It won't be an overstatement if the offering from Kotak ACE Investment matches the speed of an ace on the tennis court. The similarity doesn't end there. It's not just about speed, but intensity that keeps the scoreboard ticking. With an exhaustive list of options, this product is no exception to that rule
KOTAK ACE Investment is a type I unit-linked insurance plan (Ulip). It's a vanilla scheme that offers a wide array of investment options and riders. However, it's only the equity-oriented funds, including classic opportunity, frontline equity and balanced funds, that have projected a good show.
COST STRUCTURE:
Kotak claims ACE to be an investment-oriented Ulip and so, has kept the cost structure low. This allows more premiums to get transferred to the fund account and thus, reap benefits for policyholders in the long term. The mortality charges of Kotak ACE are nominal at 1.1 times the standard LIC charges. The only charge that may be heavy on investors' pocket is the fund management fee that is alike for all investment options, when generally the FMC on debt and money market funds are charged low.
PERFORMANCE:
Kotak offers an exhaustive mix of eight investment options, of which four are equity-oriented and the rest are debt funds. All these funds were launched just a little more than a year ago. Most of the equity funds excluding Dynamic Floor Fund II of Kotak have managed to outperform the respective benchmark with good margins while debts are yet to show their sheen. Even the last 1-year performance of Kotak equity funds has been very encouraging. Among debt funds, only the bond fund has outperformed the benchmark while others, including the Gilt Fund, Floating Rate and Money Market Fund, have either underperformed or been at par with the benchmark.
PORTFOLIO:
Kotak's equity portfolio is restricted to investing only in well-recognised large-cap companies. This fairly reduces its risk quotient. Banking and financial services, which is the major sector and accounts for almost 25% of the equity portfolio, has limited its investment to some of the top banking and financial services scrips, including HDFC Bank, ICICI Bank, HDFC, and SBI. Its other important sectoral investments include technology and energy. While the portfolio has a decent mix of sectors, it has limited its options when it comes to choosing stocks.
The debt portfolio of the scheme is also well-diversified among FDs, mutual funds, government bonds and NCDs. The maturity profile of the debts is also spread well between 1-7 years.
DEATH MATURITY BENEFIT:
Upon maturity, the policyholder receives the amount accumulated in the fund, whereas in case of death, the higher of the fund value or sum assured will be received. For instance, say a 35-yearold healthy male invests 50,000 pa in Classic Opportunity Fund of Kotak ACE for 15 years. Assuming the sum assured equivalent to be 10 times the annual premium, the total sum assured receivable, in the case of any eventuality, would be 5 lakh. Now, by the end of 15 years, assuming the rates of return of 6% and 10%, the fund value shall be 1,024,511 and 1,434,103, respectively, receivable at the maturity.
OUR VIEW:
Kotak ACE Investment has a competent cost structure which, along with the outperforming equity funds, can prove to be an ace in the hole for the policyholder in unfortunate events. Investors with high risk return appetite can look forward to investing in Classic Opportunity or Frontline Equity Funds for good returns.
