The ninth unitholders' meeting of the Parag Parikh mutual fund, held on November 12, 2022 in Mumbai, centred on the question of why foreign stocks. This is in light of the recent severe decline in US technology stock prices as well as SEBI's limits on mutual fund foreign investments.
Alphabet, Microsoft, Amazon.com, Meta Platforms (previously Facebook), and Suzuki Motor make up about 16% of the portfolio exposure of the Parag Parikh Flexi Cap Fund, the fund house's flagship investment vehicle.
American Depositary Receipts (ADRs) for Corp as of October 2022. Rajeev Thakkar, the chief investment officer at the fund company, claims that buying foreign equities is not always about maximising profits but rather about lowering country-specific volatility and discovering chances to invest in businesses that are otherwise unavailable in India.
Speaking about US tech stocks, particularly those in the fields of streaming, digital advertising, e-commerce, cloud computing, and artificial intelligence, Thakkar said that "trends in these sectors have existed even before Covid but intensified during the pandemic time and now took a rest."
The following decades will also see a continuation of these tendencies. In several of these markets, the businesses we own are dominant. The chief investment officer also admitted that the speed of change in the technology sector is accelerating quickly. He used the demise of MySpace, a platform for social media networks that was popular many years ago, and Yahoo, a former digital powerhouse. "We are frequently asked if the US IT firms we owned are also experiencing disruption.
The answer, in my opinion, is no, Thakkar replied. He explained the justification for investing in US technology equities and why he thinks it is okay to hold them at the current prices, even at the ostensibly inflated valuations seen in 2021.
Note that the fund house is currently unable to purchase more foreign stocks through the transfer of funds outside of India because the regulator, SEBI, advised asset management companies (AMCs) investing in foreign securities to halt subscriptions in order to avoid exceeding the $7 billion industry-wide limit on foreign investments.
According to Thakkar, the Alphabet (Google) corporation likely knows you better than your siblings, parents, spouse, or kids do. "Their competitive edge and moat are increasing stronger with each passing month and with each passing year," he continued."
Thakkar used Google Maps as an illustration of how the corporation works to remain current at all times. Google Maps has progressed from being only a map- and navigation-related tool to one that is now integrated with advertising.
"It was valued at 28 times earnings in 2021 (when tech stocks had a stock market boom) (price earnings ratio). This is for a business that has a monopolistic business model. It has a wide moat, and the stock price wasn't excessive, "Thakkar remarked.