Where is this $13.2 billion fund manager investing today?

Rajeev Thakkar is not your run-of-the-mill investor. As the Chief Investment Officer of PPFAS Mutual Fund, he has built a reputation around clarity, conviction and, above all, first-principles thinking.

If you watch his interviews or read his letters, you’ll notice how refreshingly rational his approach is in a market often driven by noise. He avoids fads, stays under-invested in overheated sectors and sticks to a global, value-oriented strategy.

If his investment strategy seems very uncle-like to you, get this: Under his stewardship, the Parag Parikh Flexi Cap Fund has grown into the largest in its category. In fact, the flexi-cap fund’s performance vindicates his philosophy: The fund has delivered an annualised return of 27.3 per cent, significantly higher than the benchmark Nifty 500’s 22.42 per cent in the last five years.

Whether he’s writing to unitholders – you must have guessed by now that he is a major Warren Buffet admirer – or allocating his own capital, Thakkar’s success lies in his time-tested principles:

• Simplicity over complexity
• Discipline over emotion
• Time in the market over timing the market.

So when we get to know where he is investing, thanks to Livemint, it’s worth paying attention.

Thakkar: Most of my investments over the past 18-24 months have been in hybrid and arbitrage funds

Thakkar’s debt allocation has increased significantly, from 4-5 per cent in 2020 to 12-13 per cent today.

Why? “Given I’m in my 50s, I started rebalancing by allocating more to hybrids (one dynamic asset allocation fund) and arbitrage products,” says Thakkar.

Takeaway? Rajeev Thakkar's shift to hybrid and arbitrage funds isn’t about chasing returns. It’s about managing risk as life priorities change.

As you approach your 50s or get closer to retirement, it’s wise to rebalance away from pure equity. Why? Because equities, while powerful in the long run, can be volatile in the short term. A bad market year before retirement can undo decades of gains.

Hence, because hybrid funds have debt, they can act as smoother shock absorbers. This approach protects your wealth while still letting it grow sensibly.

Thakkar: Exposure to small and mid caps are in single digits (4 per cent). Exposure to large caps? 60 per cent.

Why? “Valuations in the small- and mid-cap segments have generally been more elevated compared to large-cap companies,” says Thakkar. That means a higher risk for potentially lower future returns.

Takeaway: Near retirement, your portfolio needs to be less adventurous and more anchored. Holding a large exposure to small- and mid-cap funds might give you sleepless nights, as they tend to be more volatile and more sensitive to market swings, especially during corrections.

So, shift to safer, steadier ground with large caps and debt, so your post-retirement years are peaceful.

Thakkar: 10 per cent allocation in international equities.

Why? Investing globally isn’t about chasing the next Apple or Tesla; it’s about building a resilient portfolio. When your entire investment is tied to one economy, one currency or one policy regime, your risk increases.

Additionally, India lacks listed players in key global themes like semiconductors, AI infrastructure and other such cutting-edge sectors. However, global indices like the US’s S&P 500 give you exposure to innovation-led companies such as NVIDIA, Amazon, Microsoft and Google (Alphabet).

And here’s a kicker: The rupee has depreciated by an average 2.7 per cent annually against the US dollar over the decades. That means you gain not just from equity returns, but also from currency tailwinds.

Takeaway? At Value Research, we have always suggested investing globally, especially in the US equities. Maybe, you can direct 10 per cent of your portfolio there through these options.

Thakkar: I am in the last three years of my term plan (life insurance).

Why? You need life insurance only for as long as someone relies on your income.

So, if you’re 35 today and plan to retire by 60 or 65, a term plan that covers the next 25 to 30 years is just right.

By then, your kids will likely be financially independent, any home loan will be paid off, and your spouse will be protected by your retirement corpus.

In short, the reason for life insurance will no longer exist.

Takeaway? The first lesson is to get a term plan when it comes to buying life insurance. Term insurance is the purest, cheapest and best form of life insurance. Stick to these for your life coverage.

The second lesson is that if you are salaried, align your term plan with your expected retirement, usually age 60 or 65. If you're self-employed or have late financial responsibilities (say, parents or a younger child), you could extend it until 70, but only if truly necessary.

Final thoughts

Thakkar’s personal portfolio offers timeless lessons:

• Rebalance from equity to hybrid funds as retirement nears
• Invest globally for resilience and diversification
• Keep insurance simple, and only for as long as necessary

In a world chasing alpha, Thakkar shows that peace of mind might just be the best investment of all. And that seems to be working very well for him, as his personal portfolio has grown 29 per cent annually in the last five years.

Likewise, if you want to build a solid, long-term portfolio, we suggest you head over to Value Research Fund Advisor. There, you'll not only find our recommended list of funds, but you can also learn which funds will suit you best based on your needs.

Also read: Buffett's 1989 letter on avoiding costly myths and mistakes