Warm greetings!
This past May, Parag Parikh Flexi Cap Fund completed 3 years. Overall, we are happy with the performance and the response that the fund has generated. But only looking at returns in isolation is not prudent. We need to look at the risk adjusted returns. On that parameter, I think we have done a wonderful job. (Please see the Fund Factsheet for Quantitative Indicators and Returns.)
Over the last 3 years, we have been getting a lot of feedback and suggestions from clients, employees and other market participants regarding certain particulars of the fund. I thought it would be a good time to communicate our stance for a few of those points.
Net Worth Criteria
As most of you'll will be aware that SEBI has increased the Net Worth criteria for Mutual Funds from ₹ 10 crores to ₹ 50 crores. We have until May 2017 to reach that number. I am happy to inform you that we will be reaching that mark by December 2016 itself. We have done this through the organic route by internal accruals and the promoters pumping in some capital.
Direct Plan Expense Ratio
One of the recurring feedbacks we got was that the Direct Plan Expense Ratio of the scheme is on the higher side. With all professions/business ventures, as scale grows costs automatically come down. Also, with the Net worth Criteria mentioned above, it did not provide us any leeway to change the expense structure. As we stand, with our Assets Under Management (AUM) of ₹ 648.30 crores (as on June 30th, 2016), the Direct Plan expense ratio is 2% + Service Tax (ST). Going forward, as the AUM increases we will reduce the expense ratio. The reduction in expense ratio will be on the total corpus, and not just on the incremental flows.The planned schedule for that is:
