The funds are managed by Deepak Agrawal who has a flair for managing credit strategies for more than 15-year stint with Kotak. Agrawal is well supported by an eight-member investment team that includes the head of fixed income Lakshmi Iyer. Her presence is a big positive, and her contribution gives the team an edge.
The investment process is consistent, with economic, credit, and liquidity analysis used to determine the fund strategy. The fund is largely focused on investing in high-quality credits and takes marginal exposure to lower credits. Credit analysis is divided into banking, nonbanking financial companies, and manufacturing debt, further demarcated into three buckets based on the strength of the business, management, and corporate governance standards. The team also leverages the expertise of the equity team at Kotak Mutual Fund and Kotak Bank. The qualitative assessment is then followed by rigourous quantitative analysis, wherein financial ratios such as leverage, coverage, and solvency ratios are considered. While constructing the portfolio, the manager follows a proprietary model to determine the exposure that he can take in each issuer. An independent risk-management team ensures the limits are being adhered to.
The manager runs the fund as a pure ultrashort-term bond fund and has a well-defined mandate, which determines the extent of duration/credit risk that can be taken in this fund. The fund takes tactical exposure in government securities and also marginal exposure in state development loans. The manager follows a barbell strategy with an idea to capture the steepness of the curve and capitalise on roll-down benefit.