Why PPFAS is launching Parag Parikh Large Cap Fund and how it differs from an index fund

Parag Parikh Financial Advisory Services (PPFAS) is coming up with a large-cap fund that will actively try to replicate the performance of the Nifty 100 Total Return Index.

The fund house's decision to launch a large-cap fund has generated a lot of discussion among finance enthusiasts on social media. More so because the flexi-cap scheme of the fund house is already heavily tilted towards large-cap stocks. Its ELSS fund is also mostly invested in large-cap equity shares. Then why the large-cap fund?

In its 2025 Unitholders Meeting on Saturday, November 22, 2025, PPFAS officials explained the rationale behind the decision to launch a large-cap fund.

Historically, PPFAS has stayed away from launching multiple products. According to PPFAS CEO Neil Parikh, the firm continues to stand by this philosophy.

Speaking at the unitholders' meeting, Neil said the fund house has always maintained that they will launch a new fund only when "there is a general investor need" that they can meet and "bring in some differentiation." He said that the plan to launch a large-cap fund is a step in that direction.

According to fund manager Rukun Tarachandani, the large-cap fund will be built around Nifty 100, which will give investors a broader exposure of almost 70% of the market cap and profit pool versus the Sensex and Nifty.

Like an index fund, with a twist

According to the fund house, Parag Parikh Large Cap Fund is designed to behave like an index fund. But with an active twist.

Unlike index funds, which are managed passively, Parag Parikh Large Cap Fund will be actively managed by the fund managers. The fund house believes that the scheme may generate value for investors through "smart execution strategies".

Tarachandani said,"We differentiate ourselves in how we obtain this exposure and how we implement and execute trades..."

He further pointed out that index fund managers have to trade on rebalancing dates. However, this is not mandatory for active managers. Thus, they can avoid paying increased prices for stocks when they get into an index.

The portfolio of the large-cap fund will aim to hold all 100 stocks under Nifty 100 with index-like weights. However, the maximum investment in a stock will be capped at 10% of the portfolio.

PPFAS plans to price the expense ratio for the Parag Parikh Large Cap Fund within 10-30 basis points, which is also the range currently being charged by most Nifty 100 index funds.

Tarachandani further said that the fund house will aim to move the expense ratio towards the lower range as the fund's AUM grows.

Parag Parikh Large Cap Fund's New Fund Offer (NFO) is expected by January 2026.

Who may invest in the Parag Parikh Large Cap Fund

According to Tarachandani, Parag Parikh Large Cap Fund may be ideal for the following type of investors:

• Who wants broad exposure to India's top 100 companies by market capitalization

• Who prefers lower costs compared to typical active funds

• Who value a strategy that aims to deliver index-like returns

• Who have along-term investment horizon (5+ years)

• Understand that equity investments can be volatile

• Appreciate tactical efficiency in implementation

Who should not invest?

Tarachandani said that the large-cap scheme may not be ideal for the following type of investors:

• Who seeks to significantly outperform the index

• Who wants concentrated bets on specific stocks or sectors

• Who prefer active stock selection based on fundamentals

• Who have a short-term investment horizon

• Who cannot tolerate equity market volatility

• Who expect the fund to avoid overvalued stocks