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Bet on Parag Parikh’s highly diversified equity mutual fund

Henil Shah
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Bet on Parag Parikh’s highly diversified equity mutual fund

Parag Parikh Financial Advisory Services (PPFAS) is a much-focussed asset management company (AMC) with no cluttered offerings. They offer only three funds: Parag Parikh Long Term Equity Fund (multi-cap fund), Parag Parikh Tax Saver Fund (Equity-Linked Saving Scheme offering), and Parag Parikh Liquid Fund (liquid fund offering).

 

Well, such a focussed approach has given them an edge over other big names such as ICICI Prudential, HDFC Mutual Fund, etc.

 

Talking about Parag Parikh Long Term Equity Fund, it is one of the highly diversified equity funds among other multi-cap funds. If we look at its current asset allocation, its holding is 94.3 per cent in equity and 5.5 per cent in cash. Further, in equity as well, 66 per cent is allocated to large-caps, 24 per cent in mid-caps, and 10 per cent in small-caps. Moreover, it also invests in overseas securities such as Amazon, Alphabet, Facebook, etc. and contributes around 29 per cent to the total assets under management (AUM) of the fund.

 

This fund adopts a focussed investing approach and invests in not more than 20 companies as of June 2020. Despite having such a focussed approach, it does not have any concentration risk as only 49 per cent of the assets are dedicated towards the top 10 holdings.

 

Besides, on the sectoral front, it is quite concentrated as 68 per cent of the assets are dedicated towards the top three sectors. Moreover, this fund follows a value investing strategy.

 

Fund Performance on trailing basis (per cent)

Particulars

YTD

1 Month

3 Months

6 Months

1 Year

3 Years

5 Years

7 Years

Parag Parikh LTEF

9.42

9.77

22.00

6.84

18.67

11.29

11.42

16.94

NIFTY 500 TRI

-7.54

7.10

13.30

-7.45

1.46

2.32

6.34

12.26

Category Average

-7.75

5.88

11.06

-8.78

1.20

1.14

5.14

13.15

 

Now if we look at the fund’s performance on a trailing basis, its performance is spectacular as compared to its benchmark as well as the category. In each and every period, it successfully outperformed its benchmark as well as the category.

 

 

Even on the three-year rolling returns basis, the fund could comfortably able to beat the benchmark. This depicts the consistency of the returns of the fund.

 

Risk Statistics (per cent)

Particulars

Standard Deviation

Sharpe

Sortino

Beta

Alpha

Parag Parikh LTEF

17.46

0.28

0.26

0.74

5.59

NIFTY 500 TRI

21.61

-0.05

-0.05

N/A

N/A

Category Average

21.19

-0.10

-0.11

0.95

-1.19

 

Even in terms of risk statistics, the fund has come out with flying colours. In each and every risk metric, the fund is able to beat its benchmark as well as its category.

 

To conclude, this fund deserves applause and so does its fund managers. Further, we believe that the lacklustre value theme is likely to gain momentum and this would benefit this fund as well. Therefore, if you are a retail investor looking to create wealth in the long-term, do consider investing in this fund via a systematic investment plan (SIP).

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