovation Fund of Fund Review
Have you ever wished to invest in global innovation companies like Amazon, Facebook, Google, Visa from US markets or AstraZeneca from UK or China Gas Holdings from China? Kotak Mutual Fund has launched Global Innovation Fund of Fund (FoF) which is open for subscription now. This fund would invest in Wellington Global Innovation Fund, an existing equity fund that invests in global innovation companies across the world. The underlying fund has delivered 27% annualized returns since inception and 25% returns in the last 3 years. Even during covid-19 crisis, the underlying existing fund has delivered good returns. Should you subscribe to Kotak Global Innovation Fund of Fund NFO?
Kotak Global Innovation Fund of Fund [NFO] Issue / Scheme Details
Name of the Scheme: Kotak Global Innovation Fund of Fund
NFO Period: This fund has opened for subscription now and closes on Thursday 22nd July 2021. Since it is an open-ended scheme, it reopens for further subscription from 5th August 2021.
Where does the scheme invest: It is an open-ended fund of fund investing in units of Wellington Global Innovation Fund or any other similar overseas mutual fund schemes/ETFs.
Plans available: It has both Kotak Global Innovation FOF – Regular Plan and Kotak Global Innovation FOF – Direct Plan. Further like any other fund, it provides Growth, Payout of Income Distribution cum capital withdrawal (IDCW) & Reinvestment of Income Distribution cum capital withdrawal (IDCW)
Minimum Application Amount: Rs 5,000 and in multiples of Rs 1 there-of.
Load Structure: Entry Load is nil and Exit Load would be 1% if redeemed within 1 year.
Fund Manager: Mr. Arjun Khanna
Benchmark Index: MSCI All Country World Index TRI
Total Expense Ratio: 2.25%
Taxation of returns: Returns from this global fund would be like debt funds taxation.
What is the investment objective of this MF scheme?
The primary investment objective of the scheme is to provide long-term capital appreciation by investing in units of Wellington Global Innovation Fund or any other similar overseas mutual fund schemes/ETFs.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
What is the allocation pattern in this mutual fund?
This fund investment pattern is as follows:
1) It would invest 95% to 100% in Units of Wellington Global Innovation Fund and/or any other similar overseas mutual fund schemes/ ETFs
2) It would invest up to 5% in Debt and Money Market Instruments.
Where does the underlying fund invests?
Wellington Global Innovation Fund (underlying fund) is currently investing in the following top stocks /sectors.
Why to invest in the Kotak Global Innovation Fund of Fund?
Here are a few reasons to invest in such funds.
1) This fund would invest in global innovation companies like Facebook, Alphabet (Google), Visa, Netflix etc. (from USA), AstraZeneca (UK), Aptiv (Ireland) and China gas holdings, Tencent Holdings etc., (China). Investing in global innovation companies are best bet for medium to long term investment.
2) It is investing in an existing international mutual fund scheme that has performed well in the last 3+ years. This fund delivered 27% annualized returns since inception (3+ years).
3) Investing in international funds would help in diversification as well as access to international markets.
4) The returns from such funds are tax efficient. These funds are classified like debt funds for taxation purpose. One can benefit from low tax rates on the returns.
Risk factors of investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) International funds might not react to the Indian financial markets. If SENSEX/NIFTY is going up due to bull run, you might not see that in global funds.
2) Since this is global fund, there are currency risks and geopolitical risks.
3) While this fund delivered amazing returns in the last 3+ years, there is no guarantee that it would deliver similar performance in future.
4) You can refer complete risk factors of investing in this scheme in SID / KIM / NFO prospectus.
Performance of existing underlying fund
Let me provide you underlying fund performance (Wellington Global Innovation Fund) since inception of 2017 onwards.
Should you invest in Kotak Global Innovation Fund of Fund?
Kotak Global Innovation Fund of Fund (FoF) invests in another existing fund outside India that invests across America, Europe and other emerging markets. Bull run or bearish stock markets in Indian economy would not have a major impact of such funds as they do not invest in Indian equities. Investing in international or global funds are high risk. There are geo-political and currency risks. This fund invests in an existing mutual fund where such fund past performance is known for over 3+ years. Currently the global economies are in bull run even during this covid-19 crisis. High risk investors can invest through SIP or atleast in 3-6 lots instead of lump sum as global stock markets are at peak. Moderate to low-risk takers can stay away from such funds.
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