Kotak Consumption Fund

Kotak Consumption Fund has consistently outperformed the NIFTY 50 across all measured periods, with a 3Y lump-sum CAGR of 14.37% versus the benchmark's 6.85% and positive alpha at every horizon from 1Y (6.52%) to 15Y (0.42%). However, its 1Y SIP XIRR of 9.63% trails the category average SIP XIRR of 14.1%, indicating recent SIP investors have fared worse than sectoral/thematic peers. Calendar year returns show volatility in outcomes, ranging from 6.5% in 2023 to 28.19% in 2024.

The fund exhibits defensive characteristics with a beta of 0.81 over longer periods, downside capture of 73.84%, and upside capture of 85.82%, meaning it loses less in declines but also participates less fully in rallies. Only 2 drawdown events exceeding 10% occurred, though the maximum drawdown took 227 days to recover over a 162-day drawdown duration. The 1Y Calmar ratio of 0.54 suggests moderate risk-adjusted returns relative to the depth of its worst drawdown.

As a sectoral/thematic fund focused on the consumption theme, the portfolio is concentrated in consumer-oriented businesses such as FMCG, retail, autos, and related services rather than diversified across the broader market. This thematic mandate means sector concentration is inherent to the fund's design, and holdings will move with consumption-cycle dynamics rather than overall market trends. Investors should verify current top holdings and sector weights in the latest factsheet, as concentration risk is a structural feature of thematic funds.

The fund's 1Y SIP XIRR of 9.63% sits well below the category average of 14.1%, placing it in the lower half of sectoral/thematic peers on recent SIP returns. Its long-term lump-sum record is stronger, with alpha positive across every horizon from 1Y to 15Y, though alpha has narrowed from 7.59% (3Y) to 0.42% (15Y). This pattern suggests the fund's outperformance versus the broad market has been more pronounced in recent years than over very long horizons.

This fund suits investors with high risk tolerance and a time horizon of at least 5-7 years, given the cyclicality of the consumption theme and the extended 227-day recovery from its maximum drawdown. It should be treated as a satellite allocation within a diversified portfolio, not a core holding, since thematic funds carry concentrated sector risk. Investors comfortable with periods of underperformance versus both the benchmark and category peers, as seen in the current 1Y SIP XIRR gap, are best positioned to hold through cycles.

• Consistent outperformance versus NIFTY 50 with positive alpha across all horizons from 1Y (6.52%) to 15Y (0.42%)
• Defensive downside profile with downside capture of 73.84% and beta of 0.81, cushioning losses in weak markets
• Low expense ratio of 0.57% for a sectoral/thematic fund in the Direct Growth option

• 1Y SIP XIRR of 9.63% significantly trails the category average SIP XIRR of 14.1%, indicating recent underperformance versus thematic peers
• Thematic concentration in the consumption sector creates cyclicality risk, evidenced by calendar year returns swinging from 6.5% (2023) to 28.19% (2024)