PPFAS Mutual Fund is planning to launch a liquid fund scheme in April 2018, the fund's chief investment officer, Rajeev Thakkar, has said.

He was speaking at the mutual fund's fourth annual general meeting (AGM) in Mumbai on Saturday.

The fund, which operates only one scheme currently - the Parag Parikh Long Term Value Fund, has decided to launch a second scheme ( liquid fund scheme) in response to unit holders’ demands for alternate investment options, especially for the short-term, he said.

In another announcement that would be of interest to unit holders, Rajeev said there would be a reduction in expense ratio from December 1 by about 10 basis points. In the case of direct plan, the expense ratio would be down to 1.65 per cent while in the regular plan, the expense ratio would be down to 2.15 per cent. There would be a further 15 bps reduction once the AUM of the fund crossed Rs 1,000 crore.

PPFAS Mutual Fund, which has assets under management (AUM) of about Rs 905 crore at the end of October 2017, is a ‘rounding error in the mutual fund industry’ in the self deprecating words of Rajeev.

The MF industry has nearly Rs 22 lakh crore assets under management. Yet, the tiny fund has set itself apart with pioneering initiatives in disclosure and transparency, including the holding of an annual general meeting (AGM), where the fund’s promoter and managers stand up to face a grilling by their investors about their stock picks and their performance.

With its small size, the fund’s operational managers are under no illusions about their clout or about their performance vis-a-vis competition or other benchmarks.

The fund has offered a compounded annual return of little over 20 per cent since its inception in 2013 against a 16 per cent return offered by the benchmark Nifty 500 over the same period.

When investors queried about the fund recently underperforming the benchmark Nifty 500 (which delivered a 22 per cent return last year), Rajeev accepted the criticism but reiterated the underlying pitch of a slow and steady approach to the business of wealth building.

He said they would continue to follow a conservative, preservation of capital first - and a reasonable return next – philosophy. That approach has found favour with its small band of loyal investors who have stuck with it even as markets have been booming in the past year. The number of investors has actually doubled from around 6,000 a year ago.

At its fourth annual general meeting held in Mumbai, the faithful investors landed in their usual numbers to listen to what by now must be a familiar script.

Neil Parag Parikh, CEO of the fund, opened the proceedings underlining the values, philosophy and processes that the fund follows. With an over 12 per cent skin in the game, promoters and management have their interests aligned with investors and Neil made that clear upfront.

He said that the fund would avoid hot stocks and momentum stocks and even IPOs and would wait to pick up good quality stocks at the right price. The long term value fund that the MF operates has the flexibility to invest a minimum of 65 per cent in Indian equities and the balance 35 per cent in foreign equity and domestic debt.

The top three holdings in the scheme are Alphabet (10.97%), Bajaj Holdings (7.88%) and HDFC Bank (7.37%). Banks, Internet & technology and Finance make up the top three sectors, comprising 38.81% of the portfolio.

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