According to The Economic Times, PPFAS CIO Rajeev Thakkar is challenging fears that AI will destroy IT jobs, citing historical analysis by tech analyst Benedict Evans. Evans, an independent analyst and former partner at Andreessen Horowitz, wrote in a 2023 article that generative AI and large language models represent a generational change in what can be automated with software. However, Evans emphasized that "everyone agrees there's a lot more automation coming, and entirely new kinds of automation. Automation means jobs, and people." He noted that work has been automated for 200 years, with whole classes of jobs disappearing while new classes are created. As per The Economic Times, Thakkar referenced historical banking automation, writing that "banks moved from handwritten ledgers to computerised branches, to networked branches on a centralised core banking system to internet banking to mobile banking. Despite this, banks today employ far more people in the banking business as compared to the 1980s and 1990s." Thakkar concluded that fears around employment are largely overblown at the aggregate level, though he acknowledged there will be individual companies and roles under threat.
According to reports from Mint and The Financial Express, Rajeev Thakkar, CIO and director at PPFAS Mutual Fund, addressed concerns about the current market phase in a note to unitholders. Thakkar stated that the two-year period of sideways equity markets is neither unusual in duration nor in the magnitude of the decline from previous peaks. He emphasized that equity markets can remain range-bound or fall, and that the possibility of higher returns than fixed deposits comes with volatility. After two years of time correction in the broader market and price correction in some segments, Thakkar noted that opportunities available to investors are increasing and the outlook for future returns is improving. In his latest comments, Thakkar explained that the combination of nearly two years of time correction across the wider market and price correction in some segments was increasing the available opportunity set. He contrasted today's position with PPFAS's caution and higher cash during the market exuberance of 2024, stating that the available opportunities are increasing, and the outlook for future returns here on appears to be improving.
As reported by The Financial Express, PPFAS CIO Rajeev Thakkar challenged the assumption that smaller companies automatically provide superior returns, citing US market data as evidence. The latest valuation data shows the Nifty 100 trading at 20.8 times earnings, compared to 30.7 for the Nifty Midcap 150 and 34.6 for the Nifty Smallcap 250. The figures show the Nifty Midcap 150 traded at about 48% above the Nifty 100's earnings multiple, while the Nifty Smallcap 250 commanded a premium of about 66% to the large-cap index. Thakkar emphasized that PPFAS continues to invest in smaller companies but market capitalisation is not the basis for deciding where to deploy money. He stated that "We will invest where we find the opportunity and a favourable risk / reward and not be driven by labels," with the fund house focusing on opportunities that are attractive and actionable rather than investing purely on account of a theme being in fashion. This approach allows PPFAS to continue buying smaller companies when adequate potential is seen, while also finding value in large-cap stocks when their valuations offer better risk-reward balance.
According to The Economic Times, Thakkar addressed AI's impact on IT services, stating that "our base assumption right now is that while Artificial Intelligence (AI) writes a significant portion of the code, the need for implementation does not go away." He explained that "what was an outsourced activity to a team of people is now an outsourced activity to a team of people and AI." Thakkar noted that AI will eliminate some work but create more work in other areas, particularly in cybersecurity. As reported by The Economic Times, he pointed out that "this will arguably create more work in cyber security, given the efficiency with which hackers can use AI." On the broader AI employment impact, Thakkar referenced Evans' analysis that "the underlying business may change, but the job itself doesn't." He concluded that "there are clear outliers in terms of looking at the current sell off as an opportunity rather than an existential threat," maintaining PPFAS's view that IT services weakness presents opportunities rather than fundamental threats to the sector.
As reported by Mint, Thakkar explained that PPFAS had been cautious during the exuberance seen in 2024, including by allowing cash levels to rise. The Parag Parikh Flexi Cap Fund's cash levels peaked at about 25% and had fallen to around 14-15%. He noted that the fund was increasingly finding opportunities to buy and could eventually move to single-digit cash levels. Thakkar added that holding cash over the previous two years had not harmed investor returns and had, at the margin, helped during the sideways market. On relative performance, he acknowledged there would be periods when stocks held by the schemes could either remain subdued or decline. In his latest communication, Thakkar said the lower cash position shows the fund is finding more stocks worth buying, with cash levels dropping from around 25% to roughly 14-15% of portfolio assets. He emphasized that cash in the Parag Parikh Flexi Cap Fund will be the clearest indicator of deployment, with single digits indicating greater investment activity.
According to Mint reports, Thakkar addressed concerns around Indian Energy Exchange and market coupling, noting that IEX is a sub-1% position in the portfolio. He said there was no certainty over how long market coupling would take, what form it would take or which market segments would be affected. PPFAS would revisit its investment thesis as developments and additional data emerged. On broader market themes, Thakkar said the fund was aware of areas such as defence, energy transition, AI and fintech, but would invest where it found attractive and actionable ideas rather than simply because a theme was fashionable. He concluded that investors whose equity investments form part of a well-thought-out asset allocation appropriate to their needs need not worry about the current market phase. In his latest comments, Thakkar said the fund house is not limiting its search to one fashionable narrative, with present views including treating IT-services weakness as an opportunity, expecting AI to remove some work but create demand elsewhere, retaining private-sector banks despite concerns, and avoiding investments based only on currently fashionable market themes. He emphasized that the PPFAS investment strategy remains deliberately selective, so deployment may be uneven rather than rapid.
