The first heartening thing is that the AUM of the PPFAS Mutual Fund has nearly doubled from Rs. 152 crore in June 2013 to Rs. 302 crore in October 2013. This is quite commendable given that retail investors have generally been out of the market. This means that big-ticket & strong hands have invested in the fund. Of course, the disadvantage of having a few strong hands (as opposed to several scattered small-ticket retail investors), is that the big guys can exit as fast as they came in if the performance does not match their expectations.
The second noteworthy aspect is that the PPFAS Mutual Fund has given a return of 6.7% since its inception (28.05.2013). This compares very favourably with the benchmark and peers. The Benchmark CNX 500 Index gave a return of only 1.02% in this period. Among the peers, HDFC Mid-Cap Opportunities and IDFC Sterling gave a return of 1.5% and 3.5% respectively. BNP Paribas Equity Fund was neck to neck with a 6.6% return. SBI Emerging Businesses was the worst performer with a loss of 9.7%.
|PPFAS||HDFC Mid-Cap Opportunities||IDFC Sterling||BNP Paribas Equity Fund||SBI Emerging Businesses|
|Performance from 28.05.2013 to 31.10.2013 (%)||6.7||1.5||3.5||6.6||(9.7)|
This leads to the question as to what stocks have led to the out-performance. The answer is that Parag Parikh adopted the brilliant strategy of deploying his funds in buying stocks when the stock market slumped in August 2013. Evidence of this can be seen from the fact that while the cash position was 12.94% in August, it dipped to 6.18% in September 2013 and 3.93% in October 2013. In fact, Parag Parikh appears to have anticipated the crash because he raised the cash levels from 9.96% in July 2013 to 12.94% in August 2013 before deploying it in September and October 2013.
Now, I can tell you from personal experience that buying stocks when the market is crashing is the most difficult thing to do. In August, I saw my favourite stocks crumble but I was paralyzed with fear to be able to do anything. “I will buy after it falls more” I told myself. Before you know it, it is too late because the Nifty has surged 20% since that day.
The other sensible thing that Parag Parikh has done is to buy a chunk of 3,18,000 shares of Yes Bank in August 2013 when the stock went for a free fall and touched a low of Rs. 216 on 28.08.2013. Since then the stock has surged 55% to the present CMP of Rs. 350. ICRA and Gujarat Gas have also contributed with solid gains of 43% and 22% respectively.
|Portfolio of PPFAS Mutual Fund (Oct 2013)||(Rs in lakhs)||% to NAV|
|Axis Bank Ltd||1,700.78||5.62%|
|Gujarat Gas Company Ltd||1,444.17||4.77%|
|IL&FS Investment Managers Ltd||1,425.15||4.71%|
|Indraprastha Gas Ltd||991.11||3.27%|
|Maharashtra Scooters Limited||1,578.59||5.21%|
|Mahindra Holidays and Resorts India Ltd||1,688.77||5.58%|
|Noida Toll Bridge Co Ltd||1,721.43||5.69%|
|Novartis India Ltd||291.74||0.96%|
|Polaris Financial Technology Ltd||1,377.04||4.55%|
|Selan Exploration Technology Ltd||392.61||1.30%|
|The Jammu and Kashmir Bank Ltd||1,519.38||5.02%|
|Zydus Wellness Ltd||427.50||1.41%|
|Standard Chartered PLC IDR||1,173.26||3.87%|
|Special Situation / Arbitrage|
|Bharti Airtel Ltd||279.00||0.92%|
|Yes Bank Ltd||1,172.78||3.87%|
|Foreign Equity & ADRs|
|Anheuser Busch Inbev SA – ADR||527.92||1.74%|
|British American Tobacco Plc – ADR||1,247.04||4.12%|
|Total of all Equity||25,784.85||85.15%|
|MONEY MARKET INSTRUEMENTS|
|Collateralised Borrowing & Lending Obligation||3,300.00||10.90%|
|Cash & Cash Equivalent||695.43||2.30%|
Parag Parikh has also churned the portfolio of the PPFAS Mutual Fund a bit. Three new entrants are Selan Exploration, Wyeth Ltd and Zydus Wellness. Hindustan Unilever and Crisil, which were in the “special situations” category, and which gave quick-fire gains, have been sold and replaced by IDFC Ltd.
Parag Parikh has continued his love affair with foreign stocks and added Anheuser Busch Inbev SA – ADR and British American Tobacco Plc – ADR into the arsenal.
The other interesting point is that PPFAS Mutual Fund has about 12% (Rs. 38 crore) in Money Market instruments and about 2.30% (Rs. 7 crore) in cash. So, that is quite a bit of gunpowder available for deployment if there is another crash in the market.