Parag Parikh – JST Investments

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In recent times a fairly lesser talked about AMC – Parag Parikh (PPFAS) has done phenomenally well with its Long term equity fund.

What makes the fund tick amongst investors?

Let us dig deeper into its portfolio picks and the mindset of the fund manager

  1. A Unique fund with International Equity exposure:-

It is a well-known fact that most of the innovative companies reside in the United States. Companies such as Alphabet(parent of Google), Amazon, and Microsoft are at the forefront of the technological change the world is seeing. Such technological advancements include but are not limited to Artificial intelligence, Driverless Cars, Cloud computing, IoT, 5G, Quantum computing, and many others.

The valuations of these companies continue to be very expensive in the near term however from the long-term horizon given the long runway for growth in these technologies these companies will continue to do well.

Hence the fund manager has chosen some excellent Foreign companies to invest in!

2. The Indian Exposure:-

It is extremely difficult to play value in a mutual fund. However, the fund manager has done well to buy quality at a reasonable price.

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The recent addition of ITC is a bold call as the stock has not performed over the last 5 years. However, it is a strong company with reasonable valuations.

The fund has also continued to hold Bajaj holdings as a play on the complete Bajaj group. The holding company has deep value inside it.

Rather than having exposure to large-cap IT name the fund manager has taken a call to go for Midcap IT stocks that have a good underlying business model and strong balance sheet.

Even on the Financial Services space, the fund manager has stuck to quality large banks that should do fairly well given the turbulent times in the financial space that will see ballooning NPAs and deteriorating balance sheets.

Some companies like Mahindra Holidays and ICRA have underperformed in recent times. However, the fund manager has not averaged and they continue to be a small part of the portfolio now.

Overall the fund manager has tried to stick to buy companies at reasonable valuations. While we appreciate the fact that the fund manager has stuck to his belief of buying value it remains to be seen as to what happens as the fund grows big in size.

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The discussed PPFAS fund and the underlying stocks discussed are not recommendations.

Suggest Reading –

Annual report takeaways here.

Disclaimer

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JST Investments
JST Investments is a Mumbai-based investment firm that believes in long-term wealth creation. It's a brainchild of Aditya Kondawar, Aditya Shah, and Anish Moonka.
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