My PPFAS Flexi Cap has stalled. Should I exit?

I hold a large amount in the PPFAS Flexi Cap Fund. It has stagnated since late 2024. You rated it five stars, but its size means it cannot move much. Harvesting Rs 1.25 lakh a year is too slow. Exiting fully means a large tax bill. What should I do? - H Manjunatha Prabhu

Ashutosh Gupta: First, we are not advising an exit from this fund. It is not on our exit list.

Dhirendra Kumar: It is a promising fund, and it has done exceptionally well. It has valuation discipline, and that is why it has done well.

The fund has turned big. But it was already big when it did well, and that came from its strategic allocation to large-cap stocks.

The fund is constrained. It does not participate in mid caps and small caps in a sizeable way. Even when it does, the impact is not meaningful. So its room to manoeuvre is limited.

But it has proven its credentials over the last 10 to 15 years. Every good fund, the kind that proves itself over the long term, has had a lean period. In fact, a good fund needs these lean phases. That is when its valuation discipline and its focus show. These funds are good because they were selective, not because they chased every idea. They did not do the many things that others did, funds that later fell by the wayside.

That is the value you pay Value Research Fund Advisor for. We tell you to stay with a good fund through a phase when it will not do very well, and to keep investing your long-term money in it.

I heard an interview with a professor from an IIT. He advises the public and shares his views objectively over many years. He said he has put nearly 65 per cent of his money in one fund, Parag Parikh. I do not quite disagree with him. It gives you long-term diversification and valuation discipline.

Stay with it. Give it time. Your reward will come from one thing: investing through the lean period of a good fund, one that is not doing well right now. If you invest only in funds that have already done well, you will not make money.