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  • PPFAS Mutual Fund :: Communication from our CEO, Neil Parag Parikh

    Letter from Neil Parag Parikh

    Dear Investors,

    Greetings!

    Let me begin by thanking you for your continued faith and support in the three schemes of PPFAS Mutual Fund.

    As you are all aware, we are in the middle of a global pandemic and the most important thing is the health of our loved ones and us. I truly do hope this letter finds you well.

    Unfortunately, this year it will not be possible to have an in person Unit-holders Meet. We will, however, have an online meeting on October 24th . We hope to make this event as engaging and helpful as the previous ones.

    Over the last year, our fund has seen good growth in terms of number of investors and consequently the Assets Under Management (AUM). As such, we thought it is a good time to reiterate a few points as a precursor to the actual meeting.

    • We are guided by the 'Law of the Farm' principle. One cannot sow a seed today and reap the benefits tomorrow. The seed must go through various seasons and regular nurturing before it starts bearing fruits. As in farming, investment success comes from regular discipline, effort and a long term outlook. Having a minimum of 5 years investment horizon for equity funds is advisable.
    • Our Equity Funds endeavour to provide positive inflation-adjusted returns and at the same time protect the capital from permanent loss by ensuring adequate margin of safety while constructing our portfolio. Our goal is to optimize returns for the long term, rather than maximize returns for the short term. We have and will continue to maintain our investment discipline and philosophy and avoid chasing market fancies. We will continue to stay away from businesses we do not understand and promoters we do not have confidence in.
    • Being co-investors with you, we are more concerned/ obsessed with growth of the Net Asset Value (NAV) of our schemes rather than the AUM of the schemes. As such, all decisions that we make, will be with us- the unit-holders in mind.

    A few other points/questions -
    As your fund (PPLTEF) has seen good growth recently, are you geared to handle higher inflows?

    Handling higher flows is not a concern right now and I do not think it will be a concern in the near future. We are still a relatively small fund so there is a long runway ahead in terms of taking in more flows and allocating meaningfully to the ideas we choose. Also the fund is a multi-cap fund that has a mandate to invest in overseas stocks. These are typically large global companies that we invest in, so fund size and absorbing flows will not be an issue for quite some time.

    Will you be launching any new schemes?
    At this moment there are no plans to launch any new schemes. We will be motivated to launch a new scheme only if we can add value to the end investor, if we can provide some differentiation to the existing category and if we are excited to invest our own money in such a scheme. That said, we realize that there could be a need for low risk debt fund from our fund house. As we feel comfortable, we could launch such a scheme in the future.

    What about passive/ index funds? They have started to gain traction in India..
    We will stick to being active managers as we believe we are still in a nascent stage of our markets and there is enough opportunity to outperform the indices over a longer term. Also, there is really no way we can differentiate or add value to our investors by mimicking the index.

    From a purely economics point, one needs a very large AUM just to break even as it is a low cost structure. I do not think we will suddenly get tens of thousands of crores inflow by launching a passive fund.

    Expansion Plans?
    Currently we have physical offices in Mumbai, Bangalore, Delhi and Pune. We had plans to open branches in Chennai, Hyderabad, Kolkata and Ahmedabad this year. Obviously due to the pandemic those plans have been delayed until things normalize.

    Digital Initiatives?
    The lockdown has made it abundantly clear that digital is the way forward. Having a superior online experience was always a high priority for us. This has only reinforced that we have to continuously keep improving and enhancing our digital capability. We will be adding new features to PPFAS SelfInvest app and will continue our efforts to make the online experience as seamless as possible. We have also started working on a separate Distributor App as we realize this is a need for our partners. We will continuously seek feedback from our investors and partners on ways to improve and simplify the investment journey.

    What are your plans with regards to the new SEBI circular on multi-cap schemes?
    As of writing this, AMFI has sent their representation to SEBI and we are awaiting clarification from SEBI. So it is a wait and watch approach and nothing needs to be done until we have complete clarity going forward. I appeal to our unit holders to not worry and to not take unnecessary actions on your investments. As we run very few schemes, we always have the opportunity to reclassify to a different category without changing the basic structure of our scheme, in case the circular stands as is

    I look forward to virtually meeting you all on the 24th of October.

    Warm regards,
    Neil Parag Parikh signature
    Neil Parag Parikh
    Chairman and CEO
    October 2020

    Warm greetings!

    This past May, Parag Parikh Flexi Cap Fund completed 3 years. Overall, we are happy with the performance and the response that the fund has generated. But only looking at returns in isolation is not prudent. We need to look at the risk adjusted returns. On that parameter, I think we have done a wonderful job. (Please see the Fund Factsheet for Quantitative Indicators and Returns.)

    Over the last 3 years, we have been getting a lot of feedback and suggestions from clients, employees and other market participants regarding certain particulars of the fund. I thought it would be a good time to communicate our stance for a few of those points.

    Net Worth Criteria

    As most of you'll will be aware that SEBI has increased the Net Worth criteria for Mutual Funds from ₹ 10 crores to ₹ 50 crores. We have until May 2017 to reach that number. I am happy to inform you that we will be reaching that mark by December 2016 itself. We have done this through the organic route by internal accruals and the promoters pumping in some capital.

    Direct Plan Expense Ratio

    One of the recurring feedbacks we got was that the Direct Plan Expense Ratio of the scheme is on the higher side. With all professions/business ventures, as scale grows costs automatically come down. Also, with the Net worth Criteria mentioned above, it did not provide us any leeway to change the expense structure. As we stand, with our Assets Under Management (AUM) of ₹ 648.30 crores (as on June 30th, 2016), the Direct Plan expense ratio is 2% + Service Tax (ST). Going forward, as the AUM increases we will reduce the expense ratio. The reduction in expense ratio will be on the total corpus, and not just on the incremental flows.The planned schedule for that is:

    • ₹ 750-1,000 crores AUM - Expense Ratio of 1.75% + Service Tax (for the entire corpus)
    • Above ₹ 1,000 crores AUM - Expense Ratio of 1.50% + Service Tax (for the entire corpus)

    Proposed Scheme Name Change

    We are in the process of changing our scheme's name from 'Parag Parikh Long Term Value Fund' to 'Parag Parikh Flexi Cap Fund'.

    The prime motivators behind this move are:
    • To pay homage to our Founder whose vision and actions have been instrumental in where we stand today.
    • Given his standing and image in the industry, it has the potential to ensure better connect and recall among investors, as compared to a bland acronym.
    We will communicate the change in various media, as soon as it happens.

    Regards,
    Neil Parag Parikh signature
    Neil Parag Parikh
    Chairman and CEO
    July 15, 2016

    Dear fellow investors,

    Greetings!

    It is said that tough times are the litmus test of character. If that is so, the current investment environment must surely be testing the character of equity investors worldwide. While good times lull oneself into believing that one is a genius, difficult times make us feel like we are failures. However, both these extremes do not depict an accurate picture.

    From February 2014 to March 2015 (Colloquially known as the 'Narendra Modi Rally'), making money through equities seemed like the easiest thing in the world. Then onwards, gradually, it appears that making money in anything but equities is easy. As often happens, perceptions change faster than the underlying reality.

    Seemingly paradoxical factors like slowing global growth in one area & rising interest rates in another, falling commodity prices in some countries & falling unemployment in others are going head-to-head with the usual suspects such as entrenched geo-political tensions, rising political queasiness, lack of reforms on the domestic front, etc.

    All these are causing considerable disquiet among some of you. We are being asked questions like...”Do you think we will see a reprise of 2008?”, “At what level will we bottom out?”, “Is the India story over?”, etc.

    We do not profess to know the answers to all your questions. We do not really know where the bottom is or when the market will make a new high. Similarly, we cannot 'confidently' say that interest rates in the USA will keep rising or that rates in India will keep falling or where oil / the Indian rupee is headed.

    However, we do know certain things:

    History has consistently proven that equities are the best asset class to beat inflation over long holding periods.

    Purchasing stocks / equity funds during times of pain, is more rewarding than purchasing them when the atmosphere is cheery. The best time to buy is when you are fearful and least feel like buying. Ask yourself : Are you feeling that way right now?

    When in doubt, investing through a Systematic Investment Plan (SIP) is the best approach. It instills discipline and de-links the emotional element from the act of investing.

    I suggest you refer to the section 'Investment Lessons' on our website for evidence of these three assertions.

    At PPFAS Mutual Fund, we have resolved not to be perturbed by the mood-swings around us. We were neither euphoric in early 2015, nor despondent today. This, despite us having our skin in the game by holding nearly 12% of Parag Parikh Flexi Cap Fund's corpus.

    However, such impassivity should not be mistaken for apathy or ignorance. Our investment team is willing and able to respond appropriately to various evolving scenarios. While we do not ignore macro-trends, our unwavering focus remains on choosing good businesses at sensible valuations and holding on to them across business cycles.

    Our Founder, Mr. Parag Parikh is never far from our hearts. It will be worthwhile to recount some of his teachings during these turbulent times:

    “Nothing is permanent. Good times will be followed by bad times...and vice versa. Maintain your equanimity in all circumstances.”
    “The Law Of the Farm will always reign supreme. You cannot sow something today and reap tomorrow. Just like every seed has to pass through several phases before maturing, so do your investments.”
    “Success in investing is as much dependent on patience and diligence, as it is on competence.”
    When it comes to forecasting... “Your guess is as good as mine”.

    Hence, we strongly urge you to stay strong and carry on. What seems like a major upheaval today, is just a blip on the chart, within a short while.

    Ask yourself : “Why am I investing?” If you are doing it to meet a financial goal at least five years away, treat the current turbulence as an opportunity, not a threat.

    Let your goals guide your investment decisions and actions... not the fleeting headlines flashing on business channels.

    Me and my team members are always willing to address any queries you may have, now and in the future. You may connect with us either on 91-22-61406537 or [email protected].

    As always... Thank you for your unstinting support.
    Neil Parag Parikh signature
    Neil Parag Parikh
    Chairman and CEO
    January 19, 2016

    Dear fellow investors,

    Warm greetings!

    Let me first introduce myself to you. My name is Neil Parag Parikh and I have recently taken over as CEO of PPFAS Mutual Fund, after the untimely passing away of my father, Mr. Parag Parikh.

    I have been associated with the organisation for over 11 years now, in various capacities. I promise to uphold the high standards and strong values that we have set ourselves. The vision and dream that my father had for our Fund has now become a purpose and promise to him. I am extremely confident and motivated that we will exceed all his expectations, even as we abide by the values and investment philosophy so cherished by him.

    I want to reassure all of you that my family and I are fully committed to achieving our mission of being regarded as the most preferred Indian equity mutual fund in the years to come.

    While a lot has changed over the past month... at the same time, nothing has changed. Our prudent approach to managing your money, our personalised touch, and our commitment to you remains as steadfast as ever.

    Our investment team remains the same. Rajeev Thakkar continues to manage our fund along with a strong research team. There are no major shifts in the organization structure and we continue to manage your money prudently following the value investing philosophy.

    Mr. Aalok Mehta Shah and his team continue to manage relationships for clients and distributors. They will be delighted to answer your investment related queries.

    Please do not hesitate to contact us on [email protected] in case you have any queries or concerns about the road ahead. We will be delighted to redress them. We are always open to suggestions and feedback.

    You are the owners of this fund and we will put ourselves up for scrutiny. Continuing with that tradition, we will be having our Annual General Meeting (AGM) in Mumbai, Bangalore and Chennai in the months of October/ November 2015. The details will be mailed closer to the dates.

    I sign off by sincerely thanking you from the bottom of my heart for standing by us during these trying times. It is you who have given us the strength to be resilient. I can promise you that the faith and trust shown by you will be vindicated.

    Once again, the entire team at PPFAS Mutual Fund is more determined than ever, to fulfil our collective vision of being viewed as the most preferred Indian equity mutual fund.
    Neil Parag Parikh signature
    Neil Parag Parikh
    Chairman and CEO

    June 5, 2015

    "You cannot sow something today and reap tomorrow! A seed has to go through the various seasons before it turns into a fully grown tree. So is the case with Investing." - Parag Parikh

    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
    © 2021 PPFAS Asset Management Private Limited. All rights reserved.
    Sponsor: Parag Parikh Financial Advisory Services Limited. [CIN: U67190MH1992PLC068970], Trustee: PPFAS Trustee Company Private Limited. [CIN: U65100MH2011PTC221203], Investment Manager (AMC): PPFAS Asset Management Private Limited. [CIN: U65100MH2011PTC220623]