He recalls the excitement of buying a car with the money he made on Kotak Mahindra Finance shares during the Harshad Mehta bull run. His belief in equities as an asset class is unshakable and his faith is reflected in his investment choices – almost all his money is invested in the schemes of Mirae Asset Mutual Fund. Nilesh Surana, CIO, Mirae Asset Investment Managers (India), talks to Mint about his personal finances as part of the ‘Guru Portfolio’ series and how he got into equity investing. Edited excerpts of the interview.
What is your current asset mix?
If I exclude one residential location, it is almost entirely in equities through mutual funds. All this is invested in the schemes of Mirae Asset MF. I have no debt or any investment in gold. However, it does not include EPF. It is mainly invested in five schemes. About half is in Mirae Asset Emerging Bluechip Fund and Tax Saver Fund which are self-managed. The rest is spread across the midcap, focused and healthcare funds of the fund house.
Do you think your portfolio is too risky?
No, the risk cannot be generalised. It is a function of your needs, temperament and time horizon. I believe that equities, despite their inherent volatility, give better returns in the long run. If you’re looking at it from the perspective of 10 years or more, that’s perfectly fine. For example, I’ve been an investor in the Mirae Asset Emerging Bluechip Fund, which has grown 10x since its inception 12 years ago, or most recently in our Midcap Fund, which more than doubled in three years. While these returns are high, the power of compounding is significant, even if I assume a permanent range of around 15%. Being in this profession, I have more faith in equity.
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My investment horizon for all equity funds is almost eternal, as long as there is no need for money. Healthcare is a different product and I am comfortable with the outlook for over a decade on this area. But my asset allocation can be a bit skewed.
My personal view is that for the next 3-5 years, the excess amount should be invested in equities. Also, one should not invest more than 25% in a fund house, and ideally the investment should be spread over 4-6 managers.
What are your thoughts on real estate investing?
Beyond a house, in my opinion, it is not advisable to invest in real estate. This is due to many hidden costs such as stamp duty, municipal taxes, maintenance expenses etc. In addition, the tax on rental income is very high.
Tell us about your early equity investing days.
During our engineering college days in the early 1990s, we used to read magazines like Capital Market, Dalal Street etc. Later, I began subscribing to a weekly newsletter from Value Research showing how companies are analyzed, although I didn’t fully understand it. The specifics of the markets then. The markets were also not fully developed.
I invested small sums of money in IPOs, many of which turned out to be junk, but some were good ones, like HDFC Ltd.
The IPO I remember the most is that of Kotak Mahindra Finance, which came just before the Harshad Mehta scam. I was allotted 100 shares for 4,500 in my mother’s name at the end of 1991. Within six months, it multiplied Harshad Mehta 1.20 Lakhs – Over 25x During Bull Run. With this money we bought a car.
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