Parag Parikh Flexi Cap Fund (erstwhile Parag Parikh Long Term Equity Fund) is the flagship mutual fund scheme of Parag Parikh Financial Advisory Services Limited. The Fund was launched in May 2013 and has given decent returns.
PPFCF is an open-ended scheme with the following objective:“To seek to generate long term capital growth from an actively managed portfolio of equity and equity-related securities”
Fact sheet:
- The Fund invests in domestic as well as foreign stocks. The fund invests a minimum of 65% in Indian Stocks and up to 35% in foreign stocks.
- The Fund is managed by Mr. Rajeev Thakkar, Mr. Raunak Onkar, and Mr. Raj Mehta. Mr. Thakkar Manages domestic investments, Mr. Onkar foreign investments and Mr. Raj Mehta manages fixed-income investments for the fund.
- The present Assets Under Management (AUM) is app 19900 Crores.
- The fund is a part of the Flexi Cap category and can invest across Large Cap, Mid Cap, and Small Cap Stocks.
- The Scheme has consistently remained within top performers
- The minimum purchase for new investors is Rs. 1000.
- The present expense ratio (December 2021) is 1.80% for the regular fund and 0.81% for Direct Fund.
- There is not any entry load. There is no exit load if 10% of the units are redeemed from the date of allotment. For units over the limit of 10%, the exit load is 2.00% if the units are redeemed within one year and 1.00% if units are redeemed after one year but within two years from the date of allotment. There is no exit load for switch transactions between regular and direct funds.
Why I Like the Scheme
I have always kept the fund as one of the major holdings of my mutual fund portfolio due to the following reasonsLimited Number of Schemes
The Parag Parikh Fund house has not launched many schemes since entering the mutual fund business. While the competitors have continued to launch various schemes which overlap with each other PPFAS has kept its focus on a limited number of schemes only. It has helped them to beat the index as well as most other schemes.Diversification across Geographies
The Fund invests in Indian as well as foreign equities. It helps in the diversification of risk across geographies.Investment Strategy
The fund follows a judicious value-oriented investment strategy. It is not part of the race where most of the funds are eager to show short-term returns to increase AUM size. The fund house describes their investment styles as follows:We will follow a simple (though not simplistic) investment process. As we will not pay mere lip service to value investing, it may mean that often we will be purchasing businesses that are going through a painful phase and are therefore unloved. Each of them will blossom at different points and that is why there may be extended periods when you may feel that 'nothing is happening'. While some may regard us as boring, we are adamant that we will never sacrifice prudence for the sake of providing excitement.
Also, the fund managers will attempt to profit from various cognitive and emotional biases displayed by companies and market participants. In other words, along with the dissection of financial statements, there will also be an overlay of the study of human emotions.
Also, having strong conviction in the principle of compounding, we will offer our investors only the 'Growth Option” and not the 'Dividend Option'.
The fund house gives importance to high Corporate Governance Standards, Free Cash flows, and low leverage while investing.
Skin in the Game
The employees, promoter of the fund house have invested in their scheme. It helps in aligning the interests of fund houses and investors.Long-term Wealth Generation
The fund takes long-term calls and follows a value investing strategy. The strategy helps in generating long-term wealth. The same may be at the cost of short-term under performance but is always beneficial in long term. Since a mutual fund as a product is for long-term investment the fund is suitable for those desiring high risk-adjusted return for long-term goals.Unit holder Meetings
The fund house conducts periodic unit holder meetings which are rare in the industry. The fund house states its objectives behind investments and clarified the doubts of the investors. It helps in building trust and brings transparency.The fund house has clearly stated on its website that the fund is not for those who are impatient, fear volatility, have a short-term investment horizon, and want to time the market.
Top Holdings
The Top 10 holdings of fund and %age of AUM as of 31.12.2021 is as under:
|
Company |
%age |
|
Bajaj Holdings
& Investment Limited |
8.22% |
|
Alphabet Inc A |
8.21% |
|
ITC Limited |
7.96% |
|
Microsoft Corp |
7.39% |
|
Amazon.com |
6.44% |
|
Meta Platforms
(Facebook Inc) |
5.99% |
|
Indian Energy
Exchange Limited |
5.61% |
|
HCL Technologies
Limited |
5.41% |
|
ICICI Bank Limited |
5.03% |
|
Axis Bank Limited |
5.00% |
Returns
|
Period
of Investment |
Annualized
return |
Category
Average |
Rank
Within Category |
|
2 years |
24.26% |
15.04% |
2/24 |
|
3 years |
19.57% |
12.44% |
1/21 |
|
5 years |
18.52% |
14.71% |
1/20 |
|
Since Inception |
19.12% |
15.61% |
2/25 |
SIP returns
|
Period of
Investment |
Annualized return |
|
2 years |
35.28% |
|
3 years |
26.50% |
|
5 years |
20.63% |
Source: www.moneycontrol.com
The fund has consistently remained
within the top two funds in the category for 2year, 3 years, 5 years time
frames. Further, the annualized return since inception is 19.12%. The SIP
return for the last five-year time frame is 20.63%.
My Return Expectations from the Scheme
I expect long-term returns of 15% -18% from the scheme
and considering the sound investment principles, integrity and focus I think
the fund house can easily beat my return expectations. Further, I think that
the expense ratio shall come down gradually which shall help in improving the
returns.
Conclusion
The fund is a must in the
core mutual fund portfolio of long-term investors. It is one of the best
schemes available in the market and is benefited by investments across market
capitalization and with geographical diversification.
Sources
https://amc.ppfas.com/schemes/parag-parikh-flexi-cap-fund/
https://www.moneycontrol.com/mutual-funds/nav/parag-parikh-flexi-cap-fund-direct-plan/MPP002
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