Parag Parikh Flexi cap fund was launched by PPFAS mutual fund house in May 2013. However, the fund house had halted fresh fund inflows into this Flexi cap fund from February 2, 2022. Thus, any new lump sum or SIP investments were stopped along with registrations for STPs into the scheme. This fund was not the only one to stop fresh inflows, as other AMCs with mutual fund schemes with exposure to foreign securities had to take the same step. This was primarily due to the advisory from the Securities and Exchange Board of India (SEBI) to stop fresh investments in foreign securities as the industry-wide limit of $7 billion was breached.
The good news for investors is that Parag Parikh Flexi Cap fund will again open its investment inflow starting from March 15 this year. For investors who want to explore this fund opportunity, here is everything they need to know.
About Parag Parikh Flexi Cap Fund
This flexicap fund was formerly known as Parag Parikh Long Term Equity Fund. It is an open-ended diversified equity fund that invests in large-cap, mid-cap, and small-cap stocks apart from top-rated international stocks. The scheme does not have any restrictions or self-imposed limitations when it comes to investments across sectors, geographies, market capitalisations, etc.
What has changed?
Due to the SEBI mandate, the fund will now divert all funds to Indian equities instead of investing in foreign securities. Since the fund will start accepting inflows from March 15th, all fresh investments will be invested in India. Over time, the AMC management expects that the weight-age of foreign stocks in this scheme will come down. If in the near future, overseas investment limits are increased by SEBI, the scheme will rebalance its portfolio.
What should investors expect?
However, in the long run, an average of 65% of the scheme’s corpus will be invested in listed Indian equities. This will mostly benefit investors due to favourable capital gains tax treatment applicable to such schemes.
The scheme’s domestic investments will be handled by Mr.Rajeev Thakkar. Mr.Raunak Onkar is responsible for the fund’s foreign investments and Mr.Raj Mehta looks after the fixed-income investments.
Should you invest in Parag Parikh Flexi Cap fund?
This scheme may be suited for investors who:
- Prefer to stay invested for long-term, around five years or more.
- Have higher risk-taking ability.
- Are keen to learn about the businesses of companies that the fund invests in.
- Open to an investment approach that involves value stocks.
- Can rely on the fund managers’ investment decisions based on financial statements of companies along with emotions relayed by the companies.
- Willing to invest through the ‘Growth Option” as the fund believes in the power of compounding.
Since Parag Parikh Flexi Cap Fund is an open-ended scheme, investors can enter and exit it at any time. However, the fund’s ability to invest in bear market conditions is highly dependent on investor’s risk-acceptance. As with any other equity mutual fund scheme, this too does not guarantee any returns, however, it can help investors in getting closer to their long-term financial goals.
Which type of investors should avoid this investment
This investment is not suitable for:
- Investors who prefer short-term to medium-term returns over long-term.
- Those who do not have a higher risk appetite and are especially fearful of stock market volatility.
- Investors who are looking for periodic income through mutual fund dividends can avoid investing in this fund.
Since the fund stopped taking further inflow of investments in February, many investors were confused about their investments, especially those who invested in this fund through SIPs. However, investors can be assured of their investment since the fund has restarted inflow, albeit in domestic stocks. Investors who prefer investing a higher percentage in foreign stocks will have to wait until the fund can restart foreign investments as per SEBI guidelines. Alternatively, they can make use of the individual foreign investment limits available through the Liberalised Remittance Scheme of the RBI.
The expense ratio of Parag Parikh Flexi Cap fund is 0.80%.
To invest in Parag Parikh Flexi Cap Fund, you can download the Fisdom app on your smartphone. This app allows a seamless investment process that can be entirely done online, apart from offering a range of other mutual fund products.
No, you may not lose your capital investment in this scheme since it has only diverted the funds to domestic stocks instead of investing in international stocks as per SEBI guidelines.
Flexi-cap funds invest in stocks of companies across different market capitalisations, including large-cap, mid-cap, and small-cap. These funds allow investors to diversify their investment portfolio by gaining exposure to different market capitalisations. This way, they try to mitigate risks and lower the impact of market volatility. These are also called diversified equity funds or multi-cap funds.
Flexi cap funds are generally equity-focused and do not invest heavily in debt except for portfolio risk balancing needs. These funds aim to distribute the investment across different market capitalizations to explore growth opportunities, bring stability, and mitigate risks.