Renowned Fund Managers and Value Investing in Indian Mutual Funds
Among the numerous mutual funds in India, one name that stands out for its commitment to value investing is Parag Parikh Fund Advisors (PPFAS). This article explores the legacy of value investing in Indian mutual funds, with a focus on PPFAS and its founder, Parag Parikh.
The Legacy of Parag Parikh
Parag Parikh, the visionary behind PPFAS, was a respected figure in the investing community. I had the privilege of meeting him in 2011, when I was just starting my journey in the stock markets. Mr. Parikh was a man of honesty, humility, and depth, and his passing in 2015 was a significant loss to the investing community. His dedication to value investing and ethical investing practices continues to inspire new fund managers today.
PPFAS's Commitment to Value Investing
The success of a mutual fund lies not just in its claims but in the execution of its strategies. PPFAS is one of the few mutual funds that genuinely practices value investing. Unlike many others, PPFAS was not driven by the goal of increasing its Assets Under Management (AUM) through aggressive sales tactics. In fact, their active avoidance of hard-selling during a rising market cycle stands out. As of FY2018, PPFAS had an investor base of 19,000, fewer than their peers. This indicates a long-term wealth creation mindset rather than chasing short-term gains.
Moreover, the assets of PPFAS are predominantly managed through Systematic Investment Plans (SIPs). The total AUM from SIPs accounts for only 13%, which suggests that investors prefer to invest lump sum amounts with PPFAS. This is a testament to their trust and satisfaction with the fund's value investing approach.
A Unique Portfolio Approach
A portfolio manager's approach can be judged by their holdings. PPFAS's portfolio is deliberately unconventional, with one of their top holdings being shares in Alphabet (Google) and Facebook. Similarly, in 2011-12, their top holding was Maharashtra Scooters, a venture that few investors would have considered in the same category. These unconventional choices reflect PPFAS's commitment to identifying value and potential in overlooked opportunities rather than following the herd mentality.
An important aspect of PPFAS's approach is their focus on a smaller universe of stocks. Having only one equity scheme, PPFAS can refine their portfolio and stay true to their value investing philosophy. Unlike many mutual funds that float countless schemes based on the whims and fancies of emerging fund managers, PPFAS's approach allows for a more focused and disciplined investment strategy.
Compared to Other Mutual Funds
While PPFAS is the most well-known fund for value investing, there are other mutual funds that have gained attention for their ethical investing practices. For instance, Quantum Mutual Fund, founded by a long-time veteran of value investing, also emphasizes direct investing. Quantum has a smaller AUM and is more of a niche for hardcore followers of EquityMaster. However, as of my last update, I don't have detailed information to provide a comprehensive comparison.
It's important to note that my assessment of PPFAS is biased by my personal experience and interactions with the fund. At the time of writing this, I am not invested with them and haven't been tracking them for a while due to my focus on trading-related activities. My intent is not to promote them, but to highlight their unique approach to value investing.
Conclusion
Parag Parikh Fund Advisors (PPFAS) stands as a beacon of value investing in the Indian mutual fund landscape. By focusing on long-term wealth creation through disciplined value investing and unconventional portfolio management, PPFAS has earned a reputation that goes beyond mere claims. Whether you're an investor seeking a fund manager with a deep understanding and commitment to value investing, PPFAS is worth considering.