Kalpen Parekh, MD & CEO, DSP, do not directly buy any asset class. “I invest in Mutual Funds (MFs) only in terms of principle, convenience and tax efficiency. Also, we have a rule in DSP for all employees that incremental savings should be invested only in DSP MF and not directly, unless there is a particular product category available with us,” Parekh said as part of our annual Said during an interaction with Mint in a series on personal investments of leaders in the financial industry.
Coming to the break-up of their asset allocation, 65-70% Parekh’s The portfolio is invested in equities and the rest in bonds. He said that in 2020 after the market collapse due to Covid-19, the equity portion of his portfolio has performed quite well.
“The three biggest weights in my equity portfolio are DSP’s Small-Cap Fund, Natural Resources Fund, which is a beneficiary of rising commodity prices, and Value Fund, all of which have performed extremely well over the years. On the other hand, the fixed-income portfolio has delivered 4.5-5% due to flat interest rates.”
Asked whether he has been shifting his equity and debt portfolios to market segments in the last two years, he said equity remains intact.
“My approach to investing is generally to invest in something that is inherently good, but is temporarily going through a bad phase because in investing, the markets are cyclical. Therefore, I prefer to invest when A certain segment or category of funds tend to be in a down cycle. Over the years commodity funds—gold, oil, metals etc.—were in a down cycle. During Covid, there was a day when oil prices were negative and metal prices It also crashed due to the big shock of the lockdown and that’s when I built exposure in two of my commodity driven funds.While Nifty was down 8%-10% in the last three months, these commodity-driven funds were up 10-12% because Steel prices are up and profits are at all-time highs and oil prices are up. Last week, I moved half of my Natural Resources Fund exposure to (DSP) Value Fund, reducing my aggressive commodity driven exposure to 10% to 4% “He said with a disclaimer that this is his preferred asset allocation strategy. And that doesn’t necessarily mean it’s the best.
see full image
hit and miss
While commodity and value funds in his portfolio have performed well over the past one year, gold has declined. “A large part of my gold investments are through our World Gold Mining Fund, which is inherently very volatile. 1 change in gold prices, NAV of the fund increased by 1.5 times except in the last 2-3 months when gold prices have improved, this fund has performed negatively in the last one year.”
emergency fund
Parekh said, “There has not been a single month in the 23 years of my life, when I am working, that I have not saved. I do not keep cash at all. 25-30% risk in fixed income is a shock. Acts as an absorber.The idea is not to hold cash but to be able to sleep peacefully knowing that every 3-4 years when the market will fluctuate, the debt component gives you a sharp shock absorber , “They said.
Parekh’s loan allocation till June last year stood at around 40% due to pending home purchases.
His fixed income portfolio also doubles as his emergency fund.
“At no time, I keep more than 50,000 in my bank savings account. A liquid fund is an improved version of a savings account, and money in a short-term debt fund becomes tax-efficient after three years. Yes, I cannot withdraw this money on the go, but it is available to me within 24 hours.”
family finance
“My spouse is a major reason for my progress in my career and the proper investment portfolio we’ve built. She’s an attorney, but when it comes to money, she insists that I make all the decisions.” “
However, he said he makes it a point to walk him through all his investments every three months. “The idea is to keep him aware so that he (his wife and son) won’t be in trouble if I’m not around.”