--- Advertisement ---
New FREE Guide on Big Opportunity in Defence

Tanushree Banerjee, the co-head of research at Equitymaster, just released her latest guide:

The Explosive Rs.4 Lakh Crore Opportunity: How to Tap into India's Surging Defence Sector for Potentially Huge Profits

And she has agreed to make it available for free for a limited time.

If you've not claimed your free copy, then do so now. It might not remain free for long. One more thing...

Tanushree has also discovered one stock from defence sector... which she believes has the potential to multiply invested money 10-times in the long run.

She will reveal more details about this stock at her upcoming online special event.

Click Here to Download the Guide & Block Your Seat Now. It's Free.

Parag Parikh Long Term Equity Fund: Offering Optimal Diversification

Oct 22, 2020

Diversification across geographical boundaries can help mitigate portfolio risk. Exposure to foreign equities can potentially give you higher returns when other economies grow at a faster pace than the domestic economy.

It also enables you to exploit a particular opportunity only available in offshore markets. Moreover, it can act as a hedge against rising foreign expenses such as foreign education and travel.

However, do note that just like every investment, investment in offshore equities carries certain risk. Changes in government regulations and policies relating to companies, industries, investments; geopolitical events, economic growth and so on impacts the attractiveness of investment. Therefore, to take exposure to foreign equities prefer worthy mutual fund that focuses on safety and stability.

Parag Parikh Long Term Equity Fund (PPLTEF) is one such multi-cap fund with a hint of value-style approach focusing on long term capital appreciation from undervalued stocks available at decent margin of safety. It offers diversification to offshore stocks as well.

Graph 1: Growth of Rs 10,000 if invested in Parag Parikh Long Term Equity Fund 5 years ago

Classified under multi-cap funds category, Parag Parikh Long Term Equity Fund (PPLTEF) is mandated to follow a multi-cap strategy. However, the fund’s orientation remains more towards value style of investing, whereby it aims to invest in quality stocks available at reasonable or attractive valuations. What differentiates PPLTEF from the rest is its ability of not limiting the portfolio to only domestic equities. The fund invests nearly one-third of its corpus in stocks of offshore companies. An investment of Rs 10,000 in PPLTEF five years ago would have appreciated to Rs 19,653, a CAGR of 14.5%. A similar investment in the benchmark Nifty 500 – TRI would have grown to Rs 15,008, a CAGR of about 8.5%. Despite following a cautious investment strategy, PPLTEF has generated substantial alpha over its benchmark.

Graph 1
Data as on October 20, 2020
(Source: ACE MF)

Table: Parag Parikh Long Term Equity Fund's performance vis-à-vis category peers

Scheme Name Corpus (Cr.) 1 Year (%) 2 Year (%) 3 Year (%) 5 Year (%) 7 Year (%) Std Dev Sharpe
Parag Parikh Long Term Equity Fund 4,798 22.99 17.80 13.15 14.45 17.75 18.50 0.150
Quant Active Fund 66 21.47 15.28 11.12 12.48 19.40 23.80 0.101
UTI Equity Fund 11,386 13.80 13.07 9.64 9.98 14.59 20.65 0.082
Canara Rob Equity Diver Fund 2,413 11.30 14.00 9.01 10.36 13.71 19.08 0.075
Union Multi Cap Fund 374 8.74 11.22 5.90 7.76 10.93 20.17 0.033
DSP Equity Fund 3,668 1.95 12.66 5.56 9.74 14.96 21.47 0.030
Kotak Standard Multicap Fund 29,551 2.43 9.40 5.07 10.25 16.19 21.16 0.022
LIC MF Multi Cap Fund 293 0.00 8.25 4.72 5.06 9.29 20.24 0.018
SBI Magnum Multicap Fund 8,870 -2.29 7.31 2.52 9.00 15.83 20.79 -0.010
ICICI Pru Multicap Fund 5,232 -4.90 0.71 1.97 6.54 13.01 21.92 -0.017
NIFTY 500 - TRI 3.91 7.42 4.14 8.45 12.15 21.92 0.015
Returns are point to point and in %, calculated using Direct Plan - Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on October 20, 2020
(Source: ACE MF)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

Amidst sharp volatility seen over the last two years, PPLTEF has ranked among the list of top quartile performers and has shown a stark outperformance over its benchmark and most of its multi-cap peers. In fact, PPLTEF has generated substantial alpha over its benchmark Nifty 500 - TRI as well as category peers across time periods.

With a Standard Deviation of 18.50, the fund's volatility has been lowest in the category and is far lower than the benchmark (21.92) and the category average of 21.71. Moreover, the Sharpe Ratio of the fund at 0.15 is one of the highest in the category and much ahead of its benchmark. PPLTEF clearly stands out with potential to deliver superior risk-adjusted returns for its investors.

Investment strategy of Parag Parikh Long Term Equity Fund

PPLTEF seeks to generate long-term capital appreciation from an actively managed portfolio primarily of equity and equity related securities. Its investment universe is not restricted to any specific sector, market capitalisation or geography. Other than domestic equities, the fund invests up to 35% of its assets in foreign securities. However, an average of 65% of its corpus needs to be invested in listed Indian equities, in order to benefit from the favourable Capital Gains tax treatment accorded to equity schemes.

While picking stocks for the portfolio, the fund managers follow an active investment strategy primarily based on fundamental research driven bottom up stock selection approach. They focus on key parameters like growth opportunities, sustainable competitive advantage, industry structure, margins, quality of the management, and protection of minority shareholders. The fund managers give high importance to intrinsic value of the business and endeavour to purchase stocks that represent a discount to this value in an effort to create value for investors, maintain margin of safety, preserve capital and generate superior growth.

Graph 2: Top portfolio holdings in Parag Parikh Long Term Equity Fund

Graph 2 Graph 2
Holding in (%) as on September 30, 2020
(Source: ACE MF)

PPLTEF makes its investments with a long term perspective and follows a buy and hold investment strategy, to realize the full potential of the stocks it has bought in the portfolio. Among domestic equities the fund holds top exposure in Persistent Systems (8.3%), ITC (7%), Mphasis (5.6%), Hero MotoCorp (5.3%), and Bajaj Holdings & Investment (4.5%). Amazon is the fund's largest foreign equity exposure (7.4%), followed by Alphabet Inc. (6.9%), Facebook (5%), and Microsoft (4.7%).

Among domestic equities, names like Persistent Systems, Balkrishna Industries, Mphasis, Ipca Laboratories, Dr Reddy's Laboratories, Hero MotoCorp, Cadilla Healthcare, etc. have boost the fund's performance over the last one year; whereas financial services stocks like Bajaj Holding & Investment, Axis Bank, HDFC Bank, ICICI Bank, etc. have turned out to be the laggards in the fund's portfolio.

As on September 30, 2020, about 27.7% of PPLTEF's portfolio was exposed to offshore equities. Banking and Finance together account for another 19.3% of its assets, followed by Infotech, Consumption, Pharma, Auto, Power, Auto Ancillaries, and Leisure.


PPLTEF has shown a drastic turnaround in terms of performance in the recent corrective phase and has executed confidence among its investors, even though the fund is not among the best in the bull periods. PPLTEF's focus across market caps and geographies enables it to remain flexible enough to deal with the changing market sentiments. Its bet on fundamentally sound undervalued stocks has benefited the fund so far. With experienced fund managers at the helm, PPLTEF seems to be in capable hands.

Although there may be bouts of underperformances and the returns may not come in easily, PPLTEF is well equipped to reward investors over complete market cycle. PPLTEF is suitable for pure long term investors with high risk appetite looking out for a fund that can offer diversification along with decent margin of safety and stability.


Warm Regards,
Divya Grover
Research Analyst


Editor's note: The last few years have not been among the best for equity mutual funds. While most funds have underperformed or are struggling to match the returns of the benchmark, there are few funds that have the potential to constantly generate alpha for its investors. And we have identified five such high alpha generating funds, in our latest report 'The Alpha Funds Report 2020'. Do not miss our latest research finding. Get your access to this exclusive report, right here!

Note:   This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.


Join Now: PersonalFN is now on Telegram. Join FREE Today to get ‘Daily Wealth Letter’ and Exclusive Updates on Mutual Funds



About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

Terms and condition on which its offer research report

For the terms and condition for research report click here.

Details of associates

  1. Money Simplified Services Private Limited;

  2. PersonalFN Insurance Services India Private Limited;

  3. Equitymaster Agora Research Private Limited;

  4. Common Sense Living Private Limited;

  5. Quantum Advisors Private Limited;

  6. Quantum Asset Management Company Private Limited;

  7. HelpYourNGO.com India Private Limited;

  8. HelpYourNGO Foundation;

  9. Natural Streets for Performing Arts Foundation;

  10. Primary Real Estate Advisors Private Limited;

  11. HYNGO India Private Limited;

  12. Suresh Lulla;

  13. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest
  1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

  2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;

  3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

  4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

Disclosure with regard to receipt of Compensation
  1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

  2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

  3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

  4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

  5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

General disclosure
  1. The Research Analyst has not served as an officer, director or employee of the subject Company.

  2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

Click here to read PersonalFN's Mutual Fund Rating Methodology

Subject Company means Mutual Fund Schemes

Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. & Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021

Email:info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013

Add Comments