Kotak Gilt Fund: A 25-Year Odyssey of Performance

India’s First Gilt Fund1 Celebrates 8.99% CAGR in a Voyage through India’s Economic Milestones

Mumbai – March 14, 2024 – Kotak Gilt Fund, India’s first Gilt fund1 recently completed its 25 years. The fund continues to be a Triveni Sangam of sovereign credit, daily liquidity and no credit loss to investors in 25 years since inception. Launched on 29th December 1998, the Gilt Fund has delivered Compound Annual Growth Rate (CAGR) of 8.99%2 since its inception, successfully navigating the market’s ups and downs. In a financial landscape as dynamic as India’s, the Kotak Gilt Fund stands as a beacon of growth.

The fund’s odyssey began in the wake of India’s economic liberalization and has since sailed through major global and domestic financial storms — the Asian Financial Crisis, the dot-com bubble, the 2008 global financial crisis, 2013 taper tantrum and the recent pandemic-led economic upheaval. Through these periods, Kotak Gilt Fund has been more than just a witness; it has been a steady navigator, with an aim to anchor its investors’ trust.

Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company Ltd. (KMAMC) said, “Launched 25 years back in 1998, It has witnessed many rate cycles (no credit loss as investment is in gilts) to deliver to investors along with daily liquidity. Kotak Gilt fund – Triveni Sangam of Sovereign credit, daily liquidity and 25 years of service to the investors.”

The Fund allocates 100% to sovereign and equivalent assets, including Triparty Repos, ensuring a relatively low credit risk. Furthermore, exposure to government securities and the inclusion of Floating Rate Bonds provide a cushion against rate shocks.

The Fund has strategically utilised various instruments, including Fixed Rate, Floating Rate, and Overnight Index Swap (Derivatives). Kotak Gilt Fund has consistently delivered across timeframes of 1 year, 3 years, 5 years and since inception as on 31st Dec 20232.

Abhishek Bisen, Head-Fixed Income and Fund Manager, KMAMC and Kotak Gilt Fund manager since 2008, has played a pivotal role in its success. Speaking on the Fund, he said, “As we approach the reversal of the RBI’s interest rate cycle in CY2024 following the Fed’s pivot, Kotak Gilt Fund is strategically positioned to potentially benefit from the changing market dynamics. With an early 2024 Fed rate cut expected due to easing inflationary pressure in the US, declining Treasury yields, and a dovish shift in Fed policy, the fund is well-poised from a medium to long term perspective.”

The Fund employs various risk management tools and processes, including system-based monitoring, daily monitoring statements, performance evaluations at different levels, internal and operations audits, and periodic reviews by the Risk Management Committee, to mitigate portfolio risk in accordance with SEBI regulations.

The fund’s resilience is mirrored in its average 1-year daily rolling return of 9.46% since inception2, with no credit loss for the long-term investors. The recent addition of Indian Government Bonds to the JPM EM loss Bond Index also underscores the fund’s and India’s growing stature in the global financial bond market arena.

About Kotak Mahindra Asset Management Co. Ltd.

Kotak Mahindra Asset Management Company Limited (KMAMC) – a wholly owned subsidiary of Kotak Mahindra Bank Limited (Kotak), is the Asset Manager for Kotak Mahindra Mutual Fund (KMF). KMAMC started operations in December 1998 and as of 30th September 2023, has over 53 lakh investor folios in various schemes. KMF offers schemes catering to investors with varying risk – return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. The company is present in 92 cities and has 97 branches as of 30th September 2023.