Kotak NV 20 ETF (KOTAKNV20) is an open-ended exchange-traded fund that aims to replicate the performance of the Nifty 50 Value 20 Index. This index comprises 20 value-oriented companies selected from the Nifty 50, representing various sectors of the Indian economy.
Investment Objective: The fund seeks to provide returns, before expenses, that closely correspond to the total returns of the Nifty 50 Value 20 Index, subject to tracking errors.
Fund Details:
- Inception Date: December 2, 2015
- Fund Managers: Mr. Devender Singhal & Mr. Satish Dondapati (managing since May 9, 2019)
- Expense Ratio: 0.14%
- Assets Under Management (AUM): ₹57.76 crore (as of January 31, 2024)
- Benchmark: Nifty 50 Value 20 Total Return Index (TRI)
Portfolio Composition (as of January 31, 2024):
- IT – Software: 35.99%
- Banks: 22.04%
- Diversified FMCG: 11.39%
- Power: 7.83%
- Automobiles: 4.28%
- Other Sectors: Ferrous Metals, Oil, Consumable Fuels, Non-Ferrous Metals, Cement and Cement Products, Pharmaceuticals and Biotechnology, Food Products, Fertilizers and Agrochemicals
Top Holdings:
- Infosys Ltd.: 15.49%
- Tata Consultancy Services Ltd.: 11.25%
- ICICI Bank Ltd.: 14.88%
- ITC Ltd.: 11.39%
- State Bank of India: 7.16%
Performance (as of January 31, 2024):
- Since Inception: 17.53% CAGR
- 5 Years: 20.70% CAGR
- 3 Years: 14.80% CAGR
- 1 Year: 13.23% CAGR
Investment Details:
Minimum Investment:
- Through Exchange: 1 Unit
- Through AMC: 100,000 Units and in multiples thereof
Riskometer: The fund is suitable for investors seeking long-term capital growth through investment in stocks comprising the underlying index, aiming to track the benchmark index, subject to tracking errors.
Current Price (as of January 14, 2025):
- NAV: ₹151.95 per unit
- 52-Week Range: ₹131.11 – ₹169.00
Kotak NV 20 ETF Review
The Kotak NV 20 ETF (KOTAKNV20) is an exchange-traded fund designed to replicate the Nifty 50 Value 20 Index. Here’s a review considering key parameters like performance, composition, and suitability for investors:
Key Positives
(1) Value-Oriented Strategy:
- The ETF tracks the Nifty 50 Value 20 Index, which selects 20 value stocks from the Nifty 50 based on parameters like low PE ratio, high dividend yield, and low price-to-book ratio. This makes it appealing for value-focused investors.
(2) Low Expense Ratio:
- With an expense ratio of 0.14%, it is cost-effective compared to actively managed funds.
(3) Diversified Sector Exposure:
- The fund includes stocks from various sectors like IT, Banking, FMCG, Power, and Automobiles, reducing sector concentration risk.
(4) Top Quality Holdings:
- Major holdings include Infosys, TCS, ICICI Bank, and ITC, which are blue-chip companies with strong fundamentals.
(5) Good Long-Term Performance:
- Over the years, the ETF has delivered competitive returns, with a 5-year CAGR of 20.70% and since-inception CAGR of 17.53% (as of January 2024).
Areas of Concern
(1) Market Volatility:
- The ETF’s performance is directly linked to the market and its benchmark index, making it susceptible to fluctuations.
(2) Tracking Error:
- As with all ETFs, a slight tracking error could lead to performance deviations from the underlying index.
(3) Limited Liquidity:
- ETFs, particularly niche ones like this, might face lower liquidity in the secondary market, impacting trade efficiency.
(4) Overweight in IT Sector:
- Nearly 36% exposure to the IT sector increases concentration risk, especially if the sector underperforms.
(5) Not Actively Managed:
- While the low expense ratio is a benefit, the passive nature of the fund limits flexibility during adverse market conditions.
Suitability
Ideal for:
- Long-term investors seeking exposure to value-oriented large-cap stocks.
- Investors with a time horizon of 5+ years who prefer a passive investment strategy.
- Cost-conscious investors aiming for a diversified portfolio with blue-chip holdings.
Not Ideal for:
- Short-term investors or those looking for high liquidity.
- Investors preferring active management and tactical changes during market downturns.
Peer Comparison
- Competing ETFs like the Nippon India ETF Nifty 50 Value 20 and other large-cap index ETFs offer similar exposure. Compare expense ratios, AUM, and tracking errors when selecting among them.
Verdict
The Kotak NV 20 ETF is a solid choice for investors with a long-term horizon looking to capitalize on value stocks within the Nifty 50 universe. While its historical performance is commendable, investors must consider market conditions, sectoral concentration, and their risk appetite before investing.
Kotak NV 20 ETF Returns
Here’s a table summarizing the returns for Kotak Nifty 50 Value 20 ETF (KOTAKNV20) across different time frames:
| Time Period | CAGR (Compounded Annual Growth Rate) |
| Since Inception | 17.53% |
| Last 5 Years | 20.70% |
| Last 3 Years | 14.80% |
| Last 1 Year | 13.23% |
Additional Information:
- Current NAV (as of Jan 14, 2025): ₹151.95
- 52-Week Range: ₹131.11 – ₹169.00
- Benchmark Index: Nifty 50 Value 20 TRI
Insights:
- The ETF has consistently delivered strong returns over longer durations, reflecting its focus on value-oriented blue-chip stocks.
- Suitable for investors looking for long-term capital appreciation while benefiting from a value-investing strategy.
Kotak NV 20 ETF Portfolio
Here’s the portfolio composition of the Kotak Nifty 50 Value 20 ETF (KOTAKNV20) based on the latest available data (as of January 31, 2024):
Sector Allocation
| Sector | Weightage (%) |
| IT – Software | 35.99 |
| Banks | 22.04 |
| Diversified FMCG | 11.39 |
| Power | 7.83 |
| Automobiles | 4.28 |
| Other Sectors | ~18.47 |
Top Holdings
| Stock | Weightage (%) |
| Infosys Ltd. | 15.49 |
| ICICI Bank Ltd. | 14.88 |
| Tata Consultancy Services Ltd. | 11.25 |
| ITC Ltd. | 11.39 |
| State Bank of India | 7.16 |
| NTPC Ltd. | 4.75 |
| HCL Technologies Ltd. | 4.62 |
| Tata Steel Ltd. | 4.51 |
| Bajaj Auto Ltd. | 4.28 |
| Coal India Ltd. | 4.19 |
Portfolio Insights
- Sector Bias: Heavy allocation to IT and Banking sectors (~58% combined).
- Defensive Picks: Includes FMCG and Power stocks for stability.
- Diversified Exposure: Covers major sectors of the economy, with focus on value-based, large-cap companies.
This portfolio structure makes the fund ideal for long-term investors seeking exposure to high-quality, value-oriented stocks.
Strengths of Kotak NV 20 ETF
(1) Exposure to Value Stocks:
- The ETF tracks the Nifty 50 Value 20 Index, which is made up of 20 value-oriented companies selected based on factors like low PE ratio, high dividend yield, and low price-to-book ratio. This allows investors to focus on undervalued stocks with strong fundamentals.
(2) Strong Long-Term Performance:
- Historically, the ETF has shown a 5-year CAGR of 20.70% and since-inception CAGR of 17.53%. This performance reflects strong growth potential, especially for long-term investors.
(3) Cost-Effective:
- With a low expense ratio of 0.14%, it is a cost-efficient option for investors who prefer passive investing strategies.
(4) Diversification:
- The ETF offers diversification across sectors such as IT, Banking, FMCG, Power, and Automobiles, helping to reduce the risk associated with single-sector exposure.
(5) Exposure to Blue-Chip Companies:
- Major holdings include large-cap, blue-chip companies like Infosys, ICICI Bank, TCS, and ITC, which are expected to offer stable returns and lower volatility compared to smaller companies.
(6) Liquidity:
- As an ETF, KOTAKNV20 can be bought and sold easily on the stock exchange, providing liquidity and flexibility to investors.
Risks of Kotak NV 20 ETF
(1) Market Risk:
- The ETF’s performance is directly tied to the Nifty 50 Value 20 Index, meaning it is exposed to the overall market risk. Any downturn in the broader market will affect the ETF’s returns.
(2) Sector Concentration:
- The ETF has a heavy exposure to the IT sector (35.99%) and Banks (22.04%), making it vulnerable to sector-specific downturns. If these sectors underperform, the ETF could experience significant losses.
(3) Tracking Error:
- As with all ETFs, there could be tracking errors, where the fund’s returns do not exactly match the performance of the underlying index due to factors like management fees, market liquidity, and timing issues.
(4) Lack of Dividend:
- The ETF does not distribute dividends, making it unsuitable for income-seeking investors who rely on regular payouts.
(5) Low Liquidity:
- While ETFs are generally liquid, this particular fund could face lower liquidity in certain market conditions, especially in comparison to more popular ETFs. Lower liquidity can increase the cost of buying or selling the ETF.
(6) Passive Investment Risk:
- As a passive ETF, it does not actively adjust its holdings based on market conditions. In a rapidly changing market, the ETF could be slow to adapt, potentially underperforming relative to actively managed funds.
(7) Volatility in Value Stocks:
- While value stocks tend to be more stable, they can still experience volatility, especially if the market sentiment shifts away from value investing towards growth investing.
Conclusion
The Kotak NV 20 ETF is ideal for long-term investors seeking exposure to high-quality, value-oriented stocks from a diversified set of sectors. It is cost-efficient, has a strong historical performance, and offers good liquidity. However, its heavy sectoral concentration, exposure to market volatility, and the absence of dividends could be potential downsides. Investors should weigh these factors carefully based on their investment goals, risk tolerance, and time horizon.
Bandhan Nifty 50 ETF Overview: Why It’s a Great Choice for Passive Investors
How to Invest in CPSE ETF and Maximize Returns in 2025
A Beginner’s Guide to Edelweiss Gold ETF: How to Invest in Gold ETFs in India
Disclaimer: The content on this website is intended for informational purposes only and should not be interpreted as financial or investment advice. Engaging in stock market activities involves inherent risks, and outcomes can be unpredictable. While we strive to provide accurate and up-to-date information, we do not make any guarantees regarding the completeness or reliability of the content. Any investment decisions you make should be based on your own research and consultation with a qualified financial professional. We are not responsible for any financial gains or losses resulting from actions taken based on the information provided here. Always invest wisely and at your own risk.
