Parag Parikh Massive Cap Fund, an actively managed massive cap fund benchmarked to the Nifty 100 TRI, is at the moment in its NFO interval (nineteenth -Thirtieth Jan 2026). We focus on whether or not buyers ought to take into account shopping for this fund.
The fund is marketed as a “passive plus” fund with a low expense ratio that tends to trace the benchmark, besides in particular circumstances.
These had been mentioned within the final unit holder’s assembly. It is a temporary abstract of those “good methods”
- Single-stock futures at a reduction: Utilizing futures contracts once they commerce under spot costs to realize more cost effective market publicity.
- Index futures at a reduction: Deploying index futures when out there at reductions to identify costs, enabling cheaper market entry, particularly throughout market turmoil
- Merger-related alternatives: When an organization in an index is merging with one other agency, purchase the inventory which is at a reduction to the merger ratio.
- Smarter rebalancing: Progressively rebalancing when Nifty 100 composition adjustments are introduced as a substitute of executing trades mechanically on the precise index change dates, which can lead to trades at higher costs.
- Alternatives associated to particular conditions like demergers: Not like index funds, an energetic fund won’t be pressured to promote a demerged smaller unit of an organization faraway from the index on the demerger date. They will achieve this regularly.
- Coated name technique: Promoting name choices at costs a lot larger than the present market worth on shares already owned. The money acquired on sale is known as premium revenue. If the decision possibility worth is exceeded, the shares owned are bought for a capital achieve. If not, nothing is finished, and the premium revenue already obtained is the achieve. The fund expects to assist achieve a small additional return with this technique throughout sideways markets when most name choices will expire nugatory. See the scheme data doc for an instance.
Will all these gymnastics end in a perceptible/important larger return (wrt Nifty 100 TRI), or will their advantages get washed away in market volatility “over the long run”? This stays to be seen. I’ve my reservations, however I can be glad to alter my thoughts if there’s a massive sufficient knowledge set (5+ years).
Because of this alone, I don’t see any compelling motive to take a position on this fund. What’s extra vital is that the reader ought to ask
- Is there a spot for a big cap fund in my portfolio? For many energetic and passive fund buyers, the reply can be no. So shopping for the Parag Parikh Massive Cap Fund will solely end in muddle.
- For the only a few present buyers who had been gung-ho on mid and small cap funds and have now realised how unstable they are often, Parag Parikh Massive Cap Fund might be an possibility, however a Nifty 50, Nifty 100, and even Nifty 500 index fund can be a less complicated possibility.
- For the beginner investor who has a FOMO about selecting solely passive funds, Parag Parikh Massive Cap Fund might be an possibility, offered they’ve the precise expectations (that means don’t anticipate an excessive amount of outperformance)
- “I already maintain their flexicap fund. Ought to I direct new investments on this NFO?” I don’t see any clear profit in doing this. Will this massive cap fund outdo the flexicap fund? Nobody is aware of.
In November, after we wrote – Parag Parikh Massive Cap Fund -a curious selection, some readers speculated that this fund can be a part of their present metropolis providing for NRIs (inbound fund), together with their flexicap. This has turned out to be true. Was this the primary motive for launching the massive cap fund? I’ve no clue. However I do anticipate a very good chunk of the massive cap fund’s AUM from Reward Metropolis investments over time.
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