NFO Review: PPFAS launches its second scheme Parag Parikh Liquid FundPPFAS Asset Management (PPFAS AMC) is launching its second scheme – Parag Parikh Liquid Fund. The fund opens and closes today (May 9th)

PPFAS is perhaps the only AMC that runs a single mutual fund scheme – Parag Parikh Long Term Equity Fund (previously PPFAS Long Term Value Fund). This scheme invests predominantly in Indian equities but also maintains a small allocation to US stocks and debt. Its largest holding is in fact, Alphabet, the parent company of Google, and this holding account for almost 10% of assets. 

PPFAS AMC is promoted by Parag Parikh Financial Advisory Services Pvt. Ltd.

The fund has a devoted fan following, as did its late founder Parag Parikh himself who was a value investing Guru. PPFAS long-term equity fund has three-year returns of 12.5% and one-year returns of 16.72%. The AMC imposes an exit load for as long as 730 days (two years) instead of the industry norm of one year to encourage long-term investment in the scheme. The scheme only changed its name in response to SEBI classification rules and made no changes to its fundamental attributes. It remains a multi-cap fund.

The AMC has decided to launch this liquid scheme in response to investor requests for a place to park short-term money. The NFO will open and close for investment today (9th May 2018) but being an open-ended fund, will reopen for investment on a continuous basis on 14th May 2018.

The liquid scheme will allocate 80-100% of its assets to money market instruments such as cash, Repos, Treasury Bills, commercial paper, CBLO and government securities. It will deploy the balance 0-20% in debt including floating rate paper and securitised instruments with maturity up to 91 days  It will be benchmarked to the CRISIL Liquid Fund Index. It will have no entry or exit loads.

Raj Mehta who is currently the debt component manager at PPFAS Long Term Equity will be the manager of this scheme.

Who is this fund good for?

It may serve you well if you are looking for very short term investing or are highly risk averse but willing to take some more risk than, say, bank deposits. Being a new launch, the fund has no track record as such. However the AMC, PPFAS has established a good record at AMC level.

The fund makes particular sense for investors who wish to do Systematic Transfer Plans (STPs) into PPFAS Long Term Equity Fund or Systematic Withdrawal Plans (SWPs) form it. An STP allows you to gradually deploy a lump sum into an equity fund and an SWP withdraws a regular amount for an equity fund which you can potentially keep parked in a liquid fund.

Key Details

NFO Period: 9th May 2018

Options: Growth, Dividend Payout and Dividend Reinvestment – Daily, Weekly and Monthly Reinvestment; Monthly Payout

Plans: Regular and Direct

Benchmark: CRISIL Liquid Fund Index

Minimum Subscription Amount: Rs 5000

Minimum Redemption Amount: Rs 1000

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.