Financial planning has become very important to overcome unknown financial challenges. Mutual funds are playing a very important role for people who don’t have time to invest by themselves.
There are numerous mutual funds in our country but Parag Parikh Long Term Equity Fund is one of the best options for investors who are looking for a multi-cap fund.
Government has also taken initiatives so that people can become aware of mutual funds. Its never been so easier to invest in mutual funds. With an increase in internet reach, fin-tech startups have made investing in mutual funds very easier.
Initially, when I started investing in stocks, I was not very much interested in mutual funds but as we know things change the concept of mutual fund is actually for those people who do not want to learn how to research stocks or do not have time to research stocks and they hand over their money to a fund manager of mutual fund who manages the fund.
I can research the fundamentals of companies on my own from these websites and also have time to research then you might be thinking why I bought a mutual fund? The answer is that I found a few things very unique about the Parag Parikh Long Term Equity Fund and also about this company.
PPFAS(Parag Parikh Financial Advisory Services) is running only 3 schemes and are much focused towards benefitting their unitholders.
Recently PPFAS had organised unitholders’ meet where the fund managers and CEO of PPFAS were taking questions and queries from their unitholders which shows they are more responsive to their unitholders.
You can watch the video of the 6th unitholders’ meet of PPFAS.
There are several reasons why I choose Parag Parikh Long Term Equity Fund but I will list some of the important reasons below.
1. Integrity And Dedication Of The Management
In an active mutual fund, the fund managers play the most important role. They do the research and invest in companies which will give a good return in future. You cannot expect a good return from a bad fund manager.
PPFAS have only 3 schemes right now which also shows they are in AMC(Asset Management Company) business just to earn a lot of money like other funds houses but their prime concern is to benefit the unitholders.
Rajeev Thakkar, the Chief Investment Officer(CIO) is a well-dedicated fund manager who loves value investing and is a follower of Warren Buffett and Charlie Munger.
Rajeev Thakkar is also in the list of top-performing mutual fund managers and has beaten the benchmark many times.
You can watch a video on top-performing mutual fund managers of 2019.
PPFAS stop accepting money when valuation is unreasonably high. This step attracts me towards buying Parag Parikh Long Term Equity Fund. This also shows the honesty of the fund manager and the management of PPFAS.
2. Parag Parikh Long Term Equity Fund is a Multicap Fund With Global Focus.
First, take a look at top holdings of the Parag Parikh Long Term Equity Fund.
You can see Alphabet(Parent Company Of Google), Amazon, Facebook, Suzuki stocks in the holdings of the fund which are foreign stocks. There are very few mutual funds which invest in foreign equity(Stocks), PPFAS is one of them.
To minimise risk and maximise returns, PPFAS have a global focus.
Alphabet, Amazon and Facebook are companies in which every retail investor sees a huge upside potential and these stocks are also one of the prime reasons behind buying the Parag Parikh Long Term Equity Fund.
65% of the fund is invested in Indian shares and hence it enjoys the same tax benefits as any other Indian equity mutual fund scheme and also it has the freedom to invest in foreign stocks.
Since this is a multi-cap fund it is free to invest in Large-cap, mid-cap and small-cap. Opportunities are not restricted to large-cap, it can be anywhere that’s why I choose a multi-cap fund.
3. Value Investing
Rajeev Thakkar, the Chief Investment Officer of PPFAS, is a great admirer of Warren Buffett, the great value investor of all time.
Everyone who loves value investing is an admirer of Warren Buffett.
On the home page of PPFAS website, it has been written that we value ‘value investing’.
They only include companies with low debt, high cash flows, investor-friendly management etc and also they have mentioned that the company they include in their portfolio must be available at a discount to their intrinsic value.
The founder of PPFAS, Parag Parikh, a well-known face in the financial world. He has always guided investor to choose long term investing and he says a seed sown, has to go through various seasons before it grows into a tree. So is the case with investment.
Buying a share means buying a part of a company and it takes years for the companies to grow and expand and hence it is advisable to go for the long term.
Long term investing seems difficult but it is not so according to Parag Parikh sir. He explained it as “ Take the case of a young person starting his career at the age of 25. Assuming he retires at 65 he has 40 years where he can save and invest. Indians would invest in long term investment like PPF(Public Provident Fund), LIC and gold over many years.
But when it comes to equities they think short term. So it is not that people don’t believe in long term investing but the problem is the mindset towards equities.
Neil Parikh, son of Parag Parikh, is running PPFAS on the principles of his father and that’s why I loved the values and ethics of this fund house.
4. They Have Their Skin In The Game
This point proves that they will surely manage the fund with full dedication because their own money is at stake.
The total number of units held by insiders/people of PPFAS in the scheme as on 30-11-19 is 4.6 crore units of ₹ 10 each means a total of 5.22% of AUM(Asset Under Management).
This shows the confidence of the management. They are confident of themselves and that’s why I am as a unitholder confident of the fund managers.
PPFAS mutual fund is inspired by a king named Hammurabi whose instituted a social law known as Hammurabi’s code. The main feature of this code was about the builders. If a built a house for a man and the house collapsed to cause the death of the owner, then the builder has to be put to death.
The same thing goes with PPFAS. They have invested their own money if they will fail to give better return they will lose their own money also.
Only one thing that is disliked by me about this fund is its expense ratio about which Rajeev Thakkar has explained.
The explanation was that they are running just three schemes and are not a very big fund house running a lot of schemes so they need to make money from the three schemes only so that they can take the subscriptions of financial data like Bloomberg and also be able to give salary to their employees.
I bought Parag Parikh Long Term Equity Fund on the auspicious occasion of Dhanteras 2019.
Below is the screenshot of my mutual fund investment.
This is not a sponsored post. Everything written by me in this blog is my personal view.
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