Mutual Funds – CAGRfunds

March 16, 2019February 22, 2025

PPFAS – CAGRfunds conviction recommendation

Parag Parikh Long Term Equity Fund (PPLTE) is the only equity fund that is managed by the investment team of PPFAS. As a recent entrant in the Mutual Fund Industry (fund was launched in May 2013), it is not the most popular fund in the market. At least we do not see people including them in the “Top 10 Funds to invest in 2019” list (Frankly, we find such lists to be very silly).

There are several reasons why we believe that PPLTE is a good addition to the portfolio for investors who exhibit all of the following traits:

a) Looking to add equity exposure
b) Willing to not withdraw their investments for 7-8 years
c) Keen to add some overseas diversification to their investments
d) Unwilling to risk capital erosion in lieu of high returns
e) Want to prioritize downside protection for times when markets don’t seem to be too ecstatic

If you think you are the one we are referring to, you should contact us to check if this is a worthy addition to your existing portfolio.

Reasons why we like PPLTE

Sector Allocation

Several things stand out when we look at the sector allocation of this fund.

a) 22% of the corpus is kept in liquid resources, waiting to be deployed when opportunities emerge. Some might say that this will drag returns down (since liquid resources at best earn you around 6-7%), but let us tell you that investing in businesses at a price that seems affordable is better than buying something expensive. Also, investing when one finds good businesses to invest in is also an important consideration for long term wealth generation

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” – Warren Buffet

b) Substantial overseas exposure (~28%) adds to geographical diversification (orange bars are completely overseas). Out of this total overseas exposure, around 9.7% is in Google and 4.3% in Facebook. That adds to some real diversification to your portfolio! (Source: PPFAS Feb – March Factsheet)

Skin in the game

7.07% of the AUM represents own equity of the key persons in the fund management team. When people who are managing our funds have invested their own savings into the same, we know the commitment is for real. It is a good corporate governance practice to have their own financial being is linked with that of the investors. We give them a big thumbs up for this one.

Out-performance with focus on downside protection

As can be seen from the chart below, the fund has outperformed its benchmark (Nifty / BSE 500 TRI) at all times considering point to point returns. In terms of Alpha, the fund ranks #2 within the Multi-Cap category.

However, out-performance is not what excites us. Active funds, after all, are supposed to out-perform their respective benchmarks.

What seems interesting and commendable to us is the ability of the fund to protect the downside during times of correction. Let us look at the 3 year rolling returns of the fund. The highest rolling return is 25% and the lowest that the fund has given over a 3 year period is 10%.

This means a lot of things for you as an investor if you would have held your investment for a 3 year period at any point in time:

a) You would have generated a CAGR of at least 10% even if you would have exited at the very low point of the market which was some time in the second half of the last year

b) You would not have seen a negative return for a 3 year period on your portfolio EVER

c) You would not have lost your peace of mind over losing your money

For investors who are uncomfortable with too much volatility, the above means a lot. We believe that the reason the fund has been able to demonstrate this performance is because of its patient and down to earth fund managers – Rajeev Thakkar and Raunak Onkar. Although this is not a guarantee for the future, the above track record during testing times gives additional comfort to investors.

Mr. Thakkar is quite active on twitter and we suggest you follow him to understand his ideology if you are an existing investor or are likely to become one.

In case you have any further query, do reach out to us on contact@cagrfunds.com

December 21, 2018February 22, 2025

Aditi’s Money Story: I Was Always Conditioned To Save First

Aditi is one of my earliest female clients. And the reason I chose to write about her money story today, is because she inspires me.

A couple of months back, a common friend gave me her contact and we decided to meet at her place. She was newly married and I had almost barged into one of her lazy, cozy weekend. She greeted me well and waited till Karan, her husband, joined us. The agenda was to discuss their finances.

After having a brief discussion about their respective backgrounds, she quickly told me how she had been investing in equity mutual funds since she first started working. And how Karan had been risk averse, so to say. Now that they were married, she wanted to make sure that they have the right asset allocation and hence adequate equity exposure. She wanted an early financial independence for the couple. Meanwhile, I could sense Karan’s limited participation – may be because he was uneasy about equity, I thought.

A couple of weeks back, when I decided to venture into the domain of helping women understand and manage their own finances better, I reached out to Aditi to get her views on the subject. Remembering her as someone who took the lead in discussing family finances, she was one of the very few names that came to my mind.

A transcript of our recent conversation is given below:

Me: How do you feel about the fact that you take decisions around your finances / family finances?

Aditi: Ever since I was a child, my father used to encourage me and my sister to save whatever little earning we used to have. So we have always been conditioned to think of savings as an important aspect. The fact that I started investing since my first job has really helped me continue the practice. And today when I think about it, I realize it is a great feeling to be self – dependent. The ability to take care of my own needs gives me a lot of confidence.

Me: What made you go against the conventional practice of letting the man of the family decide?

Aditi: When we were young, a mass prevailing notion was that women are first the father’s responsibility and then the husband’s. I often questioned myself, why is that? In fact, when I was a kid, I heard someone asking my mom to have a third child, otherwise who would take care of them when they grow older (we are two sisters). It kind of impacted me deeply. I have always wanted my parents to think of me as an asset and not as a liability. I knew for sure that I wanted to change the norm that daughters cannot take care of them when they grow older.

Also, Karan and I both have our respective strengths. Knowing that managing finances is my strength, Karan has proactively taken a step back and is happy to let me handle the key financial decisions. So, for me it was not about going against the conventional practice.

Me: That is a very interesting thing to note Aditi. Because in a lot of families (including the ones where the wife is a home-maker), I notice that the men consider it to be their fundamental duty to take all financial decisions. If only, every couple could mutually agree on the mechanics that works best for them, the family finances could be managed jointly and more amicably.

Aditi: Absolutely. I think I have been lucky in this respect. But a lot of women are not.

Me: And now I understand why Karan wasn’t an active participant when we first met. So tell me, what comes to your mind when you think about “Financial Independence”?

Aditi: Financial Independence is extremely important to me. It is my confidence to live my life my way. I want to go to work because I love my job and not because I have to pay the bills. I want to stay married because I am in love and want to grow old with him and not because I have to as I cannot support myself financially. I want to achieve financial independence to have the freedom to do things I love to do, to live life the way I want to. And when I say “I”, I mean “us”.

Me: What has been your experience with me and CAGRfunds on a whole?

Aditi: I got to know about you and CAGRfunds through a common friend and I am always inspired by people who choose passion over 9-5 jobs. So when my friend told me that some of his friends had started this financial planning company, I was quite kicked about meeting you. Despite the fact that I had already met a few other investment firms before I met you.

The first meeting that we had at my place was something that made me very comfortable with you. It was casual yet relevant. There was a certain structure to the discussion we had, and logic to whatever you said. We resonated in lot of ways and it was that warmth to which I got sold which was missing in the other older firms.

What I like best about working with you is that you are extremely reachable. I know that I can talk to you if I want to. And more importantly, I trust you with the guidance that you give to me. Your intent when you talk to clients is not to sell. It is to educate them. You bring so much credibility on the table that the sale eventually just happens!

Me: Wow Aditi. Thanks for so many kind words. As you know, I am venturing into this domain where I want to help women step into main stream financial planning. What do you think about this initiative?

Aditi: I think it is a brilliant initiative. I don’t see a lot of women who are as lucky as I have been. And one of the major reason is that they are not comfortable about disclosing their level of unawareness. I mean, a lot of women would rather not speak than be judged as stupid for not knowing what equity means. So the good thing about this initiative is that as a woman, you will understand them better, not be judgmental, and help them see things from a different perspective.

Me: Thanks Aditi. That’s the intent. And I really hope that I am able to make a tangible difference to a lot of women.

Aditi: Of course you will. It has been great working with you so far and I am sure others will feel the same. All the best!

CAGR-For-Her: It is an initiative to help women to get better control over their finances. It is about making women aware of the importance of being fully involved in financial decision making. It is an attempt to drive one more woman towards her financial independence.

For embarking on your journey of financial independence, write to me directly on shruti.agrawal@cagrfunds.com

September 3, 2018February 22, 2025

Should I invest in Debt Funds or Equity Funds?

Both Debt and Equity Mutual Funds are thriving in the Indian Financial Market. But which one should you as an investor choose between the two?

When are Debt Funds suitable?

When you want to park some surplus cash for using it within 3 years
For creating your Emergency Fund
From an asset allocation perspective (when your risk appetite requires you to invest in low volatility instruments)
You want to invest funds for a long period of time but the safety of capital is most important (Example: Funds of your retired parents who may need it any time)
You have a lot of FDs on which you are paying significant taxes

When are Equity Funds suitable?

When you want to create a fund for a goal which is more than 5 years away
When you have surplus funds which you do not need to deploy in the next 5 years
When your preference is to generate inflation-beating returns and you think you have the ability to survive the volatility

In short, every investor should have some debt and equity components as part of the overall portfolio. For a lot of people, the debt exposure is taken care of through PF, PPF, FDs, NSCs and other such low return instruments. But for those who are investing for the first time and do not have a certain percentage of their wealth in the debt instruments, they can look to start investing in both debt and equity funds.

How does CAGRfunds help?

At CAGRfunds, we seek to make investing simple for you. So we do not clutter your mind with complicated technical financial terms. We just ask you your objectives of investments and suggest the suitable solutions to you. We believe in developing long-term relationships with our investors and hence our focus is solely on helping you meet your financial goals. For more information, feel free to contact us on +91 97693 56440 or drop us an email on contact@cagrfunds.com

May 18, 2018February 22, 2025

Why you need to reallocate your portfolio in volatile markets?

How often have we come across the terms risk profiling and portfolio asset allocation? Okay, before you stop reading any further, let us ask you another question.

Do you have that one person in your family who is a self – proclaimed doctor? That uncle who has no academic background of medicine yet has prescriptions for almost every disease that you can think of?

Well, investing in India is a little like that. Most of us google the mutual funds which have given the highest return in the last 1-3 years. At best, we look at the number of yellow stars beside the fund name. And that is all it takes to start our SIPs. But, just like every Bollywood movie, there is always a “but” before every happy ending. And in your investment journey, this but is about the two terms we mentioned at the top.

So, if you they felt unfamiliar to you, well you definitely need to read on.

We are all unique individuals. Every person earns a different amount of money and has a different structure of expenditure. Some of us want to buy a house early and some intend to defer for another 10 years. Some have to think about educating two kids and some have to think about educating themselves more. So basically, we all have very different and very unique financial objectives.

Therefore the objective of investing is not to be able to select the best funds but to be able to fulfill your financial objectives. You might have selected the mid cap fund which gave over 40% returns last year but if you are planning to fund your wedding next year and the stock markets choose to take some rest, well, you might as well be doomed.

And this is exactly what risk profiling and asset allocation helps you identify. At CAGRfunds, we help each of our investors to first establish their risk profile. This means how much risk you should take, how much you are willing to take, how much you require and how much you can actually take. Subsequently, we mutually establish your ideal asset allocation which simply means where you should be investing your money and in what split.

Stock markets change every day. And so do your investments. But your ideal allocation helps you achieve your objectives. However, it is possible that market volatility over short periods and trend movements over long periods can alter your actual allocation significantly. And there comes the need of adjusting your portfolio back to its ideal allocation (which can also change over time).

While a lot of us have started equity SIPs, we find very few manage their investments periodically with the discipline that is warranted of them. For some the task is too complex and for some, they simply do not have the time. Therefore, at CAGRfunds, our algorithms now evaluate every single portfolio to identify the need for any re-allocation adjustments. This is an extremely important analysis for any investment that you make. Simply because this ensures that you are prepared to fulfill your financial objective.

Still not convinced? Call us on +91 97693 56440 and we will be happy to get candid on how this makes sense for you!