50% of my equity portfolio is in NPS, says Anil Ghelani

How were you introduced to capital markets and when did you start investing in your personal capacity?

At the beginning of my career as a Chartered Accountant, I tried to understand the various use cases for audited financials and one of them was for analysts and investors to use it to analyze a company before making investment decisions. Had to do. That’s how I was introduced to the capital market. Later in my career, I was doing audit for many different companies which were in the business of asset management, stock broking, life insurance etc. This gave me a better understanding of the business and industry dynamics, after which I slowly got started. Making your initial personal investment while building a career in the capital markets sector.

Have you ever invested in shares directly?

Yes, I invested directly in stocks during the early part of my professional life. But soon I realized that it didn’t make any sense. More than a principle-based approach, it is about internal regulatory guidelines. Given that I work in a highly regulated industry, we at DSP have a mandate not to invest in direct stocks.

When I just started earning, my first investments were in some direct stocks. I am a Chartered Accountant and hence I thought I have a good understanding of the balance sheet of the company and made some investments based on that. Some of them did well, while in other cases I was following trends at the wrong time. For example, I bought some shares of a company at the height of the dot-com bubble. After a few years when I started working in the MF industry, I realized that MF is a more suitable approach for me and I stopped investing directly. So for last 12 to 15 years I am not investing in direct stocks. So, I have some holdings in my portfolio that are legacy investments.

In which category of mutual funds do you invest?

I have few small-cap funds, which are actively managed MFs. Some allocation is done through index funds in large-cap funds. I’ve had a penchant for passive investing myself and, therefore, am quite convinced of the idea that, in large-caps, the best way to achieve investment allocation is through passively managed index funds. I also invest in the National Pension System (NPS), through which I get allocation to large-cap funds. Around 50% of my equity portfolio is through NPS.

Some portion of my fixed income allocation is also through MFs, mainly in short-term debt funds of 1-3 year duration. I have some spare cash in an arbitrage fund for near term liquidity purposes.

How much of your portfolio is in passive funds?

If I look at my new allocations every month, a huge chunk is in passive funds. With respect to allocation in the overall portfolio, it is a bit low as I started investing in passive funds a little late. I would say around 20-25 per cent equity component of my portfolio is in passive funds.

When did you start investing through passive funds?

I started investing in passive funds in 2017 when we set up DSP’s passive investment platform. Prior to this, we were aware of Exchange-Traded Funds (ETFs) and Index Funds and I was actively working in the industry with Advocacy and Initiatives etc. on the AMFI Committee on ETFs. But we did not have our own fund in DSP. About 12 to 15 years ago I decided to invest primarily in DSP mutual funds. So in 2017, when our first index fund, DSP Nifty Equal Weight, was launched, my first SIP (Systematic Investment Plan) in a passive fund started.

Can you share one investment strategy that has worked for you?

My simple and boring investment strategy of asset allocation and sticking to monthly SIPs is something that has worked for me. During the Covid-19 market crash and subsequent sharp recovery, I did not make any structural changes to my investment portfolio. This strategy worked because it has given me better returns than what I would get by changing my investments according to market movements and also gives me peace of mind. The reason for the latter is that although I am in the business of money management, I am doing it in a professional capacity. If I want to execute investment strategies with my own money, I will have to quit my regular job to focus solely on it. So I stick to asset allocation, review my portfolio from time to time as per changing risk and return objectives and age profile and it works well for me.

Another strategy that didn’t work?

One strategy that failed miserably happened early in my career, around 1999-2000, when I used to invest directly in stocks and it has become a life long learning. I bought a few stocks in the TMT (Tech, Media & Entertainment, and Telecom) sector, which was a hot sector, following the wrong trend at the peak of the cycle. I held those stocks based on the principle that one should invest for the long term but valuations never returned to those levels. Structurally, you should not take a long term view without looking at the industry segment or structural changes. That was a mistake and I have decided to never sell those shares because it keeps reminding me of a lesson I learned. Currently, those stocks are a very small part of my portfolio.

Do you have health and life insurance?

Yes, I have a substantial health and life insurance cover. To be honest, during the COVID pandemic, having a bigger insurance coverage than what I already had felt kind of late. During this time, I top-up the insurance cover for myself and some of my family members.

What is your view on money?

I believe that health is the real wealth. Having good health allows you to enjoy whatever wealth you have. Talking about money as money, having a comfortable lifestyle, being able to do what you want, and being able, in some form or fashion, to do something for others, that would be good for me. definition. The balance is just a number on your account statement.