Review of Parag Parikh Flexi Cap Fund: Is It Worth Investing?
The Parag Parikh Flexi Cap Fund has been a standout performer in India's equity market, delivering impressive returns to investors since its launch in 2013.
Over the long term, the fund has shown consistent outperformance, with annualized returns of around 19.9% since its inception[1][3][5]. This performance has placed it well above its category average and benchmark NIFTY 500 TRI over similar periods.
The fund's success can be attributed to its investment strategy, which focuses on quality stocks and value investing. It maintains a diversified portfolio, with key sectors and stocks such as HDFC Bank, Bajaj Holdings, Power Grid, Coal India, and ICICI Bank[3]. Changes to the portfolio are made cautiously and infrequently, indicating a long-term buy-and-hold approach[2].
One of the key factors contributing to the fund's outperformance has been its exposure to overseas stocks, particularly FAANG. This focus has helped the fund deliver outperformance against peers and benchmarks in 2020 and 2021[4]. However, it's important to note that this strategy has also led to some volatility in the short term.
In recent 1-year periods, the fund experienced some volatility and lower returns compared to category averages[3][5]. This was partly due to market corrections in sectors it was heavily invested in and global economic uncertainties. However, the fund has shown recovery in returns as markets stabilized and the invested companies performed fundamentally well[1][5].
Despite intermittent underperformance, the fund's AUM (Assets Under Management) has grown to over Rs 1.1 lakh crore by mid-2025, reflecting investor confidence[3].
Key points to consider:
- Long-term returns: The fund has delivered returns significantly higher than its benchmark and category average over 5-10 years[1][3][5].
- Investment style: The fund follows a quality, value-driven flexi-cap strategy with diversified sector exposure and low portfolio churn[2][3].
- Peer comparison: The fund consistently ranks in the top decile or better within the flexi-cap category over multiple timeframes[5].
- Recovery from short-term dips: Market corrections have impacted short-term returns, but the fund has shown recovery driven by fundamental stock performance and stable portfolio[1][5].
- Expenses and loads: The fund has a moderate expense ratio (~0.63% for the direct plan) and exit loads, which incentivize longer holding periods[1][5].
In summary, the Parag Parikh Flexi Cap Fund is recognised for its sustained outperformance, thanks to its well-articulated value investing strategy and prudent risk management. Despite some short-term underperformance, the fund has shown the ability to rebound and deliver strong returns to investors in the long term.
Notable holdings in the fund include Amazon, which was added to the portfolio in 2019, and FAANG stocks (excluding Netflix), Alphabet (erstwhile Google), and Facebook[4].
If you had invested Rs 100 in NIFTY 500 and NIFTY 50 TRI, it would have grown to Rs 314 and Rs 290, respectively[6]. In contrast, the same investment in the Parag Parikh Flexi Cap Fund would have grown to Rs 442[3].
It's worth mentioning that the PPFAS Flexi Cap fund, managed by the same team, has never delivered a negative return if an investor remained in the fund for seven years[7].
[1] Moneycontrol.com: Parag Parikh Flexi Cap Fund: A closer look at long-term performance [2] Moneycontrol.com: Parag Parikh Flexi Cap Fund: Portfolio changes in the last few years [3] ValueResearchOnline.com: Parag Parikh Flexi Cap Fund: Performance and Portfolio Analysis [4] Moneycontrol.com: Parag Parikh Flexi Cap Fund: Why it outperformed in 2020 and 2021 [5] ValueResearchOnline.com: Parag Parikh Flexi Cap Fund: Rankings and Ratings [6] Moneycontrol.com: NIFTY 50 and NIFTY 500: Performance since inception [7] Economic Times: PPFAS Flexi Cap Fund: A consistent performer in the long run
- For those interested in long-term personal-finance and investing, a lumpsum calculator may help estimate the potential growth of investments in the Parag Parikh Flexi Cap Fund compared to mutual funds like NIFTY 500 or NIFTY 50 TRI.
- Investors should consider using a SIP calculator to understand the returns they could earn from investing in the Parag Parikh Flexi Cap Fund over a specified period, given its proven track record of growth.
- To better understand the role of education-and-self-development in finance, one can look at the fund's performance over the past decade, leveraging CAGR calculators to calculate its average annual growth rate.
- As technology plays a growing role in the financial sector, investors might find it useful to learn about the key holdings of the Parag Parikh Flexi Cap Fund, such as Amazon and leading technology companies like FAANG (excluding Netflix), Alphabet (erstwhile Google), and Facebook. This information can help inform investment decisions in other technology-related mutual funds.
