Why Alphabet, Microsoft, Amazon, Meta Stocks Continue In PPFAS Mutual Fund

Parag Parikh Flexi Cap Fund, which has been the flagship scheme of the fund house, has been investing in US stocks and has around 16% of portfolio exposure in stocks like Alphabet, Microsoft, Amazon.com, Meta Platforms (formerly Facebook). and Suzuki Motor.

Corp ADR (American Depository Receipt) by October 2022. According to the fund house’s chief investment officer Rajeev Thakkar, investing in international stocks is meant to reduce country-specific volatility and find opportunities to invest in companies that are not otherwise there. Available in India; And not necessarily to maximize returns.

Talking about US stocks in the tech space, including streaming, digital advertising, e-commerce, cloud computing and artificial intelligence, Thakkar said, “Trends in these sectors were present even before Covid, but accelerated during the pandemic period.” Done and now got a relief.

These trends will continue in the coming decades. The companies we own are strong players in some of these areas.” Further, the chief investment officer also acknowledged the fact that the pace of disruption in the technology sector is very fast. He also co-founded Yahoo (a web giant). Take the example of collapse. In the past) and MySpace (a social media network platform), which were popular many years ago. “We often question whether the American tech companies that we have are also being disrupted.

I don’t think the answer is yes. ,

Note that the fund house cannot currently buy more international stocks by sending money out of India as asset management companies (AMCs) investing in foreign securities have to be subscribed by the regulator, SEBI, to avoid breaching industry-wide foreign investment limits. It was advised to stop. $7 billion.

Alphabet

Thakkar said that Alphabet (Google) company probably knows you more than your siblings, parents, spouse or children. “With each passing month and each passing year, their competitive advantage and moat are getting stronger,” he added.

Giving an example of how the company tries to stay relevant all the time, Thakkar gave an example of Google Maps, which evolved from just an application for Maps, to Navigation, to now to Advertising.

“In 2021 (when tech stocks saw euphoria in the stock market), it was valued at 28 times earnings (price earnings ratio). This is for a company which is monopoly in nature. It has a huge gap and I don’t think the stock was overvalued,” Thakkar said.

Microsoft

Microsoft Corporation, which offers products such as Microsoft 365 (Office), Windows, Azure Cloud, Devices (Surface, Xbox, HoloLens), LinkedIn, Bing, Dynamics (CRM) and Power BI, is another international stock called PPFAS Flexi. kept in Cap Fund. its portfolio.

“It runs a major operating system. They have a subscription-based office productivity suite with applications such as Excel, Word and PowerPoint, offer software as a service and are number two in providing cloud services.” is located. It is growing significantly

Right,” Thakkar said of the company. At 33.7 price-to-earnings ratio in 2021, Thakkar believes the company was not in a valuation bubble and the fund maintains it in the fund’s portfolio.

Amazon.Com

Fund house with business segments like Amaon.com, Cloud Computing (AWS), E-commerce, Fulfillment, Prime Membership (Shipping, Video, Music, Food Delivery), Kindle, Echo/Alexa, Ring-like Devices, Advertising, Logistics, Another favorite company of

“The company tries to convert the expenses into a profit center in the profit and loss statement,” Thakkar said. In-house logistics and also provides its services externally,” he said.

The current market valuation of the company is around $1 trillion. “Given the current and last year’s price-earnings ratio, it may appear that the valuation is in a bubble, but we do not think so. Arguably, the overall valuation of the company is justified on the basis of the AWS business segment (cloud platform) only which is a significant part of the company’s profits and prospects.

Meta Platforms Inc

The meta platform offers applications such as Instagram + Reels, Facebook, WhatsApp, Messenger, Oculus, Metaverse. Talking about the company’s growth, Thakkar highlighted the $257 billion revenue generated by the company in 2021. This is against the reported revenue of just $7 billion in 2013.

This company’s valuation stood at 23 times earnings in 2021, but has now risen nine times due to a sharp correction in the share price, exacerbated by the decline in reported profit this year.

Thakkar believes, “I don’t think the company is overvalued. WhatsApp and Facebook are growing well. Tik Tok has taken some market share from Instagram, but the latter is not dead.”

“This is despite the company’s spending on the Metaverse project. It’s success or failure is largely immaterial at this point. Most companies underestimated their profits last year. But they’re all cutting costs now.” He added.

other geographic areas

Talking about investments in geographies other than the US, Thakkar said that he had earlier invested in Anheuser-Busch, a European alcoholic beverages company, and Nestle, a Swiss-based global FMCG company. We also currently own Suzuki Motor Corp, a Japanese company. When it comes to China, after due diligence, we realized that we are not comfortable investing in the country due to various reasons including the political situation.