Parag Parikh Flexi Cap Fund Underperformance: Is Fund Size Becoming A Major Challenge For Investors?

Parag Parikh Flexi Cap Fund has faced continued underperformance, raising questions about stock selection, cash levels and the impact of its large asset base. Every fund manager goes through periods of underperformance, but the reasons behind it matter. Shweta Rajani, Mutual Fund Head, Anand Rathi Wealth, says sector calls, stock-specific corrections and high cash allocations can weigh on returns, particularly when markets are rising. For a very large fund, maintaining significant cash can create a substantial performance drag. She also highlights fund size as a potential challenge, though some managers can handle large assets effectively. Investors should assess whether underperformance reflects temporary factors or structural issues.