The Covid-19 pandemic has proved to be a boon for the stock markets, with many investors joining the bandwagon in this period. small caseWhich provides portfolios based on a particular topic, sector or idea, has been a major beneficiary of this flow.
Mint got up and shut down Vasant KamathiThe founder and CEO of Smallcase for his annual series on the personal finance journey of financial services industry leaders.
For Kamath, money means financial freedom, and he makes most of his investments on his own according to a set asset allocation framework, and then seeks professional help in areas where he does not have the expertise or time to delve deeper. . “That’s where I use Smallcase, where there are professional fund managers who review the portfolio and manage it,” he said.
With an allocation of 55% in equities, 25-30% in debt, 10% in gold and 5-10% in alternative asset classes, Kamath’s portfolio is well rounded.
Kamath has a top-down investment strategy where he first starts with asset allocation and then looks at a particular strategy or risk along with the investment products within each asset class. “The majority (allocation) goes to equities. On the other hand, I am running a business. So, a lot of my net worth is also captured there. But in my investment portfolio, I have moderate to slightly aggressive risk appetite,” says Kamath.
In terms of returns over the past one year, Kamath’s equity share is up 19-20%, which is in line with Sensex’s returns, debt has given 4-5% returns and gold is 12% in the green.
Under the alternative asset class category, the head of Smallcase has exposure to certain private equity and crypto assets. However, Kamath does not track the returns provided by alternative holdings, as he wants to stay invested in these assets for at least a decade. “The idea was to understand how these asset classes work, and to take some very little risk. I am sure there has been some appreciation, but it is something that I am very comfortable losing or going to zero. ,” he argues.
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For Kamath, gold has become more of a mainstream asset class over the years than the modest exposure under some multi-asset strategies. Notably, gold is a major investment decision that worked for them last year, while emerging market exchange-traded funds (ETFs) as well as tech stocks disappointed. “I think the timing of the entry was bad for him,” he says.
However, Kamat says he wants to keep his equity allocation between 50-60 per cent. Within that, there’s more exposure to the small-cap and new-age themes that Smallcase is coming with. To be sure, 80% of Kamath’s equity allocation is in smallcase strategies based on themes such as smart beta, dividends, and specialty chemicals, manufacturing, and financial intermediaries. Kamath has also made provision for an emergency fund, which is sufficient for 18 to 24 months. He has earmarked some liquid funds and bank fixed deposits for this fund.
On the personal front, the Smallcase CEO made his first international trip to Turkey since 2006 last year. He is planning a vacation later in the year to attend some concerts, but is also looking to reduce travel for work and spend more time with family.