PPFAS Mutual Fund holds its 11th annual unitholders meeting

PPFAS Mutual Fund organised its 11th annual unitholders meeting today. Helmed by Neil Parag Parikh, Chairman and CEO, Rajeev Thakkar, CIO (Chief Investment Officer) and Director, along with other prominent members of the investment team, the meeting addressed topics such as the flexi-cap fund's cash positions, fall in large-cap indices and the fund house's investments in emerging sectors.

Below is a summary.

On the flexi-cap fund's high cash holdings

A key concern among investors was the Parag Parikh Flexi Cap Fund's current cash position, which accounts for nearly 20 per cent of its portfolio. The fund is India's largest actively managed equity fund, with an asset base of over Rs 84,600 crore.

Speaking on the flexi-cap fund's cash holdings, Rajeev Thakkar stated that now isn't the time to be fully invested as "valuations are stretched" and "opportunites are hard to come by". In such a scenario, he said, "...you would expect investment managers to slow down a bit and be defensive on their investment style and have a certain amount of cash build up in the portfolio."

Thakkar also emphasised why "patience is key" when finding the right investing opportunities, "Across the board - whether in the public or private sector—promoters are increasingly finding it attractive to sell down their stakes in India. It's not that opportunities won't arise again; patience is key, and we believe that the supply will continue to present buying opportunities".

Why large-cap indices fell harder than the rest of the market

Another key topic of discussion was the sharp decline of the Nifty compared to the mid- and small-cap indices. Thakkar explained that since foreign investors tend to have higher stakes in large-cap stocks when they sell them, these companies face steeper declines. By contrast, mid and small caps have greater domestic inflows, with individual investors typically focusing on these segments, due to which they have been relatively resilient.

Investing across emerging sectors

Thakkar explained that while PPFAS is participating in emerging themes like EV (electric vehicles), AI (artificial intelligence) and solar energy either directly or indirectly, the flexi-cap fund's approach is more measured. He stated, "Identifying the theme is not the beginning and the end, as along with the theme they need some other aspects to fall in place before they actually invest in the companies."

For instance, in AI, the fund has been invested in companies like Alphabet, Meta, Microsoft and Amazon, which benefit from cloud computing advancements. However, Thakkar acknowledged that they had missed an opportunity with Nvidia.

On the broader US market, Thakkar noted that despite the recent surge, tech companies remain attractively valued.

Message for new investors

Thakkar left a message for new investors, saying they should tread cautiously and be well-versed with financial history and market cycles, as not doing so may lead to the market teaching them "an expensive lesson".

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Also read: 5 lessons from Rajeev Thakkar's recent letter to unitholders