Rajeev Thakkar, chief investment officer of PPFAS Mutual Fund (Parag Parikh Financial Advisory Services), oversees assets exceeding ₹1 trillion. Thakkar, 52, has built a solid track record over the years, with the Parag Parikh Flexicap Fund becoming the largest fund in its category. Incidentally, this is also the fund that Thakkar uses for his own equity investments.
In this interaction with Mint for the ‘Guru Portfolio series’, Thakkar shares how he manages his personal investment portfolio and why his equity allocation has reduced.
How has your personal investing and portfolio evolved over the past five years?
Over the past five years, my portfolio has seen a shift, especially in the last one to two years. We’ve been cautious as a fund house, largely due to elevated valuations in the market, and this cautious approach has reflected in my personal investments as well.
Most of my investments over the past 18–24 months have been in hybrid and arbitrage funds. Given my historically high exposure to equities and the fact that now am in my 50s, I have started rebalancing by allocating more to hybrids and arbitrage products.
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Why have you taken a more cautious investment approach recently?
Given that valuations are elevated, while stocks may deliver slightly better returns than bonds, I have opted for a more balanced approach. Within hybrids, I have allocated to a dynamic asset allocation fund. It also offers a long-term capital gains tax benefit: if the holding period is more than 24 months, capital gains are taxed at a flat 12.5%.
What does your asset allocation look like?
On debt allocation, it has increased significantly. It was 4-5% around 2020, but has now grown to around 12-13%. If I include the contingency and retirement funds, the fixed income component moves closer to 20%. Overall, there’s been a clear rise in allocations toward hybrids and debt instruments.
Gold has largely been in the form of jewellery. I haven’t had explicit exposure to gold, but on auspicious days, some buying and some gifting happen for ceremonial reasons. The balance 80% is still in equities.
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What did your portfolio look like five years ago? Can you give some context?
Five years ago, debt was very limited. That period— around March to May 2020—coincided with the covid lows. Valuations were extremely attractive then, and even some of my debt allocation was tactically moved into equities. At that time, the portfolio was heavily tilted towards equities.
How heavy was the equity allocation back then?
It was quite high—equity allocation could have been around 95%.
How has your portfolio performed?
It has delivered 14% returns over the past year and 29% annualized returns over a five-year period.
What is the current split between large-cap, mid-cap, and small-cap stocks in your equity portfolio?
As a fund manager, I have publicly stated that valuations in the small- and mid-cap segments have generally been more elevated compared to large-cap companies. Because of this, the exposure to mid- and small-cap stocks in my equity portfolio, which is through the flexicap fund, is currently in the single digits (4%).
The bulk of the fund’s portfolio—60%—is invested in large-cap stocks. About 10% is in international stocks, and the balance is in cash.
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How has your international exposure changed?
This allocation has been coming down over the years due to the RBI-imposed limits on mutual fund investments abroad. Recently, Parag Parikh Financial Services (PPFAS) set up a subsidiary in the Gift City, which will offer both inbound funds, as well as outbound funds for Indian residents to invest in global stocks. So, hopefully, I will be able to use that and invest some additional money internationally.
What has been your approach to insurance?
Now that my savings have built up adequately, there’s no longer a need to continue term insurance coverage. I am in the last three years of my term cover. Even my health insurance coverage is slightly lower than the typical amount.
Given this scenario, I’ve been building an emergency corpus—particularly for health or unexpected needs in post-retirement period—again through hybrids and arbitrage funds.
How much coverage do you want to build for this post-retirement emergency fund?
I have reached the basic target to meet my post-retirement lifestlyle needs. But I also need to build a post-retirement contingency fund as my personal medical cover issmall in size. I have employer cover, but that would not come in handy in post-retirement period.
For this emergency fund, which I am planning for health and other contingencies post-retirement, my goal is to accumulate a corpus of around ₹10 crore.
How much is your family involved in investment decisions?
My wife is also a finance professional working in the mutual fund industry, but is on the risk-management side. My family is very well aware of what is happening in my investment portfolio, but any investment decisions are largely left to me.
My daughter, who is now 20, has also become a keen investor and manages a small portfolio of her own. Since a young age, she has been a regular at our annual general meetings with unitholders. She is an avid reader and also watches investment-related content we put out on YouTube regularly.
She has already been to Berkshire Hathaway meetings multiple times, where she has had the opportunity to listen to investing greats such as Warren Buffet and Charlie Munger.