Nippon’s Sudip Sikka’s ‘lazy’ investing style

portfolio

About 70% of Sikka’s investment portfolio is in equities, spread across mid-cap and small-cap funds. He does not invest directly in shares. “After 2009, when I became CEO, I did not invest directly in stocks to avoid conflict of interest. The only stock I have is of Nippon as ESOP (Employee Stock Ownership Scheme),” Sikka said.

When asked whether he would call himself a high-risk investor, as his portfolio largely consists of small and mid-cap segments, Sikka said he sees himself as a lazy investor. “I prefer to stay invested for longer tenures of 10-15 years wherein small and mid-caps outperform, hence they become the preferred option. An investor can be termed as an additional risk taker if he/she wants to invest in small-caps for the short term.”

For this reason, he often switches neither equity nor debt between market segments or schemes.

“Active churn of portfolio based on market activity can sometimes give you a rush that some action is taking place. But I am a firm believer in keeping emotions in check. Don’t let your emotions, market momentum or news flow dictate your investment decisions as they should always be taken with one goal in mind.”

Elaborating on his strategy, he said that it is important to get the right asset allocation while investing, and then just ride the market. “You can call me a passive investor in active schemes,” he says.

Sikka has been investing in international equities for over five years, though it has a small percentage of his overall portfolio. He prefers geographical allocation rather than choosing funds on general subjects. “For example, if I want to see a boom in semiconductors, I’ll invest in a Taiwan fund,” he said. About 99% of Sikka’s financial assets are in Nippon India Mutual Fund.

gold and real estate

Sikka is not bullish on real estate as he believes that appreciation in the asset class is not the same as it used to be a few years back. Additionally, liquidity and rental yields are low, while the cost of maintaining the properties is high, according to him.

Real estate makes up 10-12% of his portfolio, which includes the house he lives in and inherited assets. They have a small allocation of 3-5% as far as gold is concerned, but it is all in Gold Exchange Traded Funds (ETFs). Sikka said, “I have never bought physical gold for investment. When asked how he views gold as an investment class, Sikka said gold acts as a natural hedge against both equities and bonds. acts as.

family and finance

Money for Sikka means three things – health, education and relationships. He said, “By education I do not mean only formal education, but you constantly strive to be better everyday than you were yesterday.”

According to Sikka, when one replaces money with money, the purpose of life becomes short-sighted. “Money and career should be a means to achieve the three wealth goals of health, education and relationships.”

Sikka’s wife has always been involved in all his investment decisions and his preoccupation with family finances has increased tremendously post-Covid.

Sikka is sad that he was late to equities as he was always taught to invest in traditional instruments of bank deposits and provident funds. Learning from his own late beginnings, he regularly educates his children about the importance of including equities in their investment portfolio to build long-term wealth.

Among other lessons, Sikka wants to instill the habit of saving early in his children. “I tell them that earning isn’t enough if you don’t save and invest it in the right asset classes.”

Sikka has kept six months’ expenses in a liquid fund as an emergency fund.

Note to readers: The article highlights Sandeep Sikka’s asset allocation and investment strategies. Everyone should tailor the investment according to their risk appetite and time frame.

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