{"id":697,"date":"2019-07-15T09:02:37","date_gmt":"2019-07-15T09:02:37","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=697"},"modified":"2019-07-15T09:31:40","modified_gmt":"2019-07-15T09:31:40","slug":"parag-parikh-tax-saver-fund-a-worthy-proposition-for-tax-saving-this-year","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/07\/15\/parag-parikh-tax-saver-fund-a-worthy-proposition-for-tax-saving-this-year\/","title":{"rendered":"Parag Parikh Tax Saver Fund: A Worthy Proposition For Tax Saving This Year?"},"content":{"rendered":"\n

After a gap of six years, PPFAS Mutual Fund<\/a> has launched another equity scheme, Parag Parikh Tax Saver Fund (PPTSF) after its only equity scheme Parag Parikh Long Term Equity Fund. \u00a0PPFAS Mutual Fund, a small fund house, since its inception in 2013 had only two schemes in its product basket. One equity scheme (Parag Parikh Long Term Equity Fund<\/a>) and one debt scheme (Parag Parikh Liquid Fund<\/a>).<\/p>\n\n\n\n

[Read<\/strong>: Parag Parikh Mutual Fund All Set To Launch Its Second Equity Fund<\/a>]<\/p>\n\n\n\n

Parag Parikh Tax Saver Fund, an Equity Linked Saving Scheme, is a diversified equity<\/a> fund that offers a dual benefit of capital appreciation over a long term due to investments in equity and tax rebate under Section 80C<\/a> (up to Rs 1.5 lakh) as well. \u00a0\u00a0A distinguishing feature about ELSSs<\/a> is that they are subject to a compulsory lock-in period of 3 years, but the minimum application amount in most of them is as little as Rs 500, with no upper limit.<\/p>\n\n\n\n

Since, PPTSF being a diversified equity\nfund, will invest across market cap and sectors with a focus on strong\nfundamentals while selecting stocks for the portfolio. The scheme will invest\nmore than 80% of its total assets in equity and equity-related securities. So,\nfrom a risk-return standpoint, PPTSF is a high risk-high return investment proposition.\n<\/p>\n\n\n\n

In the long-term, if you intend to create wealth<\/a>, then a tax saving fund such as PPTSF could potentially clock lucrative inflation-adjusted returns if the portfolio construction is done astutely and risks are managed well. But remember, there is high risk. Hence, before you invest recognise your risk profile and make sure you have an investment time horizon of at least 3 years.<\/p>\n\n\n\n

[Read<\/strong>: How To Improve Your Return On Investments?<\/a>]<\/p>\n\n\n\n

You can do either lump sum investments or\ninvestments through a Systematic Investment Plan (SIP). In the case of the\nlatter, each instalment has a 3-year lock-in period. Both individuals and HUFs\nare entitled to invest in ELSS.<\/p>\n\n\n\n

Table1: Details\nof <\/em><\/strong>Parag Parikh Tax\nSaver Fund<\/em><\/strong><\/p>\n\n\n\n

\n Type<\/strong>\n <\/td>\n Open-ended Equity Linked Savings Scheme with a statutory lock-in of 3 years and tax benefit.\n <\/td>\n Category<\/strong>\n <\/td>\n Equity-linked saving scheme\n <\/td><\/tr>
\n Investment Objective<\/strong>\n <\/td>\n To generate long-term capital appreciation through a diversified portfolio of equity and equity-related securities.

\n The Scheme does not guarantee or assure any returns. \n <\/td><\/tr>
\n Min. Investment<\/strong>\n <\/td>\n Rs 500 and in multiples of Rs 500 thereafter\n <\/td>\n Face Value<\/strong>\n <\/td>\n Rs 10 per unit\n <\/td><\/tr>
\n Plans <\/strong>\n <\/td>\n \n\t\u2022 Regular
\n \u2022 Direct\n <\/td>		\n Options<\/strong>\n <\/td>\n \u2022 Growth (default option)
\n \u2022 Dividend Payout\n <\/td><\/tr>
\n Entry Load<\/strong>\n <\/td>\nNil\n <\/td>\n Exit Load<\/strong>\n <\/td>Nil\n <\/td><\/tr>
\n Fund Manager<\/strong>\n <\/td>\n Mr Rajeev Thakkar, Mr Raunak Onkar and Mr Raj Mehta\n <\/td>\n Benchmark Index<\/strong>\n <\/td>\n NIFTY 500 TRI\n <\/td><\/tr>
\n Issue Opens<\/strong>\n <\/td>\n July 04, 2019\n <\/td>\n Issue Closes:<\/strong>\n <\/td>\n July 18, 2019\n <\/td><\/tr><\/tbody><\/table><\/center>\n\n\n\n

(Source: Scheme\nInformation Document<\/a>)<\/p>\n\n\n\n

How will <\/strong>the scheme allocate\nits assets?<\/strong><\/p>\n\n\n\n

Under normal circumstances, it is\nanticipated that the asset allocation of the scheme will be as follows:<\/p>\n\n\n\n

Table\n2:  PPTSF\u2019s Asset Allocation<\/em><\/strong><\/em><\/p>\n\n\n\n<\/tr>
\n Instruments<\/strong>\n <\/td>\n Indicative allocations\n(% of Total Assets)\n<\/strong>\n <\/td>\n Risk Profile<\/strong>\n <\/td><\/tr>
\n Equity and Equity related instruments*#\n <\/td>80 – 100<\/td>\n High\n <\/td><\/tr>
\n Debt Instruments & Money Market Instruments**\n <\/td>0 – 20<\/td>Low to Medium<\/td><\/tr>\n\n\t<\/tbody><\/table>\n\n\n\n

**Money\nMarket Instruments include CMBs, T-Bills, and Government securities with an\nunexpired maturity up to one year, Tri-Party REPO & Repo\/ Reverse Repo. <\/p>\n\n\n\n

#The\nScheme may invest in derivative products from time to time only if permitted\nunder ELSS Rules. In such event, the exposure to derivative instruments shall\nnot exceed 50% of the total Net Assets of Scheme. The Scheme may use\nderivatives for such purposes as may be permitted by the Regulations, including\nfor the purpose of hedging and portfolio balancing, based on the opportunities\navailable and subject to guidelines issued by SEBI from time to time. The\ncumulative gross exposure through equity, debt and derivative positions should\nnot exceed 100% of the net assets of the scheme. Investment in Foreign\nSecurities would be made only if permitted under ELSS Rules. The Scheme may\nseek investment opportunities in foreign securities including ADRs \/ GDRs \/\nForeign equity subject to SEBI (MF) Regulations. Such Investment shall not\nexceed 35% of the net assets of the Scheme. The scheme may invest in a maximum\nof 20% in securitised debt subject to necessary approvals from the SEBI, RBI\nand under ELSS Guidelines.<\/p>\n\n\n\n

*Equity\nrelated instruments shall mean equities, cumulative convertible preference\nshares and fully convertible debentures and bonds of companies. Investment may\nalso be made in partly convertible issues of debentures and bonds including\nthose issued on rights basis subject to the condition that, as far as possible,\nthe non-convertible portion of the debentures so acquired or subscribed, shall\nbe disinvested within a period of 12 (twelve) months. <\/p>\n\n\n\n

(Source:\u00a0Scheme Information Document<\/a>)<\/p>\n\n\n\n

What\nwill be the Investment Strategy?<\/strong><\/p>\n\n\n\n

Investments would be made with a long-term perspective. The investment objective of the Parag Parikh Tax Saver Fund is to seek to generate long-term capital growth from an actively managed portfolio primarily of equity and Equity Related Securities. The Scheme will invest in a diversified portfolio of strong growth companies with sustainable business models.<\/p>\n\n\n\n

The portfolio will be built utilising a bottom-up stock selection process, focusing on appreciation potential of individual stocks from a fundamental perspective. The fund managers will employ a fundamentals-based research process to analyse the appreciation potential of each stock in its universe. The universe of stocks is carefully selected to include companies having robust business models and enjoying sustainable competitive advantages as compared to their competitors. The Fund will have the flexibility to invest across the market capitalization spectrum.<\/p>\n\n\n\n

The Scheme will endeavour to remain fully\ninvested in equity and equity-related instruments at all times.<\/p>\n\n\n\n

Investment in debt securities and money market instruments will be as per the limits in the asset allocation table of the scheme, within the prescribed limits laid under SEBI (MF) Regulations. The investment team of the fund managers will, as a mitigation and risk control procedure, carry out rigorous credit evaluation of the issuer company proposed to be invested in. The credit evaluation will analyse the operating environment of the issuer, business model, management, governance practices, quality of the financials, the past track record as well as the future prospects of the issuer and the financial health of the issuer<\/p>\n\n\n\n

Who\nwill manage the <\/strong>Parag Parikh Tax Saver Fund?<\/strong><\/p>\n\n\n\n

The equity portion of the Parag Parikh Tax Saver Fund will be managed by Mr Rajeev\nThakkar & Mr Raunak\nOnkar (overseas investment), while Mr Raj Mehta will manage the debt potion.<\/p>\n\n\n\n

Mr Rajeev Thakkar<\/strong> is the Chief Investment Officer & Equity Fund Manager at\nPPFAS Mutual Fund. He holds a bachelor’s degree in Commerce from the University\nof Mumbai, is a Chartered Accountant, Cost Accountant and CFA\nCharterholder. He started his career in the year 1994 and he has\nexperience of working in areas like; merchant banking, managing fixed income,\nportfolio, broking operations, PMS operations.  He joined the sponsor of\nPPFAS AMC in 2001. He was functioning as a Fund Manager for PMS service of PPFAS\nmanaging a portfolio of around Rs. 300 crores. He is acting as a Chief\nInvestment Officer and Equity Fund Manager to the Company. He is managing the\nScheme- Parag Parikh Long Term Equity Fund since its inception in May 2013.<\/p>\n\n\n\n

Mr Raunak Onkar<\/strong>\u00a0is the Head of Research and manages the overseas investment of\u00a0the flagship scheme\u00a0Parag Parikh Long Term Equity Fund<\/a>\u00a0since its inception at the fund house. He has done his MMS in Finance from the University of Mumbai and holds a BSc. IT degree from the University of Mumbai. He has over 10 years of experience in the capital market and has been working with the company as an Associate Fund Manager.<\/p>\n\n\n\n

Mr Raj Mehta<\/strong> is\nthe Debt Fund Manager at the at PPFAS Mutual Fund. He is a Commerce graduate\nfrom University of Mumbai, a fellow member of Institute of Chartered\nAccountants of India (ICAI) and is a CFA Charter Holder. He is also a\ncertificate holder of FIMMDA-NSE Debt Market module issued by NCFM. Mr Mehta\nhas over 6 years of experience in investment research. He started his career\nwith PPFAS Asset Management Pvt Ltd as an intern in 2012 and joined the company\nas a Research Analyst in 2013.<\/p>\n\n\n\n

The outlook for <\/strong>Parag\nParikh Tax Saver Fund:<\/strong><\/p>\n\n\n\n

As mentioned earlier, in an endeavour to achieve the stated objective of the Parag Parikh Tax Saver Fund, the investments will be in equity and equity related instruments predominantly and the managers will follow a bottom-up stock selection process. <\/p>\n\n\n\n

Based on fundamental research, the fund\nmanagers will actively manage the portfolio and will flexibly invest across the\nmarket capitalization spectrum. The managers will include companies having\nrobust business models and enjoying sustainable competitive advantages as\ncompared to their competitors with adequate safeguards for controlling risks in\nthe portfolio construction process.<\/p>\n\n\n\n

To control the risk emanating from\ninvesting in equities, portfolio diversification is done. The Scheme would\ninvest in a diversified portfolio of equity and equity-related securities which\nwould help alleviate the credit, sector\/market capitalization related\nconcentration risk. The AMC believes that this diversification would help\nachieve the desired level of consistency in returns.<\/p>\n\n\n\n

But being an equity-oriented scheme<\/a>, as mentioned earlier, PPTSF will be a high risk-high return investment proposition. <\/p>\n\n\n\n

Considering the current market conditions where small-cap<\/a> and mid-cap<\/a> companies have corrected, and even large caps<\/a> tumbled on account of the Budget announcement of surcharge; it provides an opportunity to do some value buying<\/a> but valuations aren’t cheap.<\/p>\n\n\n\n

[Read<\/strong>: Looking for The Best ‘Value Funds’ For 2019? Find Out Here]<\/a><\/p>\n\n\n\n

And the markets brace up for the results\nseason, the corporate earnings need to start justifying the valuations, there\nare governance issues with a few companies, and some companies that are\ndebt-free aren’t cheap.<\/p>\n\n\n\n

Global headwinds are also in play such as\nthe geopolitical tensions, so going ahead the equity markets are expected to\nremain highly volatile. Hence, it will not be an easy year for wealth creation\nand volatility will be obvious. Hence, constructing the portfolio would be a\nchallenging task for the fund managers, and if the Indian equity markets hit\nmore turbulent waters ahead it may inflict high-risk.<\/p>\n\n\n\n

[Read:\u00a0<\/strong>Why Comparing Returns to Risk Is More Meaningful!<\/a>]<\/strong><\/p>\n\n\n\n

Also, remember Parag Parikh Tax Saver Fund being\nan ELSS has a compulsory lock-in period of 3 years. So before investing in an\nELSS make sure your risk appetite is high and you have an investment time\nhorizon of at least 3 years. <\/p>\n\n\n\n

[Read<\/strong>: Which Are The Best ELSSs (Tax Saving Funds) For 2019?]<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

After a gap of six years, PPFAS Mutual Fund has launched another equity scheme, Parag Parikh Tax Saver Fund (PPTSF) after its only equity scheme Parag Parikh Long Term Equity Fund. \u00a0PPFAS Mutual Fund, a small fund house, since its inception in 2013 had only two schemes in its product basket. One equity scheme (Parag…<\/p>\n","protected":false},"author":4,"featured_media":698,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/697"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=697"}],"version-history":[{"count":3,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/697\/revisions"}],"predecessor-version":[{"id":701,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/697\/revisions\/701"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/698"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=697"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=697"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=697"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}