PPFAS after Parag Parikh

We all woke up to the shocking news yesterday that Parah Parikh died in a car crash in the US on Sunday (May 3rd). He was not wearing a seat belt. His wife was wearing one, but still sustained serious head and chest injuries and is critical.

Yesterday afternoon, the PPFAS management sent an email announcing his death with a disturbing postscript:

PS: Mutual fund is functioning normally for all transaction.

Disturbing because even in this hour of shock disbelief and sorrow, they had to comfort investors that all is well.

Yes, investors are worried.

Worried that the founder of the organization is dead.

Worried that the driver of the car was fund manager, Rajeev Thakkar. While he only sustained minor injuries, he could be facing a charge of  misdemeanor motor vehicle homicide

Accoring to Nebraska law, this is typically a class I misdemeanor and could entail imprisonment up to 1 year. However, since Rajeev has no criminal record, the punishment, if delivered, might be one of probation and community service.

However, considering Rajeev is not a US citizen, I do not know how the judge will rule.

In any case, I dont think Rajeev can come back to India until this case is resolved.

In the meantime PPFAS will have to act per SEBI regulations in such matters (fund manager facing trial, on leave of absence etc.).

Since these are not criminal charges, I dont think Rajeevs registration will be cancelled by SEBI. Howver, it is possible that until the matter is settled, Rajeev might have to step down for a brief period.

I dont think that the PPFAS management will abandon Rajeev, at least for professional reasons.

What should you and I do?

We should - do nothing.

I am an NFO investor in PFFAS. I did not invest beacuse of Parag Parikh or Rajeev. I invested because of the strategy. I dont think that is going to change. It could, of course, but I just dont think so.

I will do to PPFAS holdings, what I will do with any of my other holdings. Review periodically and act only when there is visible underperformance.

Let us leave PPFAS alone for a while. Give them space to mourn and sort things out.

Apologies for the sepculative nature of this post.

References:

  1. US new report

http://www.wowt.com/home/headlines/BREAKING-Two-Critical-Two-In-Serious-Condition-After-Morning-Crash-302342921.html

  1. Nebraska law

http://nebraskalegislature.gov/laws/statutes.php?statute=28-306

  1. SEBI fund manger rules

http://www.sebi.gov.in/acts/act122.html#ch3a

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60 thoughts on “PPFAS after Parag Parikh

  1. Syamantak

    They wanted the investors who can stay invested for 5 years at-least. I think, we should give them the time that they sought while welcoming the investors

    Reply
  2. Syamantak

    They wanted the investors who can stay invested for 5 years at-least. I think, we should give them the time that they sought while welcoming the investors

    Reply
  3. Sohil

    Want to ask just like when shares gets embroiled in controversy and it starts falling.Will there be similar case here in this fund where people start dumping it and if so same does happen will it affect NAV or what?

    Reply
  4. Sohil

    Want to ask just like when shares gets embroiled in controversy and it starts falling.Will there be similar case here in this fund where people start dumping it and if so same does happen will it affect NAV or what?

    Reply
  5. Anish Mohan

    Dear Sir, Thank you for posting this message. I have been scurrying all over the web to see if there is any word of comfort from Finance Analysts to investors. Shockingly, even my repeated emails to Value Research did not invoke any response. ! and then, sir, you responded, and I can tell you that this comforted small retail investors like me. I have been forwarding this post to all my friends and colleagues and they have heaved a sign of relief.

    Reply
  6. Anish Mohan

    Dear Sir, Thank you for posting this message. I have been scurrying all over the web to see if there is any word of comfort from Finance Analysts to investors. Shockingly, even my repeated emails to Value Research did not invoke any response. ! and then, sir, you responded, and I can tell you that this comforted small retail investors like me. I have been forwarding this post to all my friends and colleagues and they have heaved a sign of relief.

    Reply
  7. Mohan

    "Timely" post Pattu. I agree we should stay put and lets matters take its own course. Any decision should be taken on annual reviews of the fund.

    Reply
  8. Mohan

    "Timely" post Pattu. I agree we should stay put and lets matters take its own course. Any decision should be taken on annual reviews of the fund.

    Reply
  9. Uberstar

    funds are only as good as their managers...no one can replicate a Prashant Jain or Samir Arora if they quit their respective funds..... ILFS Milsestone lost their founder fund manager in a freak accident when he was on a morning walk recently ...the funds have proved to be disasters for their investors post his death..... the lesson is here is its your hard earned money... you need to be ruthless about your returns and not get strung on some emotional attachement.. i would sell and look elsewhere for another fund

    Reply
    1. Dr Rajeev Kapur

      No fund manager is indispensable. A process driven organization will continue on its path even after the founder has passed away. World history is proof of that.

      Reply
  10. Uberstar

    funds are only as good as their managers...no one can replicate a Prashant Jain or Samir Arora if they quit their respective funds..... ILFS Milsestone lost their founder fund manager in a freak accident when he was on a morning walk recently ...the funds have proved to be disasters for their investors post his death..... the lesson is here is its your hard earned money... you need to be ruthless about your returns and not get strung on some emotional attachement.. i would sell and look elsewhere for another fund

    Reply
    1. Dr Rajeev Kapur

      No fund manager is indispensable. A process driven organization will continue on its path even after the founder has passed away. World history is proof of that.

      Reply
  11. Dr Rajeev Kapur

    Parag Parikh set up a process that should continue even when another manager steps in. I will continue my SIP with PPFASMF.

    He was a great man who set up this unique MF. Institutions do not die when their creators die if the system is robust with a succession plan. Parag Parikh had stated that there was one, when I had asked him what would happen if he is no more - a few months ago at an investors meet in Delhi.

    Reply
  12. Dr Rajeev Kapur

    Parag Parikh set up a process that should continue even when another manager steps in. I will continue my SIP with PPFASMF.

    He was a great man who set up this unique MF. Institutions do not die when their creators die if the system is robust with a succession plan. Parag Parikh had stated that there was one, when I had asked him what would happen if he is no more - a few months ago at an investors meet in Delhi.

    Reply
  13. moronbuffett

    Let us leave PPFAS alone for a while. Give them space to mourn and sort things out.

    LOL. seriously?? AYFKM?

    Give "them" "space" to "mourn" ???
    We are talking about a million $ fund management business here not a charity.

    Talk about "emotional investing", anchoring, buyer's stockholm syndrome to name a few!

    +1 to Uberstar

    Q: When to exit a mutual fund

    A: When the mutual fund founder is dead, when the fund manager has criminal charges pending in a foreign country or when there is no successor in place.

    Corollary:

    IF by 2017-18 (@ the end of their proclaimed 5 yr period), PPFAS did indeed perform well it absolutely confirms malkiel's monkey theory!

    Reply
    1. freefincal

      Boy you are tiresome! Might as well accuse me of having all the syndromes that you can think of. I have made it clear enough in the post that I intend to rationally review my folio. I am not prone to knee-jerk reactions. I am neither interested nor comfortable about asking the amc about this. I am bound to get some standard diplomatic nonsense anyway. To me mutual fund investing is a black box labelled with its NAV. As long as the moves right. I stay put.

      Reply
  14. moronbuffett

    Let us leave PPFAS alone for a while. Give them space to mourn and sort things out.

    LOL. seriously?? AYFKM?

    Give "them" "space" to "mourn" ???
    We are talking about a million $ fund management business here not a charity.

    Talk about "emotional investing", anchoring, buyer's stockholm syndrome to name a few!

    +1 to Uberstar

    Q: When to exit a mutual fund

    A: When the mutual fund founder is dead, when the fund manager has criminal charges pending in a foreign country or when there is no successor in place.

    Corollary:

    IF by 2017-18 (@ the end of their proclaimed 5 yr period), PPFAS did indeed perform well it absolutely confirms malkiel's monkey theory!

    Reply
    1. freefincal

      Boy you are tiresome! Might as well accuse me of having all the syndromes that you can think of. I have made it clear enough in the post that I intend to rationally review my folio. I am not prone to knee-jerk reactions. I am neither interested nor comfortable about asking the amc about this. I am bound to get some standard diplomatic nonsense anyway. To me mutual fund investing is a black box labelled with its NAV. As long as the moves right. I stay put.

      Reply
  15. Anand

    While most funds boast processes in place unfortunately when a different fund manager executes the same process the results can vary significantly - both ways!

    Reply
  16. Anand

    While most funds boast processes in place unfortunately when a different fund manager executes the same process the results can vary significantly - both ways!

    Reply
  17. Uberstar

    PPFAS fund will be now run by his two children who dont get my vote due to their lack of experience.... They may get another professional fund manager to take over the reins temporarily .... the larger Q is do u really want them to prove their "processes are in place theory" with your money.....good luck to you all......

    Reply
  18. Uberstar

    PPFAS fund will be now run by his two children who dont get my vote due to their lack of experience.... They may get another professional fund manager to take over the reins temporarily .... the larger Q is do u really want them to prove their "processes are in place theory" with your money.....good luck to you all......

    Reply
  19. Dr Rajeev Kapur

    CHECK THE LATEST UPDATE on wowt.com site quoted in the above article. No charges will be pressed as their is no evidence against either driver. So, the prophets of doom should know that the fund manager is safe and will continue to look after investments in PPFASMF.

    Reply
  20. Dr Rajeev Kapur

    CHECK THE LATEST UPDATE on wowt.com site quoted in the above article. No charges will be pressed as their is no evidence against either driver. So, the prophets of doom should know that the fund manager is safe and will continue to look after investments in PPFASMF.

    Reply
  21. muneer

    I was in one Library in London when I using free WI FI to open this blog,I got this very much shocking news of my mentor in value investing Mr.Parag Bhai´s accident and death. I thank you Pattu sir,because I got this news through you.Feeling so sad.I have seen all of his investment videos repeatedly(still) that available in web.So the discussion here is that what about PPFAS AMC after Parag Parikh?The answer is he himself said as introduction of several videos
    `YOU HAVE TO REMEMBER THE LAW OF THE FARM THAT YOU CAN´T SOW SOMETHING TODAY AND REEP TOMORROW. A SEED HAS TO GO THROUGH VARIOUS SEASONS BEFORE IT TURNS TO A FULLY GROWN TREE´.

    Finally my worry is not RETURN,but I can´t see you anymore.

    Reply
  22. muneer

    I was in one Library in London when I using free WI FI to open this blog,I got this very much shocking news of my mentor in value investing Mr.Parag Bhai´s accident and death. I thank you Pattu sir,because I got this news through you.Feeling so sad.I have seen all of his investment videos repeatedly(still) that available in web.So the discussion here is that what about PPFAS AMC after Parag Parikh?The answer is he himself said as introduction of several videos
    `YOU HAVE TO REMEMBER THE LAW OF THE FARM THAT YOU CAN´T SOW SOMETHING TODAY AND REEP TOMORROW. A SEED HAS TO GO THROUGH VARIOUS SEASONS BEFORE IT TURNS TO A FULLY GROWN TREE´.

    Finally my worry is not RETURN,but I can´t see you anymore.

    Reply
  23. Dr Rajeev Kapur

    ET NOW channel paid a tribute to Sh Parag Parikh today with replay of his last interview where he had explained his investment philosophy of diversified long term investment in a Single Scheme MF. As a proof of his conviction he, his fund manager and employees have all invested in this fund.
    Mother Dairy and AMUL continue to thrive long after their creator Dr VJ Kurien ceased to be their leader. Systems and processes created by him are in place.

    Reply
  24. Dr Rajeev Kapur

    ET NOW channel paid a tribute to Sh Parag Parikh today with replay of his last interview where he had explained his investment philosophy of diversified long term investment in a Single Scheme MF. As a proof of his conviction he, his fund manager and employees have all invested in this fund.
    Mother Dairy and AMUL continue to thrive long after their creator Dr VJ Kurien ceased to be their leader. Systems and processes created by him are in place.

    Reply

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