Kotak Alternate unveils Yield & Growth Fund aiming at stable returns, growth upside

Kotak Alternate Asset Managers Ltd (Kotak Alts) has announced the launch of the Kotak Yield & Growth Fund (KYGF), a differentiated strategy that seeks to deliver steady credit-led income alongside selective growth participation through structured solutions. The initiative marks a renewed push to deepen India’s private credit ecosystem, while offering investors risk-adjusted yields and long-term value creation.

According to the company, the new fund will primarily target cash-flowing, mid- to large-sized enterprises with strong governance standards. The strategy aims to use structured credit solutions to enable growth, support refinancing, and fund strategic acquisitions.

“Kotak Yield & Growth Fund brings together the two pillars our investors value most—reliable yield and measured growth—delivered through the same rigorous credit underwriting that has defined Kotak Alts,” said Eshwar Karra, Deputy Managing Director, Kotak Alternates. “We see a durable opportunity to fund high-quality Indian businesses with structure, security and clarity on exits, while sharing in their growth where appropriate.”

Global track record

Kotak Alts, the alternatives business of Kotak Group, manages nearly ₹40,000 crore in private credit assets for global investors. Over the past two decades, the platform has delivered consistent returns of 18–20% with zero defaults across a large number of transactions. The launch of KYGF extends this expertise to the domestic market, with the fund now open to family offices and institutional investors in India.

Income-first, growth-enabled

The KYGF is structured around an income-first, growth-enabled approach. Core allocations will be directed toward security-enhanced private credit, while select opportunities will be pursued through equity-linked instruments that provide additional upside. This hybrid design is intended to generate resilient cash yields with potential for capital appreciation.

Risk management is central to the fund’s strategy. The approach emphasizes seniority, collateral coverage, covenants, and pre-agreed monetization routes to mitigate downside risk. By focusing on cash-generative businesses across both listed and unlisted markets, Kotak aims to build a portfolio that balances stability with selective growth participation.

Other funds

An analysis of dividend yield-oriented mutual funds across 1, 3, 5, and 10-year horizons shows mixed performance trends, highlighting the importance of evaluating funds over longer durations.

In the short term (1 year), returns are largely negative for most funds, reflecting broader market volatility. Aditya Birla Sun Life Dividend Yield Fund (-9%), Franklin India Dividend Yield Fund (-6.86%), and HDFC Dividend Yield Fund (-4.07%) posted losses, while ICICI Prudential Dividend Yield Equity Fund managed a modest positive return of 1.26%. This suggests that short-term movements in dividend yield funds can be significantly influenced by market conditions.

Over the 3-year horizon, performance is far stronger, with returns ranging from 20% to 26%. ICICI Prudential leads with 26.32%, followed by Aditya Birla Sun Life (22.27%) and HDFC (21.22%). This demonstrates that dividend yield strategies provide stability and growth when viewed beyond immediate fluctuations.

The 5-year and 10-year data reinforces consistency, with ICICI Prudential (30.62% over 5 years and 17.21% over 10 years) and Franklin India (25.28% over 5 years and 16.54% over 10 years) showing robust long-term performance.