Parag Parikh Flexi Cap Direct Growth INF879O01027

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

The leading factor in 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 buttresses the rating. However, the process is limited by the size of its portfolio management team, with five portfolio managers.

This strategy, over time, has preferred larger market-cap companies, compared with others in the Flexi Cap Morningstar Category. But in terms of style (value/growth) exposure, it does not have much of a bias and resembles the category's typical portfolio. Analyzing additional factors, this strategy has consistently had a defensive tilt owing to its exposure to high-quality stocks over the past few years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. 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. This orientation tends to pay off most prominently when markets are hot. 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 7.8 and 5.7 percentage points, respectively. The sectors with low exposure compared with category peers are industrials and basic materials, underweight the average by 11.9 and 7.3 percentage points of assets, respectively. The portfolio is positioned across 140 holdings and is relatively top-heavy. Of the strategy's assets, 51.7% are concentrated within the top 10 holdings, compared to the category’s 38.0% average.