Will this fund's stellar performance come to an end?

In the competitive world of investments, this fund is the epitome of wealth creation. Unsurprisingly, the fund has become a magnet for investors, evidenced by its exponential AUM growth, increasing eightfold in just the last three years! Today, with an asset size of over Rs 52,000 crore, Parag Parikh Flexi Cap Fund is the largest in its category and ranks second among all actively managed equity funds. It is not just successful and popular but also one of our long-standing recommendations. However, with great size comes greater scrutiny. As the fund continues to grow, we receive investors' inquiries about its style's sustainability and performance. So here we address five concerns about Parag Parikh Flexi Cap Fund's current portfolio positioning in light of its growing size. Rising number of stocks : By running a 27-32 stocks portfolio, the fund has followed a focused investing style since inception. However, the number of holdings has risen to 48 over the last year. Notably, the change was triggered when its total assets touched nearly Rs 30,000 crore. While this is a significant shift, the portfolio concentration largely remains the same. Its top 15 holdings still occupy 60 per cent of the net assets, implying it has a long tail. So, in spirit, the fund continues to run as it used to. High cash position : Currently, the fund holds 15 per cent in cash and debt. During 2020 and 2021, this exposure was merely 5 per cent on average. Does that mean it is finding difficulty in deploying assets? No. Historically, the fund's cash allocation has gone beyond 25-30 per cent. That, too, when its AUM was just under Rs 1,500 crore. Why? Owing to its value-oriented style, the fund does not shy away from sitting on cash when valuations look out of favour. It only deploys this money when market tides turn, or attractive stock opportunities emerge. Falling mid-cap and small-cap exposure : Since the fund follows a bottom-up investing style, it doesn't have a pre-decided market-cap strategy. That said, the exposure to mid-cap and small-cap st