PPFAS Enters Mutual Fund Business with “PPFAS Long Term Value Fund”

POSTED BY Jagoinvestor ON April 17, 2013 COMMENTS (40)

You must have heard the name of Parag Parikh, the veteran who has spend decades in the Indian stock markets. He runs PPFAS (Parag Parikh Financial advisory services) . They have been running PMS scheme for quite a while now, since 1996!. They have been practicing value investing from decades and now they have decided to enter the mutual fund space, not just as another also ran, but with a very clear focus. They want value investing to be the prime focus of investing in equities and have come up with “PPFAS Long Term Value Fund”. SEBI has cleared it and it will launch by next month!

PPFAS Mutual Funds

So, I decided to directly catch Rajeev Thakkar , CEO & Fund Manager of PPFAS Mutual Fund to answer few questions for our readers.  This should give us a clear idea of their vision. Those of you, who would really like to invest in equities for a very long term like 10-12 yrs, can place your bets if you find you are interested.

Here are few questions I asked Rajeev Thakkar (he has been managing the PMS for PPFAS since 2003).

1. A lot of investors still do not know about PPFAS . Would you like to share its history?

PPFAS Ltd. our Sponsor, was incorporated in 1992. Prior to that, our Chairman, Mr. Parag Parikh, ran a proprietary organisation from 1979. It was one of the earliest recipients of the Portfolio Management Service (PMS) licence, having secured it in 1995.

Over the years, it has transformed itself from being a stock and fixed income brokerage house to a reputed Portfolio Manager and currently manages over Rs. 300 crores in its flagship scheme. It has now embarked on the next step in asset management by sponsoring PPFAS Mutual Fund.

2. Why PPFAS entered Mutual funds when you already had a successful PMS ?

The main reasons behind this move are –

a) Over the years, the landscape for PMS has become progressively challenging for the investor. A hike in the minimum ticket size and increasingly tedious account opening procedures are two examples.

b) A PMS product is also perceived to be an opaque one – though we can proudly say that we defy this perception by disclosing various key data points on our sponsor’s website [www.ppfas.com].

c) Tax treatment of capital gains in a PMS product has also been a point of contention, subject to various interpretations based on the nature and frequency of the transactions .

On the other hand, a mutual fund is a far more regulated and transparent investment vehicle as compared to a Portfolio Management Scheme. Unlike PMS schemes, a mutual fund scheme’s performance, portfolio etc. is tracked by independent research agencies on a regular basis. This helps an investor in making comparisons and allocating capital accordingly. It scores on the operational front too. For instance, each time a client opts for a PMS scheme he/she has to undergo
tedious and time-consuming Know-Your-Client (KYC) related formalities.

This can be obviated in case of a mutual fund, where one KYC / KRA number is valid across all mutual funds. An investor is also able to deploy smaller amounts of capital in a mutual fund scheme. This is especially helpful when they are testing the waters. This latitude is all the more useful, now that the minimum initial corpus for a PMS account has been raised from Rs. 5 lakhs to Rs. 25 lakhs.

For fund managers too, a mutual fund is operationally easier to manage as it does not call for segregation of individual accounts, separate order placement etc. Unlike a PMS scheme, a mutual fund scheme is treated as a pass-through vehicle, thereby making it a more tax-efficient vehicle for investors.

3. Can you share why you have come up with just a single equity fund? Won’t you come up with 5-10 funds ?

Yes. In an age of ‘the more the merrier’ we walk alone. Others may launch an array of equity schemes with narrowly focussed objectives, but we believe, this leads to needless duplication and confusion.

PPFAS Long Term Value Fund’s mandate permits it to invest in companies, unfettered by any self-imposed limitations with regard to market capitalisation or geography. We believe that if our investors’ objectives can be met through one scheme there is no need to launch a slew of them. Hence it will be our only offering in the equity segment.

4. What are the top 3 things which you feel will be different with PPFAS LTEF and other equity funds in market? What is the value proposition you are offering?

The top three differences between us and the others is –

  • We will be the first mutual fund to disclose the holdings of key employees of PPFAS Mutual Fund in the scheme.
  • As mentioned above, we will launch only one scheme in the equity segment.
  • On our website (amc.ppfas.com) we have explicitly mentioned the kind of investors, we do not want. I do not know of any other mutual fund which actively discourages the wrong kind of investors from investing in its schemes.

Apart from these, there are a few more differences which have been outlined on our website

5. As It is a new entry in mutual funds, a lot of investors might want to wait and watch for the performance of your NFO. What do you have to say about it?

Sure… We are cognizant of that.

That is why we are not hard-selling our scheme through the mainstream media at this juncture. Also, that is why we have not approached the national distributors / banks. Only a few distributors (currently 20) who believe in our approach have signed up with us.

Many key investors in the PMS scheme of our Sponsor, have agreed to migrate to ‘PPFAS Long Term Value Fund.’ They will form the nucleus of our scheme. Besides these, we have received over 300 expressions of interest from new investors through our website and other sources. Some of them may invest either at the New Fund Offer stage or soon thereafter.

We envisage greater interest among the distributor community after a couple of years, once we have built a track record and are actively tracked by reputed agencies such as Morningstar and Value Research.

6. I am sure a lot of investors might want to invest through DIRECT route now. How can some one invest easily with PPFAS, because right now I suppose you do not have a lot of offices across India or in various cities? 

We are actively promoting the benefits of investing through the Direct Plan, positioning it as a cost-effective mode of investment. Investors can choose between

The online option – via our website


The offline option – Investors can submit the duly filled forms either at our Corporate Office in Fort, Mumbai or at any of the offices of our registrar, CAMS, who will double up as Points of Collection. CAMS has a very good network of offices India-wide.

7. What is your outlook for next 10-20 yrs for equity markets? I am asking you this, because you have come up with a equity fund, saying that it’s a long term fund.

While our scheme stresses on the long-term it does not necessarily mean that we have any strong view on the state of the overall stock market. Our premise is that investment-worthy stocks will be available irrespective of index levels and we prefer to concentrate on that aspect, rather than crystal-gaze.

Having said that, we obviously believe that equities form an important constituent in the portfolios of most investors now and over the coming decades and as a corollary, you could infer that we are positive on the future prospects of equities in general.

8. Anything else you would like to tell our readers?

Just like the boilerplate which states ‘Read the offer document carefully before investing’ we urge investors to read the contents of our website carefully and then decide whether you would like to invest with us or not.

While we cannot guarantee you any returns owing to the volatility inherent in equities, we will manage your money prudently, based on the time-tested principles of value investing, and play a role in helping you achieve your long-term financial goals. We are here for the long-term and our journey is just beginning. You could join us if you believe in our method of money management.

Scheme Information Document – PPFAS Long Term Value Fund

Here is the Scheme Information document of PPFAS Long Term Value Fund attached below.


While there are tons of AMCs in India, most of them focus on too many funds. PPFAS mutual funds seem to be very focused on what they believe in and seem to be on the path to evolve as a fund house that’ll be known for value investing. In a recent interview with firstport, Mr. Parag Parikh is sharing how they are themselves going to put their own money into the fund, so that there is inherent accountability and committment.

About 29 years ago, I started off as a broker and we were the first brokers to have a research department. That was the competitive edge which I wanted to get the institutional business, because that was cornered by about 12-13 brokers. As far as broking was concerned, we always believed money management is a profession rather than a business. When it is a profession, you do what is good for the client. But when it turns into a business, you do what the business demands.

Unfortunately, in mutual funds today you have this mad craze for getting assets under management. You have marketing teams, distributors. You pay them anything to get the money. From our MF’s point of view, we were professionals and we will keep it that way and run the MF as professionals. That’s the idea.

Ultimately, when you invest in our fund, what are you looking at? Returns. That is where we want to be game-changers. Secondly, what is your commitment to a fund? Today, me, Rajeev (Thakkar, CEO of PPFAS AMC) and all our senior people are going to make our own equity investments through the fund. We have to believe in what we’re doing. Whatever equity investments we have in the market, we’d rather put that in the fund.

Are you going to invest in PPFAS mutual funds ? Anyone !

40 replies on this article “PPFAS Enters Mutual Fund Business with “PPFAS Long Term Value Fund””

  1. Tridip says:

    Dear Manish,
    Do you still believe it is a good fund to invest with no long term track record. Can it be part of core portfolio? Regards,

    1. Its still a very good fund, you can have it

  2. atanu says:

    HI Manish,
    Unfortunately the great Mr. Parag Parikh died in a car crash.
    Now please advise what should PPFAS ‘s SIP investor do.
    Will it be risk to invest here further more?
    Thank you.

    1. Atanu

      I think it was not fully dependent on him. Now there is a new CEO . I think you should remain invested

      1. atanu says:

        Thanks Manish,

        One thing more. I intent to invest rs 2000 in Axis long term(SIP) for long time. On maturity(say after 30 years), accumulate amount totally tax free. Right?

        Hence my query is: should I remain invest on PPFAS along with Axis long term. Or I invest this rs1000 (sip on PPFAS) amount to HDFC Mid-Cap Opportunities Fund/or ICICI Prudential Discovery fund

        I am your Fan.
        Thank you

  3. anil28shinde says:

    I am going to invest 1000 per month for 10 years.

  4. Puneet Sharma says:

    Hi Manish,

    Had earlier gone through your MF articles where you had suggested about HDFC Prudence and DSP BlackRock; with this new entry would you still bet on earlier two or this one?
    Please share your thoughts.

    Puneet Sharma

    1. They are still good options .. You have to see if you match a mutual fund investing phylosophy and then invest

      1. Puneet Sharma says:

        Sorry, but didnt get that

  5. amol says:


    Recently I read one of the book of Parag Parikh in which he discouraged about open ended MF schemes. Then why they themselves are coming up with open ended MF scheme ?

    1. They will claim that their MF is not based on the same phylosophy others follow

  6. shalabh says:

    Well this is an informative article. One other amc which echoes the similar line of thought is quantum amc and they are doing good. To me PPFAS seems focussed and well intentioned but let us wait n watch before deciding. One more point, it would be nice if you put thanks after the interview.

    1. Thanks for your views Shalabh

  7. Piyush says:

    any idea on expense ratio in direct plan?

  8. PrAvEen says:

    This question is to Anily & Jayant from PPFAS:

    Recently I invested with Canara Robeco in their ELSS scheme through their website & paid with Axis bank internet banking. Then I got an debit sms alert from Axis bank saying the amount got deducted and the merchant it says as ‘PPFAS ASSET MANAGEMENT’.

    So my doubt is whether Canara Robeco is managed by PPFAS Asset Management????? or is this a typo at merchant gateway registration????

  9. Anil Kuppa says:

    The link in the 4th question is incorrect. Kindly correct it. This is with reference to (On our website (amc.ppfas.com) ) .When I click on amc.ppfas.com, it redirects to https://www.jagoinvestor.com/wp-admin/amc.ppfas.com .

    1. Thanks for pointing that Anil .. JUst corrected !

      1. Neerav says:

        Correct the link to PPFAS website in 2nd question as well.

  10. Amit Sawhney says:

    I have been their PMS customer for a while. They have their head above water and are not following the herd. I would keep investing with them.

    1. Good to hear that Amit .. Not sure who they plan to migrate their PMS customers to MF ? Did they ask you to now transfer the money to MF or they will do it from their end ?

  11. Paresh says:

    Regulation Wise,PMS & Mutual Funds are much more different products…so wait – watch & prefer fund like QLTE or similar..which has the active track records & follow best investing principles.

    1. Thanks for your views on this Paresh !

  12. Sunil says:

    This fund ventures into

    Indian Equity
    Foreign Equity
    and importantly into Derivative market as well..
    Hence this might be more suitable for people who can withstand the turbulances of time (as mentionned by them).

    Also, the Scheme information document should be read first to understand the risks and Asset allocation.

    I hope people shall see, read and understand before actually leaping into this fund.

    Basically i like this and i might invest upto 5% of my total investment just to test the Asset Allocations they offer (Specially the Derivative part and Foreign Equity Investing)…

    *This is my own opinion.

    1. Thanks for your views Sunil !

    2. Jayant Pai says:


      I represent PPFAS Mutual Fund. Thank you for all your comments and views.

      I just thought I should clarify one thing…

      We will be using Futures contracts mainly for parking liquid surpluses (we could use liquid funds for this too) or for hedging purposes. We are not going to indulge in any complex derivative strategies (such as strangles, etc) as we would prefer to utilise our energy for stock picking.

      Also, we have been investing quite successfully in US equities for our clients over the past three years. Hence we feel we are equipped in that sphere too.

  13. KRANTI says:

    YES. Thank You Manish for this article, and I am going to Invest in this MF Scheme with SIP-DIRECT Method. All the very best to Parag Parikh & Team.

    1. Great ! .. Good luck

  14. Bhabani says:

    I would wait for at least 3 yrs to see how the fund performs before putting my hard earned money to any fund. Let them prove first that they are worth investing.

    1. Thanks for your views ..

  15. pattu says:

    Nice to note that it plans to international equities while maintaining 65% in Indian equity so that it will be taxed like a Indian equity fund. Personally I like what I see in their website. Especially ‘who should not invest’!

    1. Yea .. thats what I liked too .. Someone at last seems to be different , but only time will tell 🙂

  16. AMIT says:

    Hi Manish,

    A nice feedback which most of the readers may not be aware.. So what’s your call on investing in this scheme? What would you advise?

    1. That I have already cleared … The first rule is anyways a general rule , that one should not invest for short term (less than 5 yrs) . If you trust the people behind the company and their history , you can go ahead .

      1. Anil Kuppa says:

        Hi Manish,
        The question here is “Would you trust them with your money?” . Since you are in the field of personal finance, you’d have better knowledge. You have put up an article about the mutual fund, but you have not provided any advice. I would like to know your perspective on this fund . I am more interested since the fund is new and I generally avoid NFOs as suggested by personal finance gurus like you.


        1. Yes Anil , I would personally trust them . But how does it solve your problem , the right question is do you trust them or not . I trust private insurance companies also , but do you ? Trust is a function of many things, which cant be generalised. I also cant say that because I trust, you should invest . Its always a personal choice . The article is just an informaiton , now its totally on you weather you want to take the risk of investing with them or not ?

          I would personally do because I like high risk high return game. Even if they do not perform later, I cant blame anyone else , other than me , because I knew I am ready for this .

          Does it help you ?


          1. Shashank says:

            Thanks for your professional advice, I am planning to invest.

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