Latest news with #ParagParikhFinancialAdvisoryServices
Mint
6 days ago
- Business
- Mint
Parag Parikh Mutual Fund's Rajeev Thakkar turns to debt: What's driving the shift in his personal portfolio?
Rajeev Thakkar, chief investment officer of PPFAS Mutual Fund (Parag Parikh Financial Advisory Services), oversees assets exceeding ₹1 trillion. Thakkar, 52, has built a solid track record over the years, with the Parag Parikh Flexicap Fund becoming the largest fund in its category. Incidentally, this is also the fund that Thakkar uses for his own equity investments. In this interaction with Mint for the 'Guru Portfolio series', Thakkar shares how he manages his personal investment portfolio and why his equity allocation has reduced. How has your personal investing and portfolio evolved over the past five years? Over the past five years, my portfolio has seen a shift, especially in the last one to two years. We've been cautious as a fund house, largely due to elevated valuations in the market, and this cautious approach has reflected in my personal investments as well. Most of my investments over the past 18–24 months have been in hybrid and arbitrage funds. Given my historically high exposure to equities and the fact that now am in my 50s, I have started rebalancing by allocating more to hybrids and arbitrage products. Also Read: What makes Mirae Asset's Swarup Mohanty paranoid about his retirement corpus Why have you taken a more cautious investment approach recently? Given that valuations are elevated, while stocks may deliver slightly better returns than bonds, I have opted for a more balanced approach. Within hybrids, I have allocated to a dynamic asset allocation fund. It also offers a long-term capital gains tax benefit: if the holding period is more than 24 months, capital gains are taxed at a flat 12.5%. What does your asset allocation look like? On debt allocation, it has increased significantly. It was 4-5% around 2020, but has now grown to around 12-13%. If I include the contingency and retirement funds, the fixed income component moves closer to 20%. Overall, there's been a clear rise in allocations toward hybrids and debt instruments. Gold has largely been in the form of jewellery. I haven't had explicit exposure to gold, but on auspicious days, some buying and some gifting happen for ceremonial reasons. The balance 80% is still in equities. Also Read: How Capitalmind's Deepak Shenoy covered shortfall in his son's education goalWhat did your portfolio look like five years ago? Can you give some context? Five years ago, debt was very limited. That period— around March to May 2020—coincided with the covid lows. Valuations were extremely attractive then, and even some of my debt allocation was tactically moved into equities. At that time, the portfolio was heavily tilted towards equities. How heavy was the equity allocation back then? It was quite high—equity allocation could have been around 95%. How has your portfolio performed? It has delivered 14% returns over the past year and 29% annualized returns over a five-year period. What is the current split between large-cap, mid-cap, and small-cap stocks in your equity portfolio? As a fund manager, I have publicly stated that valuations in the small- and mid-cap segments have generally been more elevated compared to large-cap companies. Because of this, the exposure to mid- and small-cap stocks in my equity portfolio, which is through the flexicap fund, is currently in the single digits (4%). The bulk of the fund's portfolio—60%—is invested in large-cap stocks. About 10% is in international stocks, and the balance is in cash. Also Read: Inside Edelweiss MF CEO Radhika Gupta's plan to build over ₹10-crore—and how she's investing to get there How has your international exposure changed? This allocation has been coming down over the years due to the RBI-imposed limits on mutual fund investments abroad. Recently, Parag Parikh Financial Services (PPFAS) set up a subsidiary in the Gift City, which will offer both inbound funds, as well as outbound funds for Indian residents to invest in global stocks. So, hopefully, I will be able to use that and invest some additional money internationally. What has been your approach to insurance? Now that my savings have built up adequately, there's no longer a need to continue term insurance coverage. I am in the last three years of my term cover. Even my health insurance coverage is slightly lower than the typical amount. Given this scenario, I've been building an emergency corpus—particularly for health or unexpected needs in post-retirement period—again through hybrids and arbitrage funds. How much coverage do you want to build for this post-retirement emergency fund? I have reached the basic target to meet my post-retirement lifestlyle needs. But I also need to build a post-retirement contingency fund as my personal medical cover is small in size. I have employer cover, but that would not come in handy in post-retirement period. For this emergency fund, which I am planning for health and other contingencies post-retirement, my goal is to accumulate a corpus of around ₹10 crore. How much is your family involved in investment decisions? My wife is also a finance professional working in the mutual fund industry, but is on the risk-management side. My family is very well aware of what is happening in my investment portfolio, but any investment decisions are largely left to me. My daughter, who is now 20, has also become a keen investor and manages a small portfolio of her own. Since a young age, she has been a regular at our annual general meetings with unitholders. She is an avid reader and also watches investment-related content we put out on YouTube regularly. She has already been to Berkshire Hathaway meetings multiple times, where she has had the opportunity to listen to investing greats such as Warren Buffet and Charlie Munger.
Mint
22-05-2025
- Business
- Mint
5 timeless lessons from Parag Parikh's 'Stocks to Riches' on investor behaviour
First published in October 2005, Parag Parikh's ageless book, 'Stocks to Riches: Insights On Investor Behaviour', still remains a crucial read for both aspirational equity investors and investment professionals alike. Parag Parikh was a well renowned visionary investor in India. He was also a behavioural finance professional, author, and the founder of the Parag Parikh Financial Advisory Services (PPFAS) mutual fund. He was admired in the market circles for his deep and intense insights on human psychology and investing. Not only this he was an ardent follower of Warren Buffett and advocated long term value investing. His legacy lives on through his work and writings and the immense success of PPFAS mutual fund, which continues to uphold his investment philosophy. His book focuses on blending behavioural finance with practical equity market wisdom. It details how human psychology and biases influence investment decisions in the financial world. With decades of experience in well planned value investing, Parikh draws on real-life examples to spread awareness among investors against unproductive and flawed investment behaviour. Here are five core insights from the book that continue to hold immense value even in today's volatile markets: Parikh throws light on loss aversion as a key emotional trap. 'The pain of losing is psychologically about twice as powerful as the pleasure of gaining,' he elaborates. The objective of writing this is to explain why investors often sell winning stocks early and hold on to losing ones. This instinctive fear distorts prudent decision making and rational judgement. Hence, on the part of investors one should consistently review their portfolio objectively. Focus should be on building long term wealth and not on short term market fluctuations and swings. Wealth can only be built by maintaining calmness, long term vision and composure throughout the investment journey. Mental accounting simply refers to treating money differently based on its origin or purpose according to Parikh. He strongly warns against this bias stating that, "People invest bonus money more recklessly than salary savings because they see it as a windfall." Such practices can push investors to poorly thought-out and erratic financial decisions. Therefore, as an investor you should consolidate your funds and base investment decisions on clear financial goals. You should also be careful while spending apparently 'free' looking money such as a lottery win in a responsible manner as per your long term financial goals. Many investors are reluctant to sell underperforming stocks because they have already put money into it and are on the losing end, due to this they are unable to take fair calls in a short period of time. To deal with the same challenge, Parikh urges readers to 'ignore the past and evaluate the present potential.' This difficult to overcome behavioural bias keeps people tied to bad investments. The focus here is to exit loss making positions in stocks and mutual funds after carefully analysing their fundamentals. The book quite intensely discusses the perils of following and going with the crowd. 'Investors are often influenced by what others are doing rather than what they should be doing,' Parikh writes. This can result in the creation of asset bubbles and consequently result in panic selling. The dot com bubble of 2000-01 and the housing bubble of 2007-08 in the US are some of the most recent examples of the creation of asset bubbles. If not side-stepped efficiently, such bubbles can even result in epic wipe out of wealth. Parikh hence wants investors to carry out thorough research and avoid participating in such market bubbles to conserve wealth. Parikh firmly supports long-term value investing. He argues that short-term market movements often reflect emotion, not logic. 'Markets are driven by greed and fear, not by fundamentals.' This simply means that one should ignore temporary noise, market declines or fluctuations and invest in only those businesses that have sustainable value. This is the simplest way to build wealth on a long term basis. The focus at all times is on the power of compounding and investing in those businesses that have the potential to showcase solid results and strong earnings compounding. For more details on the same you can refer to the official link of the book: PPFAS Knowledge Centre – Book Section Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should consult a qualified financial advisor before making any investment decisions.
