Parag Parikh or PPFAS Mutual Fund (MF) is known for its regular and clear communication with MF scheme investors. A recent note by Rajiv Thakkar, CIO and Director, PPFAS MF, explains the reason behind some of the recent changes in the fund house’s stock holdings.
Highlighted changes are – switch from HDFC Bank shares to HDFC, rebalancing of weightage of ITC stock, and investment in Coal India shares. It also touches on the topic of ESG (Environmental, Social and Governance) investments.
Thakkar explains that HDFC and HDFC Bank have already announced the merger and the merger ratio (25:42) is also known. Given that both belong to the same group and have already sought relevant informal permissions, the completion of the merger is largely a formality. According to him, since PPFAS MF intends to hold HDFC Bank, it is prudent to invest in the company which is cheaper considering the exchange ratio. “The difference between the two companies was 3% after transaction costs. This position, which is close to 2,000 crore (about 8% of the portfolio) gives a return of around 60 crore or 24-basis point on the entire portfolio,” says Thakkar.
On ITC, the fund house feels that while fair pricing of the stock continues, the attractiveness has waned a bit as the stock price is at least doubling. The portfolio weighting is also threatening to dissolve 10% of the portfolio due to price rise. As a result, some shares of ITC were sold to reduce the weightage. As per the July 2022 fact sheet, the fund house had invested 7.5%, 7.1% and 2.1% respectively in ITC stock in its Flexi Cap, Tax Saver and Conservative Hybrid Funds.
The investment of PPFAS MF in Coal India has surprised many. Based on the July 2022 fact sheet, the fund house had invested 4.2 per cent, 5.5 per cent and 2.2 per cent in Coal India stock, respectively, in its Flexi Cap, Tax Saver and Conservative Hybrid Funds. “We are a firm believer in turning to renewable sources of energy and have not seen Coal India as a ‘buy-and-hold’ company for decades,” says Thakkar. Stock for Medium. The reasons for holding are its high dividend yield and potential benefits from some volume increase in production and sales to reduce import dependence, and the possibility of some increase in the prices at which Coal India is selling coal compared to global prices. does.
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