PPFAS Mutual Fund house, which offered only one mutual fund scheme –Parag Parikh Long Term Equity Fund till recently, give you the chance to invest directly in these big international companies via this mutual fund scheme.

There are a very few Indian mutual funds that actively track and invest in US equities. Parag Parikh Long Term Equity Fund is one of only a handful Indian mutual fund schemes to invest in an Indian and Foreign stocks.

For Rajeev Thakkar, CIO, PPFAS Mutual Fund, that’s a strength. This fund doesn’t mind going overseas and buying the Google owner Alphabet, while keeping an eye on HDFC Bank (top domestic holdings).

Let us look into this fund in detail.

Parag Parikh Long-Term Equity Fund Review

This is a multi-cap equity oriented mutual fund which also invests in international stocks.There are quite a few mutual funds in India with international themes.

Parag Parikh Long-Term Equity Fund: NAV

The NAV of Parag Parikh Long-Term Equity – Direct is ₹24.8 as of 14th June 2018 and The NAV of the direct version of any fund will always be higher than that of its regular counterpart.

Parag Parikh Long-Term Equity Fund: Details

Before start investing in any mutual fund scheme, you should look into some basic key features. Here is the key information of this fund:

Launch Date 24 May 2013
NAV (11 June 2018) ₹24.6082
Plan Type Direct
Rating by Groww 3 Star
AUM (Fund Size) ₹987 Cr
Riskometer Very High
Minimum SIP ₹1,000
Minimum SWP ₹1,000
Performance w.r.t its Benchmark Has consistently outperformed its benchmark NIFTY 500 since its launch.
Age of the fund 5 years old
Expense Ratio 1.50%
Exit Load If redeemed bet. 0 Days to 365 Days; Exit Load is 2%; If redeemed bet. 365 Days to 730 Days; Exit Load is 1%;
Type  Open Ended

Parag Parikh Long-Term Equity Fund: Performance

This fund has given very good return since its launch and is less risky in the multi cap category due to its additional diversification. The ideal tenure of investment is more than 5 years to get potential return from this fund. Returns per annum over the years from this fund are:

Duration Returns
1 year 18.1%
3 years 14.4%
5 years 20.1%
Since launch 19.72%

As seen from past data, this fund has given high returns over the years and has consistently outperformed its benchmark. While the fund has undoubtedly scored high on the performance front, it has also managed to keep its risk metrics lower than the benchmark thereby resulting in an improved risk-reward profile.

Parag Parikh Long-Term Equity Fund: Objective

Parag Parikh Long Term Equity Fund is a diversified equity scheme with the investment objective is to seek to generate long-term capital growth from an actively managed portfolio primarily of equity and Equity Related Securities.

This fund’s allocation is guided by good opportunities to diversify and regulation. They get to diversify portfolio holdings by investing up to 35% of fund’s assets in foreign stocks. In order to retain our status as an Indian equity mutual fund, this scheme invest at least 65% in domestic stocks.

Being an equity mutual fund scheme, this fund cannot guarantee any returns. However, the fund house, assure you is that they will manage your money prudently in order to help you get closer to achieving your long-term financial goals.

Parag Parikh Long-Term Equity Fund: Holdings

This fund’s investment universe is not restricted by any self-imposed limitations in terms of sector, market capitalization, geography, etc. However, an average of 65% of its corpus will be invested in listed Indian equities, in order to benefit from the favorable Capital Gains tax treatment accorded to such schemes.

Top 5 international holdings of this fund are:

Name of the Instrument Industry % to NAV
Alphabet Inc. Prev (Google) Software 10.8%
Suzuki Motor Corp (ADR) Auto 4.6%
Facebook Inc. Software 4.9%
3M CO Industrial Conglomerates 2.2%
International Business Machines Corp (IBM) IT Consulting & Other Services 1.9%

Top 5 domestic holdings of this fund are:

Name of the Instrument Industry % to NAV
HDFC Bank Ltd Banks 6.8%
Bajaj Holdings & Investment Ltd Finance 6.4%
Balkrishna Industries Ltd Auto Ancillaries 4.9%
Persistent Systems Ltd Software 5.9%
Zydus Wellness Ltd Consumer Non Durables 4.7%

Top 5 equity sector allocation:

Sector allocation Current % NAV
IT Service 25.55%
Automobile 12.67%
Financial service 19.46%
Consumer Goods 7.9%
Pharma 4.49%

The fund managers primarily look for strong management, robust fundamentals, sustainability and demand of business before including any stock in the portfolio.

This has resulted in the fund having a higher exposure to domestically oriented sectors with sectors such as IT, Auto Ancillaries and Financial services accounting for nearly 60% of total portfolio.

Parag Parikh Long Term Equity Fund: Comparision

Let us compare this fund with other top 3 contenders in the multi-cap category.

Other top Funds Returns over the years Min SIP Investment Fund Size (Cr) Rating
1Y  3Y 5Y
Motilal Oswal MOSt Focused Multicap 35 Fund 9.6% 17.4% NA ₹ 1,000 ₹ 11,411 5
SBI Magnum Multi Cap Fund 12.5% 16.6% 23% ₹ 500 ₹ 4,086 4
Aditya Birla Sun Life Equity Fund 10.1%  17.1% 24.5% ₹ 500 ₹ 8,538 4

As seen from the table, Parag Parikh Long Term Equity Fund is easily one of the best performing multi-cap funds in the market today and its AUM is also less as compared to its peers.

With such consistently high returns, this fund has managed to outperform nearly all other funds in its category in last 1 year.

Parag Parikh Long Term Equity Fund: Plans

Parag Parikh Long Term Equity Fund is available in both regular and direct plans.

  1. Parag Parikh Long Term Equity Fund Direct
  2. Parag Parikh Long Term Equity Fund Regular

Both the regular and direct versions of any mutual fund are the exact same fund, run by the same fund managers investing in the same stocks, and bonds.

The difference is that in case of direct mutual funds, there is no broker/distributor commission. Which means, as an investor, you get higher returns from the exact same mutual fund.

Read More: Direct vs Regular Mutual Funds Examples: Returns of Top 10 Funds Compared

For both the above plans scheme offers only “Growth Option” and no “Dividend option”.

Parag Parikh Long Term Equity Fund: Major changes in 2018

From 1st July 2016, mutual funds got extra transparent.

SEBI asked fund to additionally disclose certain information in the offer documents for existing and in the new schemes. This includes monthly portfolio changes made by the fund house.

Let us look into how much the fund managers of the this fund have made changes in the fund’s portfolio in 2018.

Name of the Instrument Industry Current % NAV % Change in quantity of shares Description
Domestic Equity
Indraprastha Gas Ltd Gas 1.85% -43.59% 525282 additional shares are sold in 2018
Century Textiles Industries Ltd. Cement 0.03406 7.92% 20900 additional shares are bought in 2018
Yes Bank Ltd Banks 0.02987 132.72% 497000 additional shares are bought in 2018
Bharti Airtel Ltd Telecom – Services 0.02301 36.87% 159800 additional shares are bought in 2018
Maruti Suzuki India Ltd Auto 0.02253 80% 12000 additional shares are bought in 2018
State Bank Of India Ltd Banks 0.007 -45.95% 255000 additional shares are sold in 2018
Foreign Securities / ADRs / GDRs
Suzuki Motor Corp (ADR) Auto 0.0499 50.62% 12300 additional shares are bought in 2018
Nestle SA-ADR Packaged Foods 0.02998 50.63% 20600 additional shares are bought in 2018

**The data taken here is from January to April 2018. As May monthly portfolio change is yet to published by PPFAS Mutual Fund house.

As we can see from the tables above, the fund manager of Parag Parikh Long Term Equity Fund, has made huge changes in some of the portfolio in 2018.

This is due to the announcement of budget 2018. The fund manager has aligned the fund to the new announcement so that the fund can meet its objective.

Parag Parikh Long Term Equity Fund: Fund Managers

This fund is managed by 3 fund managers. They both have immense experience in the financial markets of India.

The domestic portion of the scheme will be managed by Mr. Rajeev Thakkar, while Raunak Onkar manages the foreign investment component. Raj Mehta is responsible for the ‘fixed income’ investment component.

1. Raj Mehta since Jan 2016

Education: Mr. Mehta is a B.Com and M.Com from Mumbai University, CA and CFA Level III Pass.

Experience: Prior to joining PPFAS AMC as a Research Analyst he was associated with the AMC as an intern since 2012. He has collectively over 3 years of experience in investment research.

Funds Managed:

  1. Parag Parikh Long Term Equity Fund – Regular Plan – since Jan 2016
  2. Parag Parikh Liquid Fund – Regular Plan – since May 2018

2 . Rajeev Thakkar since May 2013

Education: Mr.Thakkar is a Chartered Accountant, Cost Accountant, CFA, and CFP.

Experience: He has been associated with PPFAS AMC since 2013.

Funds Managed:

  1. Parag Parikh Long Term Equity Fund – Regular Plan – since May 2013

3. Raunak Onkar since May 2013

Education: Mr.Onkar is an MMS (Finance) from the University of Mumbai.

Experience: His has been associated with PPFAS Limited for quite a few years.

Funds Managed:

  1. Parag Parikh Long Term Equity Fund – Regular Plan – since May 2013

Parag Parikh Long Term Equity Fund: AMC details

PPFAS Mutual Fund has assets under management (AUM) of about Rs 905 crore at the end of October 2017.

Challenging the status quo of the Indian mutual fund industry, PPFAS Mutual Fund, promoted by Parag Parikh Financial Advisory Services, held its first unit holders meet in Mumbai on 22 November 2014. PPFAS MF previously held the Annual General Meeting (AGM) of its unitholders in Chennai and Bangalore.

This fund house believe that investing should not be a complicated process. Hence, they strive for simplicity in their scheme design, investing process and their operations. While investing involves individuals, they accord more importance to the investing process than to personalities.

According to the fund house, it does not launch new schemes to take advantage of the bull run and wants to be transparent and accountable to its unit holders.

Till recently it offered only one mutual fund scheme – Parag Parikh Long Term Equity Fund (PPLF). PPFAS Mutual Fund launched a new mutual fund scheme on 9th May 2018 – Parag Parikh Liquid Fund, in response to unit holderss’ demands for alternate investment options, especially for the short-term needs.

PPFAS mutual fund house may have instilled some amount of trust by providing accountability to their investors

Parag Parikh Long Term Equity Fund: Salient features

Some of the salient features of this fund are:

  1. Parag Parikh Long Term Equity Fund is different from other equity oriented mutual fund in India, as this fund is one of only a handful of Indian mutual fund schemes to invest in a basket of Indian and foreign stocks.
  2. This fund concentrate on stock-picking rather than forecast currency movements. However, this fund reduce the risk of their investors losing due to sharp currency appreciation of the Indian rupee, by hedging approximately 80% of our foreign exposure through Currency Contracts.
  3. For investing in foreign stocks, this fund prefer countries where stock markets are well-developed, good governance is in place, financial statements are prepared in English and stock markets are liquid. Within these countries, they seek companies which are large, have operations in multiple countries and are reasonably valued.
  4. To instill a sense of accountability, this fund ensure that the Fund Management team is investing their own monies along with those of the clients in the scheme.
  5. Fund house of this fund believe that through Parag Parikh Long Term Equity Fund they can invest in all the asset classes and geographies that they like and hence, there is no need to launch an array of schemes, as doing so may confuse our investors rather than help them.

Why you should invest in Parag Parikh Long Term Equity Fund?

Here are the few important reasons, why should you pick this fund in 2018:

  1. Reducing country risk: Most equity mutual fund schemes help investors diversify across industries within the same country. However, investors could still be affected if there are negative events throughout the country (such as war, drought, political turmoil etc.). Investing across countries helps to reduce this risk.
  2. Winners keep rotating: Different markets perform well at different times and it is virtually impossible to predict who will be the next winner. Also, there will be times when the Indian stock market may under perform others. By diversifying abroad, we reduce the risk of our investors losing out when this happens.
  3. Reducing portfolio volatility: All stock markets do not always move at the same pace or in the same direction. Hence, investing across countries helps to reduce the volatility of the portfolio. Lower fluctuations in the Net Asset Value (NAV) mean greater peace of mind.
  4. Wider choice: There are several world-class companies which do not have Indian subsidiaries who are listed. Also, there are innovative companies making certain products/services for which there are no Indian substitutes. When this fund invest abroad, their investors get a chance to benefit from the performance of such global leaders.
  5. Valuations: Sometimes, the Indian subsidiary of a multinational company may be very highly valued, and hence not investment-worthy. However, its parent company may be available at much more reasonable valuation. This fund can take advantage of such situations. Parag Parikh Long Term Equity Fund employ the same time-tested principles of value investing while choosing both, Indian and foreign stocks.

Conclusion

I am sure you have thought about investing in Apple, Amazon, Microsoft, Google or Facebook, despite the fact that these companies are not listed on Indian stock exchange(s). Indian investors can still invest in them directly through this mutual fund scheme.

Being a multi-cap fund, Parag Parikh Long Term Equity Fund’s  offer the fund manager the freedom to invest across large-cap, mid-cap and small-cap stocks that too across different markets.

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.

Parag Parikh Long Term Equity Fund is suitable for all investors who are willing to commit their investible surplus to the stock market for a period of 5 years or more and are seeking a mutual fund scheme which adheres to the time-tested principles of value investing.

But, it is recommended, that invest in this mutual fund scheme through Systematic Investment Plan (SIP). SIP is much better and safer option for investing in equity oriented mutual funds.

Every person’s financial condition is different. Evaluate the funds you invest in yourself – don’t invest in a fund because of its popularity.

Investing in mutual funds online is very simple and paperless. Simply log in to your Groww account, choose a fund, and invest using net banking – exactly like you would when shopping online.

To look at some of the best performing funds from every category of mutual funds, check out Groww 30: Top funds in every mutual fund category. 

Happy Investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.