Get full access to one story every week, and to summaries of all other stories. Just create a free account

When PPFAS Mutual Fund—popularly known as Parag Parikh Mutual Fund, after its eponymous late founder—published its September factsheet earlier this month, it made heads turn. More often than not in the past, this investor favourite had dazzled the market with its returns. But this time, the numbers were underwhelming, to say the least.

The one-year return of Parag Parikh Flexi Cap Fund, the flagship scheme of the asset management company, was minus 5.68% for the year ended September 2022. Far worse than the minus 0.22% returns of the Nifty 500 TRI TRI Total Returns Index An index that takes into account both price movements of the underlying stocks and the dividends they declare , the scheme’s benchmark. The flexi-cap fund—which allows the fund house to invest across firms of different market capitalisation—had been lagging the benchmark for a couple of months before it slipped into negative territory in September.

The needle of blame points towards the scheme’s unique selling proposition (USP)—a 65%-local-35%-global investing approach that it pioneered in India. More specifically, towards the leeway to invest abroad and the Reserve Bank of India’s (RBI’s) cap cap The Ken RBI’s $7 billion damper on India’s overseas investments Read more on it. India’s capital-markets regulator Securities and Exchange Board of India (Sebi) prohibited mutual funds from investing in foreign securities from 2 February to prevent the breach of the overall $7 billion limit set by the central bank.

What was a boon earlier is anything but in 2022. After a dream run in 2020 and 2021, the scheme’s global investments took a beating from the massive sell-off in US tech stocks this year. Microsoft, Amazon, and Alphabet are down about 30% since January, while Meta Platforms (formerly Facebook Inc.) is down 60%.

This kind of decline was last seen in 2008 and 2000, according to Dhirendra Kumar, founder of mutual-fund research firm Value Research.

Moreover, the PPFAS fund finds its hands tied due to the RBI cap. It’s unable to buy these stocks at attractive post-crash valuations. The mutual-fund industry was hoping for a quick easing of the restriction, but there’s no relief even nine months down the line. As a result, the share of foreign investments in the scheme’s portfolio is now down to 18% from 29% in January.

Besides, its domestic portfolio has put up a mixed show in the past year with stocks like the cigarette-to-FMCG giant ITC doing well, while those like power-trading platform Indian Energy Exchange (IEX) taking a knock. In short, the scheme finds itself in a returns squeeze.

So, have the scheme’s investors been voting with their feet? Money, after all, chases returns. But the reality is far from it.

AUTHOR

Anand Kalyanaraman

A certified Chartered Accountant, Anand chose to pack the power of numbers with words when he left a career of seven years in accounting, putting together MIS reports, and investment research to enter journalism. Before joining The Ken, Anand was Deputy Editor at The Hindu BusinessLine, a newspaper he worked at for 11 years.

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 6 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 6 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 6 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.