Alok Jain, Founder of Weekend Investing, is a Delhi-based Research Analyst. Jain runs some of the popular strategies on Smallcase, a platform that allows individuals to invest in curated portfolios created by SEBI Registered Research Analysts or SEBI Registered Investment Advisors. Mint asked Jain how he invests his money. Unlike many fund managers, Jain is not inclined towards equities, with just 35% of his personal money in stocks. A major part of Jain’s net worth is in real estate and Sleep (30% each) and he puts the remaining amount into more debt as an emergency provision.
When it comes to equities, Jain invests through the momentum strategy. Momentum strategy is investing techniques to buy stocks that are trending up and sell stocks that are trending down. Typically, they involve complex quantitative analysis. Jain offers these strategies on Smallcase and follows them in his personal equity investments as well.
“Regulatory restrictions have made it difficult for me to invest through my smallcase portfolio as I have been prohibited from transacting in them for a few days before and after entering the smallcase portfolio,” he said.
A speed strategy There is a need for quick trading necessarily and therefore restrictions may prevent him from making returns similar to the model portfolio. However, Jain said that he follows similar strategies for his personal investments as they are driven by quantitative models and have a high level of churn (the entire portfolio is churned around 3 times a year).
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This investment style has given them 40% returns in the last one year, undoubtedly a bull market year. However, according to Jain, momentum as a strategy works equally well in bear markets as it is able to move in cash quickly, and limits the extent of losses (drawdowns). It also makes these strategies extremely risky. “Most of our strategies are mid- and small-cap-based. We prohibit investors from entering in large amounts (more than . 15-20 lakhs). We have also stopped the flow in some strategies. But this comes from gold’s ability to diversify and its low correlation with equities.
“Even if US dollar investors do not get that much by diversifying into gold, Indian investors who have depreciating currency will get these benefits. If you look at examples like Turkey or Russia, a country and single currency portfolio, even of stocks, can perform poorly.” According to Jain, older investors especially because of the precious metal’s potential. Should lean towards gold. To preserve wealth, he said, “Dividing the age of the investor by two is a good rule for people to follow.” However, he said he expects to do so, especially when such portfolios are made available on Smallcase.
Alok Jain is also a real estate investor, though he acknowledges the muted returns given by real estate over the past decade. He invests in commercial real estate, buys and rents commercial properties in Delhi. He also considers his primary residence as a part of his investment portfolio. “At the end of the day, it’s an asset. If you really need the money you’ll sell or mortgage it.”