What Makes Parag Parikh Funds So Successful? The Secret Behind

Parag Parikh Funds

Ever wondered why Parag Parikh Funds are so successful? Parag Parikh succeeded in his portfolio management scheme and is now looking to repeat his performance with a new mutual fund!

Parag Parikh Funds

 

Think of it as a financial adventure where Parag Parikh Funds shine bright. What’s their secret? Well, it’s a mix of smart thinking, looking at the whole world for opportunities, and managing things wisely. It’s not just about fancy numbers; it’s about having a plan that deals with challenges and grabs chances. 

Join us in finding out how they handle the ups and downs, gain trust from folks like us, and come out on top in the world of money. 

(A) What are Parag Parikh Funds? 

Let’s begin with the definition. Parag Parikh Funds refer to the set of mutual fund schemes offered by PPFAS i.e. Parag Parikh Financial Advisory Services. It includes various types of funds and is known for its long-term investment approach. 

Name of the EntityParag Parikh Funds
Official Name of the EntityParag Parikh Financial Advisory Services Pvt. Ltd. (PPFAS Ltd.)
Type of FirmInvestment advisory firm,
SEBI Registered Portfolio Management Service (PMS) Provider.
Incorporated in1992
Products of PPFAS Ltd.Mutual Fund Products
Flagship FundPPFAS Long-Term Equity Fund
Investment ApproachLong-term, Value-oriented
Fund CategoriesEquity, Hybrid, Liquid
Notable FeatureFlexibility to invest globally
Fund ManagersMr.Rajeev Thakkar (Equity),
Mr.Raunak Onkar (Debt)
RecognitionAwarded as the Best Fund House- Equity, at the Outlook Money Awards 2020
Parag Parikh Funds: A Brief Overview

Over the years, these funds have delivered competitive returns by employing diverse investment strategies across market sectors and types of securities. And this factor acted as a cherry on top!

(B) Types of Parag Parikh Funds

In this section, we will look into different types of Parag Parikh Funds that made huge tidal waves in the mutual fund industry.

Type of Parag Parikh FundsDescriptionLaunch DateAUM in crores (Assets Under Management)Reason for Popularity
Parag Parikh Flexi Cap FundA versatile fund that invests in stocks of all sizes, even from other countries, providing growth potential.May 2013Rs.48,293.88Consistently outperforms, offering a diverse approach to maximize returns.
Parag Parikh Long-Term Equity FundA fund that hunts for companies with the potential for long-term wealth creation, both locally and globally.May 2013N/ASmartly picks companies with solid management and strong foundations.
Parag Parikh Liquid FundActs like a safe parking spot for short-term money, investing in easily convertible assets.June 2019Rs.2,007.20The low-risk choice for those seeking stability in the short term.
Parag Parikh Tax Saver FundA tax-saving friend with a three-year lock-in, investing across sectors for potential long-term gains.January 2019Rs.2,334.28Offers tax benefits while aiming for wealth creation.
Parag Parikh Conservative Hybrid FundBalances risk by investing in a mix of safe and slightly risky assets for stable returns.July 2020Rs.1,656.72Ideal for those seeking a steady and less volatile investment option.
Parag Parikh Arbitrage FundA clever fund that makes money from price differences between different markets.October 2023Rs.167.59Acts as a financial detective, seeking opportunities for sneaky profits.
Different types of Parag Parikh Funds

Parag Parikh Funds belongs to Parag Parikh Financial Advisory Services (PPFAS), a boutique investment advisory firm established in 1992. The funds kicked off in May 2013, starting with the Parag Parikh Flexi Cap Fund.

After that, they rolled out more funds to cover all sorts of investment needs. And guess what? These funds are like overachievers – they keep doing better than their peers and have super protection against losses.

 They follow a value investing strategy, putting money in companies with solid foundations, skilled management, and a competitive edge. To mix things up, they also invest in foreign securities, adding diversity and reducing risk in their portfolio. Over the years, these funds have attracted a growing amount of assets under management (AUM).

Let’s quickly go through the various types of Parag Parikh Funds in detail-

  • Parag Parikh Flexi Cap Fund: This fund invests in stocks across market capitalizations and sectors. It has the flexibility to invest in foreign securities as well. The fund has consistently outperformed its benchmark and peers.
  • Parag Parikh Long-Term Equity Fund: This fund invests in companies that have the potential to create long-term wealth. The fund invests in companies that have a competitive advantage, good management, and strong fundamentals. The fund also invests in foreign securities.
  • Parag Parikh Liquid Fund: This fund invests in highly liquid money market instruments and debt securities. The fund has a low-risk profile and is suitable for investors who want to park their money for a short period.
  • Parag Parikh Tax Saver Fund: This fund invests in stocks across market capitalizations and sectors intending to generate long-term wealth. The fund has a lock-in period of three years and offers tax benefits under Section 80C of the Income Tax Act.
  • Parag Parikh Conservative Hybrid Fund: This fund invests in a mix of debt and equity securities. The fund has a low-risk profile and is suitable for investors who want to generate stable returns with low volatility.
  • Parag Parikh Arbitrage Fund: This fund invests in arbitrage opportunities and aims to generate returns by exploiting price differentials between the cash and derivatives markets.

However, you must note that the Mutual funds can be a bit like a rollercoaster ride in the market. Just remember, past success doesn’t promise future gains. It’s wise to chat with a financial advisor before making any investment moves. They’re like money experts, guiding you to the best decisions. Stay smart and safe with your investments! 

(C) Secret Sauce: What makes Parag Parikh Funds so Successful?

Here comes the most anticipated part of this write-up i.e. the efficient strategies opted by Parag Parikh Funds to make their financial products highly successful-

(C.1) Value Investing

Value Investing (Parag Parikh Funds)

Parag Parikh Funds follow a value investing strategy, which involves investing in stocks that are undervalued by the market. This approach is based on the belief that the market sometimes undervalues good companies and that these companies will eventually be recognized and their stock prices will rise. 

The funds invest in companies that have strong fundamentals, good management, and a competitive advantage.

Sounds complicated?

Alright, let’s break down the Parag Parikh Funds’ secret sauce – value investing. 

Imagine you’re at a store, and you spot a super cool gadget on sale, way cheaper than it’s worth. Value investing is a bit like that but with stocks. Parag Parikh Funds look for stocks that the market kind of undervalues – it doesn’t realize how awesome they are. They believe that, over time, these undervalued stocks will get the attention they deserve, and their prices will shoot up like a skyrocket.

Now, think of these undervalued stocks as hidden gems. Parag Parikh Funds picks companies with strong basics, killer management, and a special edge over others. It’s like investing in the underdog that’s secretly a superstar. Just like when people underestimated Apple back in the day – now, everyone knows it’s a tech giant. That’s the magic of value investing; it’s like finding hidden treasures in the stock market! 

(C.2) Consistent Performance

Consistent Performance of Parag Parikh Funds

Parag Parikh Flexi Cap Fund has a track record of impressive performance. Since its launch in 2013, the Flexi Cap Fund has generated a return of Rs.442 for every Rs.100 invested. This is a clear indication of the fund’s ability to grow investors’ money significantly over time.

What’s even more noteworthy is how well it has fared against its benchmark (NIFTY 500 TRI) and the broader NIFTY 50 TRI index. The fund doesn’t just keep up with them; it consistently surpasses their performance. It’s like having a runner consistently outpacing the competition in a race.

Moreover, if you held onto the Flexi Cap Fund for seven years, you never faced negative returns. This means that over this period, investors consistently saw positive growth in their investments. It’s akin to having a dependable financial ally that provides stability and growth.

In essence, Parag Parikh Funds have demonstrated a reliable and successful track record, delivering returns that outshine benchmarks and providing investors with consistent positive outcomes over time.

(C.3) Downside Protection

Parag Parikh Funds are like your financial guardians when the market gets a bit shaky. They have this secret defense strategy called “downside protection,” meaning when the market goes down, they don’t fall as much – it’s like a financial safety net.

For instance, during the bumpy ride of the COVID market crash in March 2020, while other funds dropped by around 26%, the Parag Parikh Flexi Cap Fund only went down by 21.38%. It’s like having a sturdy umbrella in a storm that keeps you a bit drier than others.

Now, since the Flexi Cap Fund started, there were 13 times when the market wasn’t in the best mood. But here’s the interesting part – in 9 out of those 13 times, the Flexi Cap Fund fell less than the average for its group. It’s like running a race and not only keeping up but sometimes even taking the lead.

So, when things get a bit rocky in the market, Parag Parikh Funds knows how to navigate it better than many. They’re like your reliable guide through the financial ups and downs. 

(C.4) Smart Investment Strategies

Smart Investment Strategies of Parag Parikh

Parag Parikh Funds are no less than smart money managers, carefully choosing companies with specific qualities. They go for companies with low debts (meaning they don’t owe a lot), management that cares about investors, and healthy cash flows – like building a reliable team of money-savvy friends.

But here’s the cool part – they don’t limit themselves to local buddies. Parag Parikh Funds also invests in companies with a global presence. Think of it as having friends from different places, making your group more diverse. This helps spread the risk around, so if one friend is facing a financial challenge, others can step in and balance things out.

Take the Parag Parikh Long-Term Equity Fund, for instance. It’s not only playing in the Indian market; it’s also investing partially in the US markets. In short, they create a solid team by investing in indigenous and global companies ensuring a well-balanced and diverse approach for financial well-being.

(C.5) Assets Under Management (AUM)

The growth of Parag Parikh Funds in recent years is nothing short of remarkable. Take the Parag Parikh Flexi Cap Fund as an example – its Assets Under Management (AUM) experienced a fourfold increase in just 18 months. This substantial growth is indicative of the growing trust and confidence investors place in these funds.

As of now, the Parag Parikh Flexi Cap Fund stands as the fifth-largest in the Flexi Cap category, managing an impressive AUM of Rs.22,647 crore. This achievement signifies not only the fund’s increasing popularity but also its substantial presence in the market.

To put it in perspective, envision a small business rapidly expanding and securing a prominent position in its industry. The growth of Parag Parikh Funds reflects a broader acknowledgment from investors, making them a significant player in the financial landscape. It’s not just about numbers; it’s a testament to the funds’ credibility and the increasing preference among investors for Parag Parikh as a reliable investment choice.

Note: When it comes to mutual funds, folks are caught in the dilemma of Direct vs Regular Mutual Fund.” To avoid any kind of confusion, don’t forget to read the article. Hence, you will know the differences between them and will find out which one suits you the best! 

(D) Summing Up Parag Parikh Funds Successful Growth

Success story of Parag Parikh Funds

In conclusion, the success of Parag Parikh Funds rests on a foundation of disciplined investment principles and a well-crafted strategic approach. These funds consistently demonstrate effective portfolio management, illustrating a commitment to a structured and principled investment philosophy. 

Moreover, their ability to seize advantageous investment opportunities underscores a strategic acumen that contributes significantly to their success.

The fusion of investment discipline and strategic vision positions Parag Parikh Funds as a reputable and dependable choice within the competitive landscape of mutual funds.

Investors seeking a blend of reliability and thoughtful strategy find a trusted partner in Parag Parikh Funds, marking their sustained success and credibility in the financial domain.

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Published By: Supti Nandi
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