Parag Parikh Flexi Cap Fund: Flexible To Changes For Long Haul

Among mutual funds, the flexi-cap category allows fund managers the freedom to invest across market capitalisation without restriction. They adjust their portfolio allocation based on market conditions and valuations to capitalise on favourable market opportunities and invest across sectors and market caps with ease.

Parag Parikh Flexi Cap Fund is one such fund in this category. Its unique selling point (USP) lies in its ability to take advantage of market capitalisation on the domestic front, while also giving exposure to global business disruptors like Microsoft, Alphabet, Meta and others.

The fund was launched in 2013, with a multi-cap strategy, by the name of Parag Parikh Long Term Equity. However, after the introduction of the flexi-cap category in 2020, both the name and category were changed.

Portfolio

The fund invests minimum 65 per cent in Indian equities across market caps and sectors which helps it to take advantage of equity taxation. The balance is allocated in foreign stocks and other financial instruments. At present, the scheme is invested 13.73 per cent in four foreign listed securities Meta Platform (3.93 per cent), Alphabet (3.71 per cent), Amazon (3.15 per cent), and Microsoft (2.94 per cent).

The scheme prefers to invest in quality businesses managed by a competent management team, high pricing power, high entry barriers, a high return on capital, and a strong balance sheet. The fund manager prefers a buy and hold strategy in high-conviction stocks at attractive valuation rather than churning the portfolio to generate alpha, which reflects in its low portfolio turnover ratio. In the last one year, the portfolio turnover ratio stands at 22.13 per cent as compared to the category average of 94.62 per cent.

Performance

It is one of the best performing schemes in its category. In the last 10 years, it has delivered 17.95 per cent returns compared to the category average of 13.16 per cent.

OLM Take

The scheme has the ability to reward investors handsomely if they remain invested for the long term.

kundan@outlookindia.com

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