Nilesh Shah and Naren's advice to investors constructing a portfolio

Mar 29, 2023
These views were shared his views at a recent webinar hosted by Morningstar.

Nilesh Shah
Managing Director and CEO
Kotak Mahindra Asset Management

My question to do-it-yourself (DIY) investors; do you go to barber for a haircut, or do it yourself? For your hair, you trust a professional. Then why would you experiment with something as serious as finance?

A patient doesn't not go to a pharmacy and ask them what to buy. He will ask the doctor, who will give a prescription based on the patient's medical history and symptoms. What you are doing for your physical health, you must do for your financial health.

Every rule has an exception. There will be investors who are extremely smart and can manage their own portfolio. Fair enough. But for ordinary folks, it would make sense to go to a financial adviser, lay down your objectives, understand your risk profile and get a prescription for your journey to secure financial freedom.

For every investor, there are only three things to do.

  • Invest regularly. Little drops of water make an ocean. The same thing is true with an SIP. A colleague of mine at Axis Bank started SIP for his driver a few years back. That driver left the job but kept the money with my colleague. Recently, when he came to give his daughter's wedding invite, he requested that money to be returned. When the driver saw the amount that was to be deposited into his bank account, he had tears in his eyes because he never imagined that he would ever make that kind of money.
  • Have a long-term perspective. If you want good mangoes, you have to wait for 12 years after planting a mango tree. Miracles don't happen. You have to be a long-term investor to ensure compounding works on your behalf.
  • Be disciplined. Diversified based upon your risk profile and investment objective across debt, equity, commodities, real estate and offshore.

Sankaran Naren
Executive Director and CIO
ICICI Prudential Asset Management

Our models are currently suggesting gradual increase in equity allocation. Over the last six months, it has been slowly increasing the equity allocation.

The Sensex touched 60,000 in September 2021. For 18 months, it hovered at the same level. If interest rates by chance were to start falling, then actually it would have increased much, much more significantly. If the Federal Reserve were to change its stance and cut rates, it would suggest much more aggressive investing in equity. Because interest rates are going up, in India too, it suggests a gradual increase in equity allocation.

This is what our models are suggesting in the products that we run such as the Balanced Advantage Fund or Asset Allocator fund-of-fund.


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