From Nifty's Growth To Thematic Funds— PPFAS CIO Rajeev Thakkar Shares Investment Philosophy

The benchmark NSE Nifty 50 has been on a tear, with prices rising every calendar year since 2019, according to Parag Parikh Mutual Fund's Chief Investment Officer and Director Rajeev Thakkar. The numbers are undeniably attractive. Since 2019, Nifty has delivered positive returns every calendar year, climbing from 10,830 in January 2019 to a staggering 23,883 by November 2024. Even the pandemic-ridden year of 2020 failed to break this upward march.

For many, this consistency might suggest an endless bull run, tempting investors to bet solely on equities while ignoring safer options like fixed deposits or debt funds. But Thakkar warns against such overconfidence. "The last few years do not constitute the entire history of stock markets," he noted in a letter to unitholders, pointing out that equities can underperform fixed income for extended periods—or even deliver negative returns.

Thematic funds may sound glamorous, but Thakkar warns that history is littered with failed bets—from 1990s airline dreams to the once-booming telecom sector. Despite the initial buzz, most airlines went bankrupt, and only one telecom company from that era proved profitable for investors.

"The obvious prospects for growth in a business do not translate into obvious profits for investors," Thakkar said quoting Benjamin Graham, the author of The Intelligent Investor. He emphasised that sectoral funds often attract maximum investment when a sector is 'hot', leaving little room for long-term returns.

Thakkar pulled no punches on the rising allure of day trading, IPO flipping, and options speculation among younger investors. "Serious amounts of money have been lost," he noted, citing SEBI's sobering data. For him, sustainable wealth lies in sticking to a financial plan, not chasing overnight riches.

With valuation metrics now breaching triple-digit P/E ratios, Thakkar likened investing to test cricket. "Not losing our wickets is more important than hitting a six," he said. Holding cash during overvalued markets allows for deployment when opportunities arise, rather than chasing every trend or reacting to events like elections or interest rate changes.

This approach isn't about market timing, Thakkar clarified, but about valuation discipline—waiting for stocks to trade at attractive levels before jumping in.

While India's nominal GDP growth of 11–12% may align with equity returns over decades, Thakkar tempers expectations for those betting on quick windfalls. His advice? Respect market cycles, stick to disciplined asset allocation, and be ready to act when the opportunity arises.