A mutual fund (MF) scheme which provides a geographical spread can be perfect for conservative long-term investors. It offers a certain level of advantage to different investors as positive business conditions in geographical locations other than domestic local markets may assist a MF scheme to raise its overall performance.
When you look at all the mutual fund schemes that offer such geographical spread with stringent steadfastness to stock choices based on conviction, then it can be said that the Parag Parikh Long Term Equity has its own cozy place in such a list. The scheme finished 5 years in the market in May 2018.
The mutual fund scheme is managed by Rajeev Thakkar, Raj Mehta, and Raunak Onkar, all of who steadfastly adhere to the time-tested standards of purchasing stocks of companies as per different parameters like entry barriers, return on invested capital, and prospects of positive growth. After checking out all these elements, the fund managers choose stocks of companies which also appear to be reasonably attractive with regards to their valuations.
As per the above mentioned principles, more than 27 percent of the mutual fund’s geographically diversified portfolio is allotted to international companies like Suzuki Motor Corp, Alphabet Inc, and Facebook Inc. These companies are large caps that trade at good valuations and increased visibility of continued and sustainable returns. The rest of the portfolio of Parag Parikh Long Term Equity mutual fund scheme consists of companies in the domestic Indian markets.
The managers of the fund have 25 percent cash holdings as well as arbitrage investments, which show that they do not mind waiting for the valuations to become sufficiently and practically more attractive. The mutual fund is ideal for ultra conservative investors who are ok with sitting on the investment for a very long time and ready to opt for investments in equities for a very long term. Over the past 5-year and 3-year periods, the fund has offered returns of 20 percent and 13 percent respectively, while the Nifty 500 TRI (its benchmark index) has offered returns of 19 percent and 12 percent, respectively, for the same periods.
Over the past 6 months, the portfolio allocation of Parag Parikh Long Term Equity has changed in the following way:
- There has been a complete exit from ITC stock holdings
- New entries include stocks of LIC housing finance, HDFC, Tata Steel, and Sun Pharmaceutical
- There has been an increase in the allocation towards Maruti Suzuki India, Century Textiles & Industries, and Yes Bank.
Returns of Parag Parikh Long Term Equity
- Over the past 1 year period, the CAGR return has been 21.17 percent; the SIP CAGR return has been 18.35 percent; and the market cap-multicap Avg CAGR has been 11.84 percent.
- Over the past 3 year period, the CAGR return has been 13.61 percent; the SIP CAGR return has been 19.45 percent; and the market cap-multicap Avg CAGR has been 10.66 percent.
- Over the past 5 year period, the CAGR return has been 20.75 percent; the SIP CAGR return has been 18.77 percent; and the market cap-multicap Avg CAGR has been 31.49 percent.
Comparison of Parag Parikh Long Term Equity with category peers
- The 1-year, 3-year, and 5-year returns of Kotak Standard Multicap Fund – Reg has been 12.65 percent, 12.74 percent, and 23.35 percent, respectively.
- The 1-year, 3-year, and 5-year returns of Axis Focused 25 Fund has been 24.51 percent, 15.74 percent, and 21.69 percent, respectively.
- The 1-year, 3-year, and 5-year returns of Tata Retirement Savings Fund – PP – Reg has been 18.45 percent, 15.22 percent, and 22.57 percent, respectively.
- The 1-year and 3-year returns of Motilal Oswal Multicap 35 Fund – Reg has been 9.57 percent and 13.12 percent, respectively.
The unfortunate death of Parag Parikh
The Chairman and CEO of Parag Parikh Financial Advisory Services, behavioral investment guru, and veteran stock-picker met with an car accident in the US in mid August 2018 and passed away at the age of 61.
Parikh had gone to the US to attend Warren Buffet’s and Berkshire Hathaway’s yearly meeting with shareholders. He was with Raunak Onkar, Rajeev Thakkar, and his wife Geeta in the car when it met with the accident. Onkar and Thakkar escaped with minor injuries, Geeta was hospitalized in serious condition, and Parikh passed away. Parikh is father to two sons, Neil and Sahil.
Parikh rose from a polio-stricken boy to a well known and respected investment broker. He began his career in 1979 as a sub-broker. After the markets in India were opened in the 90s to foreign investors, Parikh became famous for his astute research. He surrendered his broker license to launch the PPFAS Asset Management Company.
Parikh has also written two books, namely, Behavioral finance: Insights into Indian stock markets realities, and Stocks to Riches: Insights on investor behavior and value investing.