Parag Parikh Flexi Cap Direct Growth INF879O01027

Parag Parikh Flexi Cap Fund earns an Above Average Process Pillar rating.

The most significant contributor to the rating is the fund's impressive long-term risk-adjusted performance. This can be seen in its ten-year alpha calculated relative to the category average, which suggests that the managers have shown skill in their allocation of risk. The firm's five-year retention rate of 100% also underpins the rating. However, the process is limited by the size of its portfolio management team, with five portfolio managers.

This strategy, over time, has opted for larger market-cap companies, compared with others in the Flexi Cap Morningstar Category. But in terms of investment style, it is on par with peers. Examining additional factor exposure, this strategy has consistently favored high-quality stocks, including those with low financial leverage and solid returns on equity, compared with Morningstar Category peers during recent years. Such holdings could cause it to trail peers during economic booms, but help it better endure busts. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. This strategy has also displayed a tendency to hold more companies with high dividend or buyback yields than peers over recent years. High-yield stocks tend to be connected to more mature companies earning enough cash to return some to shareholders. At times, however, extreme market pressure can force them to cut their dividends, which hurts stock performance. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. In addition, this strategy has exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. In this month, the strategy also had more exposure to the Volatility factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in financial services and energy relative to the category average by 6.7 and 5.6 percentage points, respectively. The sectors with low exposure compared with category peers are industrials and basic materials, underweight the average by 11.2 and 7.3 percentage points of assets, respectively. The portfolio is positioned across 118 holdings and is relatively concentrated. In particular, 51.9% of the fund’s assets are housed within the top 10 holdings, compared with the category’s 40.4% average. And finally, in terms of portfolio turnover, looking at year-over-year movements, 9% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.