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personal finance

Fund Review: Parag Parikh Long Term Equity Fund

A mutual fund scheme which offers geographical diversification could be ideal for long-term conservative investors. This provides some amount of advantage to investors as favourable business situation in geographies other than domestic markets could help a scheme boost its performance.

Among schemes which provide such geographical diversifications with strict adherence to conviction-based stock selection, Parag Parikh Long Term Equity is a placed reasonably well. In May this year, the scheme completed five years of existence.

The scheme’s fund managers, Rajeev Thakkar, Raunak Onkar and Raj Mehta, strictly follow time-tested principles of buying companies based on parameters such as return on capital, entry barriers, and growth prospects. After sifting through these variables, the fund managers select companies which also seem reasonably attractive as far as valuations are concerned. Based on these principles, 27.3 per cent of the scheme’s portfolio is dedicated to international companies such as Alphabet Inc, Suzuki Motor Corp and Facebook Inc. These are largecap companies trading at attractive valuations and high visibility of sustainable earnings. The remaining part of the scheme’s portfolio is geared towards Indian markets.

The fund managers are sitting on 25 per cent cash holdings and arbitrage investments, which indicate they are willing to wait for valuations to turn reasonably attractive. This scheme works for ultra conservative investors who are willing to take a very long-term call on equities. In the past three- and five-year periods, the scheme has given 13 per cent and 20 per cent returns, while its benchmark index, Nifty 500 TRI, has given 12 per cent and 19 per cent during the same period, respectively.

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Parag Parikh Long Term Equity Fund


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