Rarely is there a fund that is suited for all types of markets and for those with even medium risk appetites.
Parag Parikh Flexi Cap fund is one such scheme that is suitable for a wide swathe of investors looking to create wealth over the long term of at least 10 years.
As a consistent performer that beats its benchmark as well as most peers in the category, the fund is suitable for being in the core part of an investor’s portfolio.
The scheme has a strong value focus, diversifies its portfolio via investments in US stocks and moderates risks via high cash and debt calls.
In the current market, when indices have corrected in double digits and many stocks across segments have fallen 20-40 per cent, there may be pockets of attractive opportunities emerging, making value investing a desirable proposition.
Parag Parikh Flexi Cap is among the best placed in the category to benefit from an upturn in the markets.
The scheme is its twelfth year of operations and has delivered across the medium and long terms.
An SIP can be started in the fund towards achieving long-term financial goals.
Top-notch performance
Over the past 1-year, 3-year, 5-year and 10-year periods, the fund has delivered compounded annual returns of 19 per cent, 18.6 per cent, 24.8 per cent and 18.4 per cent, respectively on a point-to-point basis. This performance places it among the top few funds in the category. The scheme outperformed the Nifty 500 TRI by 4-6 percentage points over the medium to long term.
When five-year rolling returns over May 2013-February 2025 are considered, Parag Parikh Flexi Cap has delivered mean returns of 18.6 per cent.
Also, in the period aforementioned, on a 5-year rolling basis, the scheme has beaten the Nifty 500 TRI all the time (100 per cent). It has delivered more than 15 per cent nearly 78 per cent of the time over May 2013-February 2025 and more than 18 per cent nearly 58 per cent of the time.
The fund’s SIP returns (XIRR) over the past 10 years are top-notch at 21.1 per cent. An SIP in the Nifty 500 TRI would have returned 15.7 per cent over this period.
All return figures pertain to the direct plan of Parag Parikh India Flexi Cap.
The fund has an upside capture ratio of nearly 84.7, indicating that its NAV rises less than the benchmark during rallies. But more importantly, it has a downside capture ratio of just 51.9, indicating that the scheme’s NAV falls a lot less than the Nifty 500 TRI during corrections. This inference is based on data from February 2022-February 2025. A score of 100 indicates that a fund performs in line with its benchmark.
Heady portfolio mix
Parag Parikh Flexi Cap has a portfolio that is almost entirely in favour of large-cap stocks.
With valuations in the reasonably comfortable zone in the large-cap space, especially after the recent correction, the tilt may help the fund deliver steady returns over the medium to long term.
As mentioned earlier, the fund also invests in overseas stocks; currently, the portfolio has US picks to the tune of 12.8 per cent. Meta, Alphabet, Microsoft and Amazon are the four firms held.
The Indian part of the portfolio is focused on value style of investing and often the ‘buy and hold’ is the strategy of the fund.
It has rarely taken a wrong call among its top picks. Even though banks and software firms aren’t doing well at the bourses, the fund has been able to identify select outperformers without compromising on the value approach. So, an ICICI Bank or a HCL Technologies figures in prominence, as does a Bajaj Holdings. The fund has also remained steadfast with HDFC Bank, Power Grid and Coal India.
Indian stocks in recent portfolios account for a little over 65 per cent of Parag Parikh Flexi Cap fund.
The fund has always held 10 per cent or higher positions in cash and debt instruments. That figure has risen to 20 per cent levels over the past several months as choppy markets necessitated taking a cautious approach.
Despite being the largest equity fund in India, Parag Parikh Flexi Cap maintains a rather slim portfolio, with only around 30 stocks figuring in its holdings across market cycles. However, concentration in holdings reduces after the top five stocks.
Overall, the fund represents an excellent blend of domestic and overseas stocks, together with a risk-conscious approach.
Sticking to the fund via the SIP route for 7-10 years is likely to lead to healthy performance outcomes.
Why invest
Relentless focus on value
Risk moderation via cash and debt calls
Excellent blend of domestic and overseas stocks
