Ritesh Sabharwal CFP®

W.M.W #7: 84% up, 52% down - why is this PPFAS fund special?

Reading time: 4 minutes - August 2, 2025

↓

Hey Reader

What if I told you a Mutual fund that never beats the market in good times is still one of the best funds in its category?

Sounds odd, right? But that’s exactly what Parag Parikh Flexi Cap has done for years—and it’s become a favourite for serious long-term investors.

Not because it flies during bull runs. But because it doesn’t crash hard when the markets do.

And that’s where a powerful concept comes in - Upside and Downside Capture Ratios.

Today’s issue is all about understanding:

1. What do these ratios really mean
2. Why they matter more than absolute past returns
3. And stepwise process on how you can check them for any of your mutual funds

The last section is the best part so keep reading along!!

3 Things to Understand Capture Ratios (So You Don’t Pick a Fund that Breaks when Markets Crash)

Let’s break it down using Parag Parikh Flexi Cap as an example:

1️⃣ Upside Market Capture Ratio – It Doesn’t Chase Returns

This ratio tells you how much of the market’s gains the fund captures when the markets are going up.

🧮 Formula: Fund's avg. monthly return / Benchmark return (during up months)

For Parag Parikh Flexi Cap:

• Over the last 10 years, the Upside Capture Ratio = 84%
• This means if the benchmark gained 10%, the fund gained only 8.4%

2️⃣ Downside Market Capture Ratio – Does it protect you?

This is the real hero metric.

🧮 Formula: Fund's avg. monthly loss / Benchmark loss (during down months)

• Over the last 10 years, Parag Parikh’s Downside Capture Ratio = 52%
• So, if the market falls 10%, this fund typically drops just 5.2%

That’s massive protection during volatile years like 2020 or 2022.

Now compare this with some other Flexi Cap funds over the last 10 years:

• HDFC Flexi Cap falls ~101% of the benchmark
• JM Flexi Cap ~87%
• DSP Flexi Cap ~96%

3️⃣ Capture Ratio – A True Measure of Risk-Adjusted Performance

Now comes the real test - Capture Ratio = Upside / Downside

Parag Parikh:
🧮 84 / 52 = 1.62

A Capture Ratio above 1 means the fund delivers better risk-adjusted returns. Above 1.5? That’s elite territory.

How to Check This for Your Own Funds (Takes 2 Minutes)

Here’s how you can do this using AdvisorKhoj.com:

1. Go to the site and click on ‘MF Research’ → ‘Market Capture Ratio’

2. In "Select Category," choose Equity: Flexi Cap (or your fund category)

3. In “Fund 1,” select the name of your fund (e.g., Parag Parikh Flexi Cap Dir GR)

4. Set time period to “10 years” or your desired time period from dropdown

5. Click Submit to view the table and Click Download Result to keep a copy

You can compare up to 5 funds at once. Super helpful when choosing between similar-looking options.

Quick note: If you get an error that means a fund you selected was not launched till then, so you need to change the selected period to get the data.

Here's what you learned today:

• Upside Capture tells you how much your fund gains when markets rise
• Downside Capture shows how much it protects when markets fall
• A high Capture Ratio means you’re getting better risk-adjusted returns—not just flashy numbers
• How do you actually see this for your funds on Advisorkhoj

P.S - No recommendation of either PPFAS or Advisorkhoj, no affiliation. Only for educational purposes.

Help me help you👇

Reply to this email and tell me what should be the next 4 topics you want me to cover. It could be anything!!

​

Connect with me on LinkedIn, I write every day to help you make smarter money decisions👇

​