Rajeev Thakkar, CIO of PPFAS Mutual Fund, has addressed investor concerns regarding the Parag Parikh Flexi Cap Fund's recent performance. With the fund trailing its category average, Thakkar reiterated that the firm's contrarian investment approach is designed for the long term. He also highlighted that the fund has begun reducing its high cash reserves as it finds more attractive opportunities in the market.
PPFAS Mutual Fund’s Chief Investment Officer, Rajeev Thakkar, has addressed investor concerns regarding the performance of the flagship Parag Parikh Flexi Cap Fund. As of August 2026, the fund recorded a one-year return of approximately 0.4%, which lags behind the mutual fund category average of around 7%. Thakkar emphasized that such phases of underperformance are a normal part of the investment cycle for any equity-focused fund.
Strategy Over Fund Size
One common concern among investors is whether the fund’s large size is limiting its ability to generate returns. Thakkar firmly rejected this notion. He explained that the recent performance gap is not due to the fund's assets under management, but rather its specific investment strategy. The fund follows a contrarian approach, which means investing in stocks or sectors that are currently out of favor or undervalued by the broader market. When these segments take time to recover, the fund's performance often trails behind the rest of the market in the short term.
Shifting Cash Levels
One of the most important updates for investors is the change in the fund's cash management. During the market highs of 2024, the fund had accumulated a significant cash cushion, with reserves reaching as high as 25%. Thakkar noted that after roughly two years of price and time corrections in various segments of the market, he now sees more attractive valuations. Consequently, the fund has been deploying this cash, bringing its reserves down to the 14%-15% range. This indicates that the fund manager is finding more stocks that meet their valuation criteria.
Outlook on Banking and Tech
The fund maintains its positive stance on its existing portfolio, particularly in the banking and technology sectors. Regarding the IT services industry, Thakkar views recent market selling as an opportunity rather than a sign of structural weakness. He anticipates that artificial intelligence will create new roles and growth areas, such as cybersecurity, rather than eliminating existing business models. On the banking front, despite investor worries surrounding private sector lenders like HDFC Bank, the fund management stated that they do not see any material threats to the bank's core franchise or customer base.
Risks and What to Watch
Investors should keep in mind that the fund's value-oriented, contrarian approach inherently carries the risk of extended periods where it may underperform compared to the market benchmark. The success of this strategy relies on the management's ability to identify value that eventually realizes its potential. For investors, the key monitorable will be how these currently 'out-of-favor' sectors perform in the coming quarters and whether the deployment of the remaining cash leads to a recovery in relative performance.