Parikh Parikh Flexi Cap Fund (PPFCF) is a hugely popular flexi cap mutual fund scheme giving investors exposure to foreign equities. The PPFCF is an open-ended equity-oriented programme that makes investments in both domestic and international large-medium and small-cap stocks. This makes PPFCF a flexi-cap international mutual fund scheme giving Indian investors an opportunity to diversify abroad. The exposure to overseas stocks distinguishes the Parag Parikh Flexi Cap Fund from other plans in the same category.
The latest factsheet for March 2023 shows that the fund managers have added Infosys to the portfolio while keeping the foreign exposure the same as the previous month. The exposure to Infosys Limited stands at 0.73% as of March 31.
PPFCF has the mandate to invest a maximum of 35% in foreign equities and a minimum of 65% in Indian stocks. The allocation levels become important from a tax point of view. As per the new debt tax rules which also apply to international funds, the indexation benefit is no longer available to debt schemes and long-term gains get taxed as per the investor’s tax slab. This new tax rule for debt funds, which became effective on April 1, 223, applies if the exposure to Indian equities is less than 35%.
Therefore, PPFCF is not impacted negatively by this new debt fund tax rule. The AUM as of March 31, 2023, stands at around Rs 31,290 crores. Nearly 70% of the AUM is in Indian equities ( including the arbitrage position) while almost 17% is in foreign equities. So, PPFCF is taxed as any other equity fund holding more than 65% in Indian equities.
Within the exposure to Indian equities, 15.01% allocation is in the Finance sector, 13.35% is in Internet & Technology and 11.45% is in banks.
Within the Indian equity allocation, the top 5 companies with over 5% allocation include Housing Development Finance Corporation 8.07%, ITC 7.44%, Bajaj Holdings & Investment 6.83%, ICICI Bank 6.09% and Axis Bank 5.36%.
Microsoft Corporation 5.34%, Alphabet Inc. (Google Class A) 4.78%, Amazon, 3.44%, Meta Platforms Inc. (Formerly Facebook Inc.) 3.23%, and Suzuki Motor Corp. (0.54%) are among the foreign investments held by the Parag Parikh Flexi Cap Fund as of March 31. Currency risk needs to be considered while investing internationally and for the Parag Parikh Flexi Cap Fund, the currency hedge covers about 70.17% of the exposure to foreign equities.
By March end, the fund had about 12.46% in cash holdings (excluding CDs and arbitrage positions) as against 13.02% held at February end.
The Parag Parikh Flexi Cap Fund is a diversified equity scheme, the investment universe of which is not constrained by sector, market capitalization or geography. The fund suits investors with a long-term horizon. As of March 31, 2023, the 1-year return of Parag Parikh Flexi Cap Fund has been 0.03% as against a return of -1.22% of Nifty 500 and 0.59% of the Nifty 50. Since its inception (May 24, 2013), the CAGR of PPFCF is 17.61% compared to 12.80% of Nifty 50.