Rajeev Thakkar, CIO of PPFAS Mutual Fund, has reminded investors that volatility is an inherent part of stock market investing, not a signal of failure. He clarified that those seeking fixed-deposit-like stability should avoid equities. This message highlights the fund's current cautious approach, where cash holdings have been reduced to 14-15% to manage risks while maintaining a value-focused investment strategy.
Rajeev Thakkar, the Chief Investment Officer of PPFAS Mutual Fund, has recently communicated to unitholders that investors must accept market volatility if they aim for returns higher than those offered by traditional fixed-income instruments like bank deposits. He emphasized that equating equity investing with the certainty of a fixed deposit is a fundamental misunderstanding of how stock markets function.
Strategic Shift and Cash Holdings
While the fund remains committed to its long-term, value-oriented philosophy, it has been actively adjusting its strategy to navigate current market conditions. As of August 2026, the fund's flagship Flexi Cap Fund has reduced its cash holdings to approximately 14-15%. This is a notable shift from the 25% cash peak observed in 2024. These cash reserves serve as a cushion during overheated market phases, allowing the fund to deploy capital when valuations become more attractive, rather than chasing momentum.
Thakkar’s recent commentary serves as a reality check for investors who may be feeling uneasy due to recent market fluctuations. The fund maintains a sector-agnostic approach, deliberately avoiding pure-play artificial intelligence (AI) stocks or high-momentum bets, preferring instead to focus on diversified technology and infrastructure businesses. This disciplined stance is designed to protect the portfolio from the volatility often associated with trendy or overvalued market segments.
Managing Return Expectations
Beyond volatility, Thakkar has also addressed the moderation in equity return expectations. As inflation stabilizes and the economic landscape evolves, the aggressive returns seen in previous years may not be the baseline for the future. Investors who are counting on consistent 15-20% nominal annual returns may need to temper their expectations in a cooling market environment.
Investor Monitorables
The fund's strategy highlights a few key areas that shareholders should watch in the coming months. First is the fund's ability to maintain its valuation discipline despite pressure to participate in frothy or momentum-driven market segments. Second is the impact of persistent market volatility, which is expected to continue over the next 12 to 18 months. Finally, investors should observe how the fund manages its remaining cash reserves, as this provides insight into the management's view on current valuations relative to future growth opportunities. For those who prioritize capital preservation and predictable income over the long-term wealth creation that equities aim to provide, Thakkar reiterated that fixed-income products remain the appropriate choice.