Rajeev Thakkar, Chief Funding Officer-Fairness and Director at PPFAS Mutual Fund, addressed rising investor chatter across the underperformance of the Parag Parikh Flexi Cap Fund in a notice to unitholders.
Thakkar opened the notice by describing latest scrutiny as pushed by “noise on social media”, mentioning that two years of range-bound fairness markets are a “function and never a bug” of fairness investing, and never one thing markets are obligated to keep away from.
Parag Parikh Flexi Cap Fund is the most important actively-managed fairness scheme in India by property, having turn into the primary lively fund to cross the Rs 1-trillion AUM mark in Might 2025.
On absolute returns, Thakkar mentioned the fund home had been guiding warning for the reason that market exuberance of 2024 and was “mocked” on the time for its rising money ranges. He mentioned the 2 years of time correction had thrown up extra alternatives, and the outlook for returns “seems to be enhancing”.
On relative efficiency, Thakkar mentioned the present interval of underperformance was “not noteworthy” in both length or magnitude, including he had overseen a bigger drawdown in 2007 on a PMS e-book of simply over Rs 100 crore.
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Money ranges, which peaked at about 25%, have come all the way down to 14-15% within the Flexi Cap fund, he mentioned, including that the fund home expects to maneuver towards single-digit money ranges “in a while”. He mentioned holding money by the sideways market had not damage investor returns and had helped “on the margin”.
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Defending the fund’s publicity to HDFC Financial institution, Thakkar mentioned the problems reported on the financial institution didn’t seem to threaten its buyer franchise, and that the outlook on its basket of 4 personal banks was unchanged.
AI Fear Overblown?
Thakkar additionally pushed again on prevailing worries round India’s lack of homegrown AI fashions, capital positive aspects taxes, the Securities Transaction Tax and the rupee, calling these recurring “manic/depressive temper swings” moderately than new developments.
On IT providers, he mentioned fears of AI-led job losses had been “largely overblown on the combination stage”, drawing a parallel with earlier fears round financial institution computerisation, and mentioned the fund home seen the present sell-off within the sector as a chance moderately than a menace.
On its hyperscaler holdings, Thakkar mentioned these firms retain core companies past AI and that any capex overcapacity was more likely to be cyclical moderately than everlasting. The fund has no direct publicity to pure-play AI mannequin firms, he mentioned.
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On IEX, he mentioned market-coupling considerations utilized to a sub-1% portfolio place and that the view that the trade’s market share would fall to a 3rd of the overall market was “simplistic”.
Citing Screener.in information as of 4 August, Thakkar wrote in his Aug. 4 notice the Nifty 100 traded at a PE of 20.8, towards 30.7 for the Nifty Midcap 150 and 34.6 for the Nifty Smallcap 250, and mentioned it was not “a regulation of physics” that smaller firms ship greater returns.
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