New name for Parag Parikh Long Term Equity Fund and Change in Category
Investors of the Parag Parikh Long Term Equity Fund have received an email regarding change in the name and re-categorization of the fund. The fund will now be called the Parag Parikh Flexi Cap Fund and it will be classified in Flexi Cap category from January 21, 2021.
It was evident when changes to the Multi cap category were announced in September 2020, that most of the multi cap funds would shift to other categories.Subsequently SEBI came up with Flexi Cap Fund that can have the same characteristics as the earlier version of multi cap funds. The problem for Multi Cap Fund Managers was to comply with the changed rule of minimum limit of 25% in mid cap and small cap companies. That new rule also results in additional risk the fund had to take by investing minimum 25% in midcap and small cap companies.
What Does This Mean For Investors?
PPFAS Asset Management Company took the call of moving their flagship fund into Flexi Cap category which is truer to label when it comes to the way the fund is managed. Being in Flexi Cap category gives the fund the much-needed liberty to invest in any market capitalization without any restrictions. Hence, the fund house has taken a rational call of recategorizing its fund as Flexi Cap.
Existing and potential investors can heave a sigh of relief as the fund can continue as it was managed in the past as a FlexiCap category. Nothing changes for the investors of the fund and there is no other major fund fundamental change except the change of name and recategorization.
Existing investors can continue to remain invested and prospective investors who were planning to start investing in the fund need not change their mind if they had decided to invest in the fund before this communication.