“I have seen ₹25 lakh of my savings just going for my father’s medical expenditure. After this, I have tried to take as much medical insurance as I can, for my family. I have got ₹4 crore medical cover for my family; ₹3 crore for my wife and I and a separate, ₹1-crore health cover, for my son,” says Mohanty in an interaction with Mint for the Guru Portfolio series. In this series, leaders in the financial services industry share how they manage their own money.
Investments
Mohanty shuffled his equity portfolio last year. He made most of his new equity investments in multi-cap and mid-cap funds. On the other hand, he made some new allocations to passively-managed exchange traded funds (ETFs) and international funds. Being in the index helped, especially in the mid-cap and international space last year.
He says he prefers multi-caps over flexi-cap funds as there is more disciplined investing across all market caps. He also plans to add multi-asset to his portfolio for a disciplined exposure across asset classes.
Mohanty says within his equity investments, now around 20–25% is in passively-managed funds, while the rest is in actively-managed funds. Overall, Mohanty’s portfolio delivered 30% returns over the past 12 months.
He has stayed away from small-caps so far as he says he wants to avoid high volatility of small-caps in his retirement-linked investments. However, he has made a nominal investment recently in Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF, which is the fund house’s maiden small-cap offering.
What worked
Mohanty says among his portfolio, mid-cap funds did well over the last 12 months. Among international funds, Mirae Asset NYSE FANG+ ETF did well for Mohanty.
Mohanty also takes exposure to certain non-Mirae funds, where he doesn’t find a Mirae product.
For example, he is now hopeful of IT sector doing well over the long-run and hence has taken some exposure in an IT fund of another fund house.
However, he cautions that theme-based investing is always an allocation towards the satellite part of the portfolio. About 85–86% of Mohanty’s mutual fund investments are through Mirae Asset MF’s schemes. The rest of it is through non-Mirae schemes. He also considers non-Mirae schemes if he needs style diversification in his portfolio.
Alternatives
Mohanty continued to add alternative investments to his portfolio. The art investments are largely driven by Mohanty’s wife, who plays the key role of identifying the artists and the art pieces for investments.
Mohanty says that now they have managed to buy art-pieces by some iconic artists as well, “the masters”, as he calls them.
Mohanty added two more startups to his alternative investments recently. One of them is an OTT (over-the-top) platform and the other one is a fintech. From his previous startup investments, Mohanty has investment in a healthtech company and another fintech.
International exposure
Mohanty’s exposure to international investments has remained in 5–6% range. He has not been able to meaningfully increase his international exposure as share of his overall portfolio due to international investing limits for mutual funds.
In January 2022, market regulator Securities and Exchange Board of India (Sebi) asked mutual funds to stop accepting fresh flows into international mutual fund schemes investing in overseas stocks, following directions from the banking regulator Reserve Bank of India.
In June 2022, Sebi gave some headroom to international schemes to accept flows and invest in stocks listed on foreign exchanges, but only up to the extent of the investments that were redeemed by investors since the restrictions were imposed.
Since Mohanty’s other investments have either grown or remained intact, the share of international exposures in his overall portfolio has dipped from 10–11%, to 5–6% of his overall portfolio.
Debt investments
Mohanty says a lot of his investments were made in ultra short debt funds to ensure that his overall asset allocation is maintained. “I wanted to keep my equity allocation to 70%, which had run up to as much as 80% in the middle of the year. Hence, I needed to make that adjustment, which meant moving larger part of new investments to debt funds,” he points out.
He has made new investments in equity:debt in 50:50 mix to keep his equity exposure at 70%.
He also made some of his new investments in corporate bond funds. “If rates come off, such funds could do well,” he says.
Mohanty says he is still holding back on making long duration investments. “There can be an opportunity in that space, but we are in wait-and-watch mode right now,” he says. He has also been holding target maturity funds, which had started to invest in last year.
Retirement goal
Mohanty says he has crossed the minimum target for his retirement corpus, which can take care of his day-to-day expenses. But he says he has not yet reached his full target.
Mohanty says between his wife and himself, they run separate retirement corpuses. “Essentially, if she is on her own, how much she would need as retirement corpus. And if I am on my own, how much would I need as retirement corpus. Broadly, we have a target in mind. When I retire, if we broadly have this amount put together, then we are adequately covered to meet all our post-retirement goals,” Mohanty says.
Insurance, contingency
Mohanty believes that life insurance should be enough to cover debt. So, he has three-times of his debt (home loan: ₹3 crore, car loan: ₹40 lakh) for his term life cover, which is about ₹12 crore. On his emergency fund, Mohanty says he has two-three months of it in liquid funds. But he says he now has a large medical insurance and large equity corpus, which can be used in an emergency.
Money lessons at home
Mohanty says he has been able to ingrain the investing habit in his son quite early. “I used to give pocket money to him when he was young, but would also ensure that part of this pocket money goes towards investments,” he says.
His son, who is 24 now and works in an IT company, has continued to invest in a disciplined way. He says between his wife, his son and himself, there is transparency on their investment portfolios. “We all know each other’s passwords on mfcentral.com and can easily check and track each other’s portfolios,” he adds.
Mohanty says he has also always been very transparent in terms of his earnings with his son. “I learnt this from my parents. They were always very transparent with me. So, I knew that I could spend within a certain boundary. This transparency has also helped to instill the same sense in my son, to spend within one’s means,” Mohanty says.
Advice for investors
“You choose a fund manager, and you have to take the journey with the manager. People play the game of catching the best fund manager, but it never works,” Mohanty says.
He adds that investing on the basis of past performance also doesn’t work, as past performance belongs to investors who were in the fund at that point of time and doesn’t belong to you.
“When you start off, you think this is a process of return generation, but over time, you realize that this is a process of risk-mitigation. When the market is sitting on 40–50% small-cap gains, I am not flustered. It is not a temptation to suddenly go large on small-caps,” he says.