Thakkar started with a meme to get into the topic of underperformance. He said many investors, especially the new ones, are worried about the underperformance of the scheme. Parag Parikh Flexi Cap Fund lost a little over 3% in the last year, against a gain of 3.52% by the benchmark.
Confession of serial underperformer
Rajeev Thakkar said this is not the first-time the scheme has underperformed. This is also not the biggest in magnitude. “I can underperform at all AUMs,” he said. “I don’t need a large AUM to underperform. I can also underperform with or without foreign stocks,” he added.
Thakkar also cautioned investors that they should not think this is the last time the scheme is underperforming. We are in the asset management business. You can hope to do better over a long period, but not all of the time, he said.
Rajiv Thakkar shared the story of how some people were concerned about his performance and approached Parag Parikh, the founder of the fund house. During another lackluster period, they complained to Neil Parikh, the current CEO.
He said he understands when investors complain about underperformance. He pointed out there are things which are not under your control. “Then there are things you can do,” he said. That is what he and his fund managers try to do. For example, you can choose companies with great promoters, great business, high returns on equity.
He said looking at the numbers closely, you will see that the scheme has offered around 23% in three years and 16% in five years. That is why the fund house always maintained that the scheme is meant for long term investors. In fact, the scheme and management always used to say the scheme is not meant for investors if they don’t have an investment horizon of five years.
Rajeev Thakkar also tried to address topics such as why the fund house is holding some stocks or not selling certain stocks. Some investors also wanted to know what will happen to foreign investment since there is no clarity on the issue. Thakkar said foreign stocks gave a great opportunity to invest in stocks that were otherwise not available. However, he is nor unduly perturbed about the lack of clarity on the issue. The government and RBI have not clarified whether they plan to raise the overall limit for mutual funds to invest in overseas stocks.