Fund of Fortnight



Reason for recommendation

Parag Parikh Long Term Equity Fund - Direct Plan (Growth)



For many investors, investing experience matters more than returns. They do not want sleepless nights due to volatility in their investment. The on-going election and its results next month can create a lot of volatility in the market. Hence going for a fund like Parag Parikh Long Term Equity (PLTEF) can help you avoid anxious moments. The reason PLTEF gave good investment experience and better returns in the last one year is its diversified portfolio. The portfolio is not only diversified domestically but also internationally. At the end of March 2019, the fund held almost 28 per cent of its assets in overseas securities and the fund’s largest holding was in Alphabet Inc, where the fund has deployed 9.57 per cent of its net assets. To protect its portfolio from any forex fluctuation, PLTEF hedges most of the currency exposure using currency futures. This strategy has really helped PLTEF to clearly stand out among its category in various quantitative indicators calculated to measure its riskiness. Fund’s standard deviation is 9.17 compared to 13.16 and 13.45 of its benchmark and category, respectively. Even the risk-adjusted return generated by the fund measured by Sharpe ratio of 0.87 is far better than 0.67 posted by its category. At the end of March 2019, the fund has about 19.56 per cent of its asset in cash holdings, debt and money market instruments and arbitrage positions, which may limit the fund’s chance of gaining big in case a stable government comes into power and market spurts in short duration. Nonetheless, the fund is suitable for investors who invest for the long-term and are willing to take moderate risk.



This might not be top ranked fund, however, looking at risk-reward opportunity we recommend this fund.
 * Expected one year return is based on the assumption that current holdings remain constant.

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