Why The Buffett Indicator Is Widely Misused Rajeev Thakkar

TITLE: Why the Buffett Indicator is Widely Misused | Thrive by Groww ft. Rajeev Thakkar CHANNEL: Thrive by Groww DATE: 2025-12-27 ---TRANSCRIPT--- mistake that I see people doing is that people will come into a trend or a theme at the peak of that cycle. So in late ’90s people bought into technology as a theme. 2007 people bought into real estate and commodity as a theme. Or sometime back people were rushing into defense. The identity of the flexi cap fund is you, right? It’s like Elon Musk and Tesla. Right? So should a new investor, you know, coming into your fold be somewhat concerned about leadership changes in the future? How is that going to affect the thinking behind the fund itself? Within the next 47 years I will have no association with PPFAS because I am 53 years of age. So I’ll probably not be associated as a shareholder, as a employee director, whatever. Key thing of any person is can you build systems and processes in the company that outlast you. So our recruitment is such that we bring together like-minded people, people who believe in this approach of investing. The same stocks which you may have considered overvalued in your flexi cap, now you will be putting in money when it comes to your large cap. So is there not a contradiction in what the core values of Parag Parikh have been for so many years? Let us say a restaurant is serving idli for 13 years. Now the restaurant has a dosa also on the menu. You can choose not to order the dosa, but people who are fond of dosa they have an option now saying dosa is also served at this restaurant. It’s as simple as that. Sometimes in the long term it means that you will be sitting on flat to negative returns. But over what duration? That’s the question. It can be very, very long. In a world where investors are constantly told to chase the next big thing, Parag Parikh Financial Advisory Services has built something much deeper, trust. Today we are speaking to someone who guides the philosophy of PPFAS, Rajiv Thakkar. We’ll talk to him about managing money to be reliable, safe and consistent in a world where everyone else is chasing noise. Welcome to Thrive by Grow. I’m Radhika Bajaj. Rajiv, it’s an absolute honor to be speaking with you on Thrive by Grow. So thanks for making time for us today. Wonderful. Thank you for the opportunity. Uh Rajiv, you know, if you look at some of the macro factors in the past few months, whether it’s the weakening rupee or volatile markets or tariffs, there’ve been a lot of headwinds. What is the most common mistake that you’re seeing investors make at a time when there’s been so much uncertainty and volatility? I think the common mistake investors make is focus on the headwinds or focus on the uh what is the headline or what is the topic of discussion today. Uh because if you look at uh equity investor’s journey or not just equity investor, why any investor who has uh longer term goals, uh be it retirement, be it children’s education or milestone events in the family like a home purchase or a wedding or something. Uh in this journey inflation will go up, come down, tariffs will come and go away, wars will start and wars will end, oil prices will shoot up and come down. But one has to decide allocation based on one’s needs and then stay the course. I think the mistake people make is people focus on the past 12 months, uh 24 months. Rush into the asset which has done the best in the last recent period and over allocate there. So in the current context people would say uh or 12 months haven’t been that great for equities. Uh gold has done well or bank FDs have done well. Now let’s move away from equity into those asset classes. That’s not the way investing should work. That brings me to something I think you’ve said in the past that when it comes to long-term investing you have to identify long-term trends. So at a time like this this becomes even more important? Uh so trend identification does play a role uh in investing. That trend identification has to be matched with uh the execution capability of the people running the company, balance sheet strength and uh various other things have to come together. Uh and in my opinion that’s best left to the professional investors, uh the fund managers. The function of a retail investor or someone who’s putting investments into equities, uh that person is best uh served by investing in a diversified fund. Uh the other mistake that I see people doing is that people will come into a trend or a theme at the peak uh of that cycle. So in late ’90s people bought into uh technology as a theme. 2007 people bought into real estate and commodity as a theme. Or sometime back people were rushing into defense. I think that’s best left to the uh people managing the fund and people should invest in diversified equity funds. So let me put this question to you as someone who manages funds, right? Uh now when you see a trend emerging or you see consolidation in a particular sector, is it also important for you to wait for somewhat clear winners to emerge to capitalize on the trend or consolidation? Uh for example, I think whether it’s Bharti Airtel or Mahindra, uh you know, where you went in and uh those have given multifold returns. Yes. So uh when some new trend is emerging, many a times what happens is too many people rush into that space. And while the volume growth comes into that sector the profitability is poor uh and if you look at uh things in the past mid-’90s, uh private sector airlines were opened up or Indian Airlines at the erstwhile monopoly and private sector players were allowed. Or cell phones were just invented and uh that sector was opened up for the private players. Uh a lot of players came in and destroyed a lot of wealth for investors. So with the underlying trend, uh some restriction on the amount of competition, some balance sheet strength, pricing power some financials have to be there before you invest in. So telecom and auto, the two investments that we have made. Telecom has come out of a brutal uh competition period. So many players exited. So now they have had pricing power coming back. Auto it’s still very, very competitive actually. It’s not uh the earlier era where, let’s say, Maruti dominated the entire space. You have domestic players plus Chinese players coming in. Tesla has entered the market. But uh Mahindra we felt that they had a good product lineup and they had brought back focus on the capital efficiency, etc. But were you also thinking of a trend that Mahindra was leaning into which was electric vehicles? Was that also part of your thinking? Uh yes. So that is one of the things. So the form factor itself has moved from hatchbacks and sedans into the larger SUV form factor where Mahindra has been leading and they are there in various power trains. So diesel as well as they have a good electric lineup as well. So from that point of view they are in the right segments. Okay. Uh let’s talk a little bit about stocks where you have actually moved against market sentiment. I think Meta to some extent also IEX. Uh when there was a lot of negative news around these businesses you actually upped your positions. Uh Uh what makes you reassess a business business and in what way when there is the short-term volatility? And I ask this because again there is sometimes panic selling because people are reacting to bad news around a certain business. So one has to evaluate whether the sell-off is a permanent sell-off or is are there fundamental factors which have permanently damaged the business? Or is this something which is temporary and where it’s just a sentimental thing as you mentioned. Uh so if you bought Jet Airways for example after their plane stopped flying, you knew that they have these huge debts which they haven’t repaid to the banks or they haven’t paid staff salaries and obviously it’s a fatal situation. The company is going into liquidation. So averaging downwards or buying after a sell-off does not make any sense. Uh the other examples that you mentioned are examples where our reading was that these things are temporary where the underlying business has not suffered. Maybe there’s either regulatory uncertainty or there’s elevated capital expenditure or revenue expenditure around a new line of business that they are exploring. Now either that succeeds, in which case well and good. Even if it does not succeed uh it will be a dampener for 1 year’s earnings or 1 and 1/2 year’s earnings and they will eventually cut back. So in the case of Meta they were making a lot of investments in metaverse. Uh that directly has not helped them. Yeah. But, there were allied benefits uh So, the AI glasses that they have made or the

related. open source uh uh artificial intelligence models that are there. So, some ancillary benefits could come once in a while. Mhm. And they have now announced cutback in the meta-related expenses. Mhm. So, it really boils down to this assessment, temporary headwinds versus permanent damage to the business. Uh and what’s your thinking on these themes that keep emerging? Like, for example, capital markets is a theme that a lot of people are buying into. You are You seem to be exiting. I think you’ve exited uh MCX and more recently Motilal Oswal. So, for a theme that appears to be decadal, uh how do you take a call on exiting some prominent business there in? MCX we are still holding. Some of these we have trimmed. So, MCX, CDSL, these kind of names we are uh still holding. Mhm. Uh we have exited Motilal Oswal UTI AMC. Mhm. So, some of these businesses are cyclical. So, what happens is in a rising market, uh a lot of IPOs come out. A lot of investment banking fees are there. A lot of the private equity investments that have been made in the past get exits. So, there are these uh carry fees or performance-linked fees that the manager earns. The AUMs are at elevated levels because stock prices have moved up. Uh stock brokerage turnover goes up. So, a lot of these things uh have cycles. There are upcycles and there are downcycles. So, in a upcycle it feels like a permanent long-term growth uh kind of business. But, what it does is one, it increases expenses for people. There’s competition for talent. More players enter into the segment. Uh and eventually you see a cyclical downturn. So, uh it’s very difficult to uh time the exact tops and bottoms. But, at least my reading is that we are at the upper end of the cycle rather than um middle or lower end of the cycle. So, we are lightening up the investments in this space. Now, uh when it comes to AI, it’s being called like this multi-decadal theme, right? Uh how do you view the theme of AI from an Indian investor’s lens? Because the feeling is that there is not enough opportunity in India to sort of ride this AI wave. So, I wouldn’t read too much into this uh thing. And I’ve seen those social media posts or the forwards going around that we have lost the AI race. All the models are either made by the US companies or the Chinese companies. We don’t have our own operating system, right? We don’t have Windows or we have not created any database software like a Oracle or uh we don’t have a Adobe kind of thing. Mhm. Our strength lies in implementation and services around that. Uh so, although we were not among the initial internet companies or we were not among the initial uh people who developed the hardware chips or uh created something like a Windows. But, we were great at implementing these things. I think AI improves the productivity for of the uh engineers. Now, initially it’s seen as a headwind because less time and effort will be required and uh people are saying top line of IT services companies will come down. Mhm. Uh fewer people will be required. At the same time, this will create a huge amount of demand for customized software. As things become cheaper, the uh demand for that goes up. So, it’s uh in literature it’s called something like the Jevons paradox. Academic literature refers to it. Uh stockbroking, for example, let’s look at that. So, uh we are on a Groww platform. At one point in time, uh brokerage rates were 2% and 3% in India for a stock brokerage transactions. Now, we all know how that has played out. Uh brokerage rates have crashed. But, still the uh volume has simply shot up. And if you look at the total brokerage revenue today versus, let’s say, ’80s and ’90s, Mhm. it’s much higher than what it was at that point in time. Mhm. So, one should not look at the simply the pricing trends. Mhm. Price into volume is what matters and volume goes up. Mhm. So, although we don’t have foundational models on AI in India, Mhm. but still we’ll benefit from the AI. And it’s a like internet, it’s a multi-decadal theme. There will be ups and downs surely, just like we saw in the case of internet. There was a big boom in late ’90s followed by a crash, a period of consolidation, then in some cases a new set of winners came about. Some companies which were not in the ’90s got founded. Uh so, uh Facebook was not around in ’90s. It came in much later. It’s interesting that you say that because uh if you look at the flagship Parag Parikh Flexi Cap Fund, the exposure to the Indian IT sector has pretty much cut been cut down to half in the last 1 year. So, I see a little bit of a contradiction between what you’re saying and how the fund uh has been sort of repositioned. So, we have in our monthly disclosure just came out. So, just last month we have added uh new investments in the IT services space. And it’s something that we are watching. And at the appropriate valuation, we would be looking to invest in this space. The other thing that has resulted in overall IT exposure coming down is not because we have sold things. It’s because we have not been able to invest globally. So, our exposure to uh things like Alphabet or Google, things like Meta, Facebook, Amazon, Microsoft, these have come down. Mhm. Because of the restrictions on investments abroad. So, what I’m sensing is that if the regulations were relaxed, you would be interested or keen to invest more in foreign stocks. Absolutely. Uh why do you think that is important for India and Indian investors today? So, one, while India is a large market, well-diversified market, newer listings are happening all the time, still there are some key sectors where we are not present. You mentioned AI. Uh innovator pharmaceutical space is another such uh sector. So, the uh Ozempic, Mounjaro, Wegovy came from foreign companies. Mhm. The Teslas and BYDs are abroad, not uh in India. The Apples, Googles, Microsofts are abroad. Mhm. a lot of uh sectors we are not large players in them. And also, India as such is a mid to high single-digit market share in global market cap. Mhm. A lot of companies are outside India. And when you have a India plus overseas portfolio, it reduces the ups and downs on the portfolio. Sure. So, India-specific whether positive, whether negative, so a GST cut benefits only Indian companies, not global companies. A demonetization affects only Indian companies, not global companies. Mhm. So, there are those ups and downs become more muted in a diversified portfolio. Absolutely. I want to talk a little bit about the core philosophy that you hold around value investing. So, you moved from fixed income to equities back in

Uh you know, in the midst of a bull run or a bull run was starting. Sensex turned 5x. Were there any momentum-driven mistakes at that time uh that you made and that you recall today? So, not mistakes. Uh there were momentum-driven pains that uh we went through. Mhm. So, 2007 was a period where uh the fancied sectors were real estate and infra. Mhm. Uh and we were not having those companies in our portfolio. So, which caused a huge underperformance because we were not participating in the momentum that was going on. Mhm. And which helped us in 2008 at the time of the crash. Mhm. But, which this happens all the time. So, in a crazy bull run kind of environment, we tend to be somewhat subdued. Mhm. Uh so, also how value investing has really changed. I think back then, if there was a single digit PE and there were some dividend yields, you know, that signaled value. Today, we are looking at 100 plus uh PEs. Uh what are some of the major shifts that you see that have come in today? So, the 100 PE stocks existed existed even then. Uh and they were not value. You simply have to stay away from a good quality company, but which is overvalued. Mhm. So, late ’90s, companies like Infosys and Wipro, absolutely phenomenal companies, by the way. But, they were trading at 300 times earnings or 200 times earnings kind of multiples. Mhm. Now, for a for almost 7 years, 10 years, these companies gave zero return to shareholders who bought at those prices. Mhm. Uh even though profits grew quite a bit. Mhm. So, essentially, our job is to identify not only good quality managers and companies, but to buy at them at the appropriate valuation. And if things get out of hand, to actually sell them and move on. But that’s such an important point, right? I mean, if somebody sold Infi back then, then they would be regretting today. So, how do you advise people learn or to develop that patience that sometimes in the long term, it means that you will be sitting on flat to negative returns, but there would be returns maybe in a in the longer tenure. So, flat to negative returns are a feature of equity investing. It’s not a bug. But over what duration? That’s the question. It can be very, very long. Uh So, at the index level, 1992 to 2003, 11-year period, was uh negative or flat. Uh peak 2007, December 2007 to let’s say 5 and 1/2 years, 2000 12 or 13, there was a long period of consolidation. It can be very, very long. Mhm. The way to protect oneself against this is to give up some extra returns in the bull period. So, if in 2007, you were away from the frothiest sectors, real estate and infra, you would look very, very foolish in 2007, but you did not have such a long period of zero or negative returns, because you were away from the frothiest sectors. Mhm. So, if one is okay with reasonable rate of return over a long period, then you avoid the worst mistakes in a bull run. Uh so, you know, what you said in the previous answer, another question pops up that as a value investor, you have some control over the level at which you’re entering. But for those of us who prefer growth companies, uh how do you decide where to sort of, you know, draw the line? Because growth stories can be exciting, but how do you know you’re not uh overpaying? Growth companies can also be value investments. So, growth is put into your estimate of future cash flows. Mhm. And based on those future cash flows, you arrive at some value you think is reasonable for that company. And then you have to buy it at a discount to that value. So, today in our portfolio, we have companies like Microsoft, Google, Amazon, Facebook, which lot of people would classify them as growth companies, but we think that they are intrinsically worth more than what they are quoted at in the market. So, it’s not that we are against growth. Mhm. It’s just that we are against overpaying for growth. Mhm. There’s a fine line a distinction between these.

you know, elaborate, because I think you have said that predicting growth can be easy, but making money is the tough thing. So, if you can elaborate on that for our viewers, it would be helpful. So, Benjamin Graham said this many, many decades ago. His few lines were, “Obvious prospects for physical growth do not translate into obvious profits for investors.” So, physical growth is your top line. More uh number of units get sold, and the company earns a revenue. Profits for investors are the bottom line. Is there a reported profit? Does that profit get matched with cash flows, or is it completely in the receivables or uh fixed asset Mhm. assets, and relative to the amount invested in the business, is that profit adequate? Now, if you have put in 100 rupees in the business, and the business generates 20 25 as profits, cash flows, that is obviously adequate. Mhm. But for generating 25, 30 as profits, if you have invested 1 lakh of rupees, then obviously that is not adequate. You want a reasonable return on equity or return on capital employed. So, today when a bank is giving you 6, 7% FD returns, and if you are taking equity risk, you typically want a 12, 15% kind of 20% kind of return on equity. Is that being earned, or is this growth simply uh vanity, where maybe 20 companies are competing in this space, all of them are losing money, but they are just showing top line growth and saying profits will come somewhere in the future. So, you have to guard against those things. Wonderful. I think, you know, only you can articulate it so simply and effectively. Thank you for that. I want to go back to talking about the flagship flexi cap fund. Currently, it holds about 90 stocks, about 24% in cash and debt. Not not 90 stocks. Yeah, so uh when people look at our fact sheet, I would ask them to look at only the core equity portfolio. Okay. So, there are arbitrage positions, which really don’t matter whether the stock price goes up or down. Mhm. We have bought the stock in the cash market, Mhm. and we have sold in the futures contract. Mhm. So, there are roughly less than 35 stocks in the portfolio. Okay. Uh why I asked that was that there are many holdings which are as small as between 0.1% to 0.5%. Is that factual? So, a lot of things would be in the arbitrage space. Small positions would be there in some cases, but uh those can arise for various factors. So, want to just understand those factors, because even if these really small allocations give 5x returns, they would never be a substantial part of the portfolio. Yeah. So, as I said, some of these may not really be core equity holdings. They could be arbitrage holdings. But otherwise, sometimes you start buying a stock, and the stock price moves, where you may not be able to build a sizeable position, Mhm. in which case, uh you would hold on to what you have. If the price comes back lower, you could end up buying, or somewhere down the road, you could exit the position. So, it could be because of that. In some cases, especially in pharma, we have uh said that we want a basket of good generic pharma companies, rather than creating a large individual weight in a particular company. So, if we have five stocks of 1% each, then at a portfolio level, it would be 5% exposure to that sector. So, while we are not looking at individual companies uh too much, we are looking at that exposure to that space. So, it’s exposure to the sector in various companies. Okay, that makes sense. You were speaking about, you know, arbitrage. Now, 5 years ago, India had roughly 23 arbitrage funds. Today, there are 34, including one at yours. Uh with more schemes now competing for the same pool of opportunities, and even some non-arbitrage funds partially using these strategies, will such funds will, you know, be actually able to deliver the returns, and should we expect these returns to decline over a period of time? So, arbitrage funds are largely cash management products. Uh arbitrage funds still have the capital gains benefit if you hold them for a year plus, you get the 12 and 1/2 uh percent taxation. Of course, government makes its share of taxes via the STT uh that the arbitrage funds uh generate. The returns that come from arbitrage are a function of various different things. It’s not just linked to the number of schemes or the size of assets. Uh for arbitrage funds to generate return, there should be some speculative interest in the market. So, arbitrage funds buy in the cash market, and they are selling in the futures market. There have to be buyers in the futures market for arbitrage funds to be able to generate a return. If people are not buying futures at a premium, or if there are too many short sellers who are driving down futures prices, arbitrage returns will not be there. The good part about returns is that these are self-correcting. Uh if let’s say money market or liquid funds are generating 5 and 1/2 percent, if arbitrage funds suddenly start generating 10% returns, lot of money will flow in. Corporates or HNIs will redeem liquid and money market funds, dump money in arbitrage funds. Returns will come down. If returns fall significantly below liquid and money market funds. Let us say if liquid and money market are giving 5 and 1/2 6% kind of returns, if arbitrage funds start giving 2% and 3% returns, there will be redemptions and money will flow to liquid and money market. So it’s a self-correcting thing. The number of schemes as more number of fund houses come to the market, that will increase. Maybe somewhere down the road you’ll have 50 arbitrage funds in the market. Uh you know, we speak a lot about how India is adding new retail investors every day. Number of demat accounts is growing and PPFAS has such cult following, right? Many new investors in fact begin their journey because of the sheer simplicity of what you have offered so far. The identity of the flexi cap fund is you, right? It’s like Elon Musk and Tesla. Right? So should new investor, you know, coming into your fold be somewhat concerned about leadership changes in the future? How is that going to affect the thinking behind the fund itself? So we are moving towards a 350 person organization. So lot of people are there in the company. So while we are chatting, the markets are on. My colleagues are busy taking the investment decisions. So it’s not a one person organization. Partly the perception comes from the time of our humble beginnings. So way back in 2003, we were a 4 crore AUM PMS. That time obviously there were a very very limited set of individuals or at that time our founder Paragbhai and I were the face of the company. So it’s because of that that this perception is there. Today there’s a pretty large investment team similar in size to the teams of other fund houses and this thing is not true. So I think you’re you’re being very humble now. I I would say you know, people think of staff fund managers and they definitely think you as part of that list. So what like it’s a certainty that within the next 47 years I will have ceased to have no association with PPFAS because I’m 53 years of age. So I’ll probably not be associated as a shareholder, as an employee director, whatever. So the key thing of any person is can you build systems and processes in the company that outlast you? The entire effort of the organization is that it becomes a long-term perpetual organization which serves the client needs rather than being linked to a individual. So sure I may have had some role in the founding days of the company, important role in the founding days of the company. But have I been working on developing systems and processes which run on their own where people buy into that approach and philosophy? So our recruitment is such that we bring together like-minded people, people who believe in this approach of investing. And I believe we have managed to create that. Again, just a statement of fact, our flexi cap fund launched in 2013. Raunak has been part of this team since 2013, day one. Raj has been part of the team since day one. And we have on-boarded more in people. So Rukun came in later, but Rukun is someone we have known pre-2013 as an individual. On the fixed income side we have hired senior resources. So so Tejas Soman has joined us as the CIO on the fixed income side. So the depth of the team is increasing as we speak. I’m glad to hear that and I’m sure that many young investors are too. But there are also people who want to work in this industry. And if someone’s entering this industry today wants to be a fund manager, what would be your advice to them? So firstly have clear alignment in all the stakeholders. So if you have seen the boat races in Kerala, these long boats have multiple rowers and everyone rows at the same speed in the same direction. It’s only then that the boat can go ahead at speed. Otherwise if one side is rowing faster than the boat will turn or if people are rowing in different directions and obviously the boat will go nowhere. So what happens is if the founder of the fund house has a short-term thinking, if the employee has long-term thinking, if someone is fundamental oriented investor versus someone else who’s a technical indicators or a momentum driven investor, so then there’s complete misalignment. So there has to be alignment between the end client who is giving the money, there has to be alignment with the advisors or distributors, there has to be alignment within the investment team and the fund house. Only then it can work properly. So firstly identify something. Don’t just come for the money because that will not take you far. So money can be made in any field. You can be a cricketer, you can be a film actor, you can be an investment manager, lawyer, a surgeon. You will succeed if you have competency and passion in that field and you are willing to put in the effort that is required and then find the right set of individuals to work with. So a quick follow up to that would be are are people looking at trading today or are they looking at investing? Because there is a difference between the two. The SEBI data is out there. 1.07 lakh crores of money was lost by people doing F&O transactions. It’s a sad thing. So much money could have gone into building factories, creating retailing outlets or whatever the thing is. Of course IPOs are happening and money is getting channelized, but you have both and this has been true for eternity. So there have been speculators all the time and there have been investors all the time. I think our role is to encourage the investing side of business rather than just the speculating side. And it’s not out of any morality kind of thing. It’s just the economics. Let us say you and I, we pull together some money and we started a restaurant. Now if that restaurant did well, if it served hygienic quality food, had good ambience and service, lot of patrons would come in to dine there. If the restaurant is doing well, both of us can be profitable, right? If there’s 100 profit and we are equal partners, you will make 50 profit and I’ll make 50 rupees profit. Instead if we pulled out a pack of cards and we started playing a card game, can both of us win? Answer is no. It is a zero-sum game. If you win, I have to lose. If I win, you have to lose. An added factor is there are taxes to account for, there are transaction charges to account for. So trading as such, it shuffles money, there are winners and there are losers. But in investing over the long run, there are only winners if you stay put. So Sensex started at 100, 125. We know where it is over 45 45 years. So obviously it’s created a lot of wealth for investors. Some golden words to remember in what you just said. You know, I asked you right at the start of what is the mistake that people are making when they see so much volatility. But in the past few months, how have you handled the portfolio for your clients given the kind of volatility and uncertainty we have seen? We have been cautious for a year and a half now which is reflected in our money market cash levels. We have communicated this to clients saying to the extent Neil, our CEO, and I have said in separate interviews have said we would be okay underperforming if the market keeps running away because valuations are stretched. Thankfully we have not underperformed, but this message was out there that we are cautious overall. So in this volatility, wherever things are getting out of hand, wherever we see an opportunity to exit, we have sold stock. Wherever we have seen opportunities to buy, we have bought stock. So, while at the surface it may seem that we are just holding cash and doing nothing, but you have seen our portfolio. We have entered companies that you mentioned, things like Mahindra and Mahindra or Bharti Airtel. We have exit exited things like UTI AMC and Motilal Oswal. So, we have been taking portfolio action. And we have been using the volatility to our advantage. So, we have to talk about the large cap scheme that everyone is talking about. And after years and years, something new. Why now? So, the design has been there with me for 4 to 5 years. Lot of people say, “Oh, we should invest in index funds.” Or we have been asked at our AGM numerous times, “Why don’t you launch an index fund?” And our reply was the same saying there are so many index funds out there and at very very attractive TER or costs. So, ETFs tracking Nifty 50 are available at three bases and four bases. So, why should we launch one more scheme? At the same time, for a long period of time, I have had this thing, pet peeve if you were to call, that a lot of times money is left on the table by the passive funds that are out there. So, the thinking was to launch something in the active space which takes into account the market inefficiencies and which is able to generate a return not very very different from the index, but which takes into account some of these things like merger arbitrages, sensible rebalancing, or the distortions between the cash market and futures market. So, it’s a different product from the flexi cap that is there. It will be close to fully invested at all points in time. It will not deliver very very big alpha given the strategy. It will be rule-based. It will be well diversified. Again, another peeve that I have had is globally, when people talk about passive investing, people typically think of S&P 500, especially in the US context. In India, we focus only on the top 50 stocks. We should look at a more diversified investing for people who do not want to take the fund manager risk or the strategy risk. So, gradually one should try and increase the basket. So, I think large cap fills that gap of people wanting rule-based investing rather than a human decision-based investing. At the same time, take into account some of these active factors like spin-offs, and mergers and things like that. Sure. But, you know, Rajiv ji, there are some people who criticize this new launch saying that the same stocks which you may have considered overvalued in your flexi cap, now you will be, you know, putting in money when it comes to your large cap. So, is there is there not a contradiction in what the core values of Parag Parikh have been for so many years? So, first, so people will criticize no matter what we do. If we keep cash, people will criticize you are having cash. If we are fully deployed, they’ll say you are a value fund house, why are you fully deployed? So, you can’t please everyone at all the time. So, criticism is okay. People who don’t like it can choose not to invest. It addresses a different need. A flexi cap investor has no reason to complain because the flexi cap will continue to run the way it has been run for 13 years. So, they can simply ignore the large cap fund. Right? So, let us say a restaurant is serving idli for 13 years. Now, the restaurant has a dosa also on the menu. You can choose not to order the dosa. But, people who are fond of dosa, they have an option now saying dosa is also served at this restaurant. It’s as simple as that. So, the approach of So, flexi cap has 30-35 names. That will have 100 names. Flexi cap has India plus overseas. Flexi cap remains in cash when it does not find opportunity. To your same question, is flexi cap over dependent on the research investment team? Over there, there’s no over dependence. It’s a process-driven, rules-driven thing. So, people who are worried about this have an option. So, now we’ve spoken about idli and dosa. Is there any plan to add upma or shira at some point as well or So, we don’t want to overly clutter the offering. So, we can’t be all things to all people. That is very very clear. Yeah. Now, on Domino’s, you get pizzas. You don’t get biryani, right? So, we can’t or in a Punjabi dhaba, you will not get Japanese sushi. So, It’s possible, but Yeah, it will be very very messy. So, we don’t want to be all things to all people. Sure. But, wherever we see that our skill sets, our strategies align, wherever we can bring something differentiated which adds value to the end customer, we will explore that. So, people keep asking us, “What are you doing about the SIF space?” We are saying initially we are just watching that space. Our entire research is geared towards long investments. As of now, we don’t have a research coverage on the short side of the equation. We are not rushing into it. So, down the road, there could be requirements because of the environment regulatory changes or whatever. So, people could say, “Why are you launching GIFT City products?” For example. Now, 13 years back, you could have India plus global allocation in the same mutual fund scheme. Now, overseas limits have been frozen for last 3 and 1/2 years. Now, it necessitates creating an alternative structure for investors looking for global diversification. So, we have created a subsidiary in associate company in GIFT City which will do these foreign investments and provide an avenue to the end customer. So, if there is something that we identify, we could look at launching that. So, as I mentioned, we have added people on the fixed income side. Right now, we have a liquid fund over there. We have arbitrage again for cash management. These are typically three-month kind of products. We have hybrid schemes which are three-year plus products. Between three month and three years, there’s a gap. One could look at something like a money market fund or a ultra short duration fund. Those kind of things could be there or a overnight fund which is largely towards corporate money. So, those could come somewhere down the road, but in 13 years or 12 years, we have had six schemes. We have filed for the seventh one. We don’t want to be launching schemes all the time. It will be a very very slow and calibrated approach. Okay, I think you’ve answered many questions around, you know, the new scheme that you’re launching that our viewers will appreciate. As we close, I have a few quick questions for you that, you know, I like to ask all investment gurus of such a high stature such as you such as you. So, the first would be what you think is one overrated investing metric? I’ve mentioned this in the past. Uh market cap to GDP ratio. Why? People use this and abuse this. So, it’s famously called the Warren Buffett indicator. And he has written about it. At the same time, I don’t think he has thought through the way people would end up using it. And if he were to listen to me, probably he’ll agree with most of the points. So, firstly, you can’t use it across time. Uh as a very vivid example, using market cap to GDP ratio of Saudi Arabia before Saudi Aramco listed and after Saudi Aramco listed would be totally different. Right? Because that is bulk of the market. Using this to do cross-country comparisons, one would be a natural resource company. So, comparing Brazil or Saudi Arabia with US does not make sense. One is dependent on oil as a commodity versus the tech giants over there. They may be at different stages of the cycle. Doing cross-country comparisons where the percentage of business which is in the listed space also does not matter. So, market cap to GDP in North Korea would be zero because they don’t have a stock market. So, does it mean it’s very undervalued? No. So, as So, in India for example, you don’t have too many restaurants listed. Of course, we have the quick food fast, quick QSRs. You have the QSRs which are listed, but a lot of the informal eateries are not part of the listed space compared to the US where bulk of it is things like McDonald’s and the likes. So, how much of a country’s business is through listed entities also makes a difference. Also, today business is global. So, when you are taking market cap of a Microsoft or a Google, that is added to the US market cap. But, their GDP is global. They are selling products all over the world. Today, a Tata Motors passenger vehicle is listed in India, but Jaguar Land Rover is a global business. So, many a times these things don’t make sense. People uh uses indiscriminately and draw wrong conclusions from this. Do you also think there’s an underrated investing metric? I think very, very simple metrics like what is the book value or what is the value of investments that went in, what is the price earning ratio, what is the price to sales, some of these basic things and these are crude methods. A lot of people will cringe at this. Analysts typically have complicated DCF models. They project cash flows 40 years out, but using some of these simple metrics they would avoid a lot of investing mistakes if they were to use them. Okay. You know, looking back at your glorious multi-decade career, what is something you wanted to do when you started out, but you’re glad today that you did not? I don’t think there’s any such thing. No regrets. You’ve done everything that you wanted to. Okay. Two or three books that influenced the way you think about investing. More than investing, I think one book is a general purpose book which everyone should read, especially in this day and age of smartphones and the distracted world that we live in. It’s a book called Deep Work. It has had a big influence on the way I at least some part of the day carve out so that you are able to work in a distraction-free environment. In terms of investing for people who don’t want a very technical or very dense book, I think the two books written by Peter Lynch are very, very accessible. So, One Up on Wall Street and Beating the Street. These are accessible. Intelligent Investor is frequently recommended and it has important chapters, but for as a first book it may be uh a bit dry for the first-time reader, but it’s a good book. Plenty of books have been written about Buffett. So, one can pick up one which is suiting one’s style or one can simply read the letters he’s written to investors or now on CNBC they’ve put in the video recordings of most of the AGMs that have been held. Those are good viewing. Okay, great. Those are some great recommendations and as we wrap today, we have to talk about the full year we have ahead of us. So, in 2026, Rajiv, what are you watching out for and what are you going to be avoiding? Things continue as usual. I’ll be trying to avoid the frothiest things. I’ll be trying to avoid the FOMO. The biggest problem people have is not how much return they have made in the portfolio. They are worried about how much returns their neighbor or their office colleague has made. Uh so, Charlie Munger used to say this all the time. He said the worst sin to commit So, in Judaism and Christianity and all, there are these seven deadly sins. He said, in other sins, you have fun when you are committing them. So, one sin is gluttony for example. You overeat and overindulge. Now, while you are committing that sin, it’s a lot of fun. Right? Eating junk food, overeating, and bingeing. Bad consequences come later. Pay tomorrow. Envy is one sin where even when you are committing it, you are miserable. Long-term consequences obviously are bad, but you feel miserable because your uh office colleague made more money than you. So, try and avoid that in 2026 and forever, hopefully. Avoid FOMO. Okay, that’s a brilliant note to end on. We wish you the very best for the new scheme and a very happy 2026 to you. Thank you so much. Wish you the same and wish everyone at Grow family and all the investors a very happy 2026. Thank you so much, Rajiv. Thanks, ma’am. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Please read the risk disclosure documents carefully before investing in equity shares, derivatives, mutual fund, and all other instruments traded on the stock exchanges.