Kalpen Parekh Reveals Secrets To Surviving Market Volatility Sonia Shenoy Podcast

TITLE: Kalpen Parekh Reveals Secrets to Surviving Market Volatility | Sonia Shenoy Podcast CHANNEL: Sonia Shenoy DATE: 2025-12-18 ---TRANSCRIPT--- It’s been a disappointing year for Indian equity markets.

Absolutely. The broader markets taking a beating. Both the midcap index, the small cap index, all of them down over a percent and a half. Where do we go from here and what does 2026 look like? We have Kalpin Parik of DSP mutual fund here with us. So, how does one manage their fear in a market like this? One biggest learning I have had after the first 10 years of doing bad investing [music] myself is to kill the senses which you know receive these stories is to just say that what is my job? My job is to collect units every month because my salary is coming every month. Every month if I invest, if markets fall, my enemies [music] will fall. I’ll get more units. So in 2008 is when I realize that you should celebrate falling [music] markets, not celebrate rising markets. So tell me if someone is an investor in this market for the long term. What are the mistakes that one should avoid making? You know, I’ll not chase something [music] which is uh hot today. What has become very popular generally will not be profitable because what has become very popular gets [music] overpriced. So the biggest mistake to avoid is to not chase blindly only because last one year return is very high. Every asset class which earns higher return also in phases will take away those returns. Don’t buy narratives and stories which [music] is nice to hear. Now what is nice to hear, what is interesting to hear becomes the narrative becomes part of all WhatsApp group messages every day. You folks have an offshore fund from [music] Gift City. Now tell me a little bit more about it like why should I invest in international funds? There are many business models which are today not available in India. These are business models where uh life may shut down without them. They have created that type of presence in day-to-day lives by building or by designing business models which are very difficult to replicate. So sometimes you get great businesses at reasonably [music] cheap valuations. Any major regrets that you have in your investment journey or in your in your life journey overall? The only regret is Hey guys, I’m happy to be a part of Zerodha’s media network. Together, Zerodha and I plan to bring to you simple yet effective and impactful news and views from the best minds in the financial world. Hey guys, welcome to the money mindset. Now, the market is not in the best place at the moment. In fact, it’s been a disappointing year for Indian equity markets. We’ve underperformed most of our global peers. So we’ve been flat year to date on a dollar basis while the emerging market index is up about 20 25%. So where do we go from here and what does 2026 look like? We have Kalpin Parik of DSP mutual fund here with us. So Kalpin thank you so much for being on the money mindset. You know this has been a a tricky year for the market. Uh a lot of people um talk about how India is has had nothing to offer this year and from a global standpoint that was the argument. But do you think things will change in 2026? Just rewind one year back. If you remember the narratives and the conversations everyone was having was that you know the world is not a place to invest and we should only be in India and all growth is here. Uh and you know FIS are idiots that they are losing out the best growth market of the of the world is how narratives were today. The narratives have changed within 12 months. just you know one rotation of earth around the sun and everything has changed and that I think is the more important point for investors to learn or realize that whatever we say is contextual today but the investor’s goals are for next 5 10 15 20 years and today’s narrative many times make us take wrong decisions. So um my belief always or my experience always has been that whatever is the current topical mood um we should not extrapolate that uh this two shall pass has always worked best in life and in investing. So I think um rightly as you said last year India didn’t do well other markets did well but the other markets were underperforming for 10 years or 15 years and India had a very strong performance from 2020 to 24 four years of very robust performance almost 120% up nifty small and midcaps were up 200 to 300% in these four years. So one important thing for us to educate our listeners is markets have no guarantee that they have to deliver every year or they have to go up every month. uh the nature of markets is to fluctuate. The nature of uni the nature of nature is to fluctuate. Right? Nature also is cycles. Why is it going to be any different in markets? And any all of us who’ve been around for 20 30 years have seen ups and downs. Uh if you just take simple statistics for uh nifty uh 30% of times uh it goes uh down uh roughly 25% of times. 25 30% of times it is sideways for many years and then 40% of times it goes up and generally in those 40% times when it goes up the quantum is large enough for creating an overall compounding of 13 14% over a long period of time. So I think that’s a big game. In between there will be periods of phases like this. Can you forecast these phases? Probably no. Can you preempt uh some part of this by understanding the setups? Maybe yes. So exactly in the last 2 three years the setup has been um reasonably higher valuations and it not it’s not just the B number of 23 24 for the type of growth rate uh corporate India has of around 14% over long periods and around 16 17% 16% return on equity this combination should earn let’s say 17 to 18 times P multiple we’ve been above that for reasonably uh you know moderate periods of time and investor should know that in such periods if I invest I will earn moderate returns and moderate returns are not bad when inflation is just 4%. So even if you’re on 8 to 10% in this setup is not a bad return is the first thing I would like to say. Second uh gold silver did very well. Uh uh Japan did well, Europe did well, US continues to do well. Uh and and rather than lamenting and worrying, uh investors have choices today to blend portfolios across these asset classes sensibly and take advantage of them. So I think we need to be dispassionate and uh you know very rational investors and just ask this question that one what should be my time horizon around that time horizon what should be my portfolio in terms of the mix of portfolio and depending on which asset class is relatively fairly valued or or undervalued allocate more there what is very expensively valued whatever may be the narrative however strong may be the storytelling by any expert uh you know don’t get carried away today people are getting carried away with gold and silver you know every second or Third comment is on gold or silver. Every third fund launches on gold and silver. 3 years back everyone said don’t touch gold you know but gold and silver is up some 250% since lows. I was just seeing silver over 25 years now gold and silver over 25 years have beaten equity markets. Now the takeaway hence is not that they are more attractive. The takeaway is they have run up a lot more than what they deserve and and you know core equity is a is the main asset class which is cash flow generating which has growth in it. So when that core asset class starts underperforming we should not feel disappointed with it. This is a time to keep faith in it. So I remember a couple of years ago where you started getting bullish on gold and silver and you know you’ve been propagating investing into gold funds, silver funds etc. Now what is your view on how to approach 2026? What should the best asset allocation be for a young investor? I’ll tell you what I am doing and again it’s it’s a it’s very contextual. So in my son son’s portfolio he’s he’s studying his engineering. I give 5,000 rupees to him in his account. So he doesn’t have uh this feeling that money is easily available. It is going into an SIP of a 100% equity fund. His asset allocation is 100% equity and that fund is a mix of Indian and global stocks. My father’s portfolio uh is uh you know 50/50. 50 is in stocks and 50 is in uh bonds and other things. Personally, my portfolio is a 7030 portfolio. 70% is in Indian and global stocks and 30% is in bonds and uh precious metals. So, it’s nuance to each person’s time horizons, risk appetite, level of understanding. But the way I think about it is that long-term compounding happens from equity generally. So, equity should be a dominant part of our portfolios. it is a growth asset and more than just equity as an asset class or any index if we narrow down to say that okay you know through a mutual fund or through your own um ability to choose stocks I broadly assume most people can’t do that so come to a mutual fund but if you choose good companies at reasonable prices and give 10 15 years to them uh you’ll see significant compounding you and I both have seen it in the last 20 to 30 years so why should we believe the next 20 10 20 years will be any different and periods like this periods like 2025 when the train of compounding has paused on the station is a time for us to get in. Most people tend to get out. Of course, every time a train comes on a station, people do get out and many people will get out when markets shake or fluctuate. That is a time for long-term investors to again come and get a window seat. So you know I was reading this report today only that came out from Akash Praash of Amansa where he said that FIS have just not been interested in India for the last few years also because not just the valuations but also because India has lost out on the AI AI trade growth has not been reasonable given the kind of valuations we are at. How high is the possibility that this um you know this kind of disappointment from FIS continues for a couple of years and then what happens? I think reasonably high because for enough number of years they have continued to be with us. FI has been investing since

93. It’s been 32 years that FI has been investing in India and India was never an AI trade. Even one year back it was not an AI trade. So I I’m surprised why people are suddenly just because the world is chasing AI today. So the story of India was always about domestic consumption that you know while while in the rest of the world you have tech stocks as dominant um market cap growth companies. India is in a way uh domestic. It doesn’t have the vagaries of global cycle. So India the largest weight always has been banks and financial services 30 35%. Tech has always been a 10 to 15% component. So to that extent just because the stock prices are right now muted we will always seek for reasons. Having said that the larger point is more important that for the last 3 four years we had benefited from revenue growth and margin expansion after covid that can’t last forever. Margins cannot keep rising forever because our business models don’t have that type of either competitive advantages or modes to maintain pricing power or increase buying. So our margins even today are at all-time high but revenue growth has come to single digit and hence profit growth has come to single digit. So singledigit profit growth market for a year or two at 23 24 times is expensive. So whether FI has come or not this is an expensive market. Investors must be conscious about it and which is why they should invest using asset allocation funds hybrid funds or SIPs. If you have very long-term time horizons then today’s valuation will not matter. 10 years out 20 years out it won’t matter whether we invested at 24p or 22p. It may have some one or 1% sort of impact on long-term returns. Um but clearly yes mathematically valuations are higher than what we deserve and hence portfolio should be conservative. M you know a lot of people Kalpian believe that um to make money in this markets you need to know maths you need to know uh you know companies you need to know balance sheets of course all of that you need to know but I think a large part of it is also how you manage your own emotions and this is a time when fear is at at a high level right because there’s so many negative factors whether it’s global whether it’s the job situation uncertainty with respect to AI cost of living has gone up so how does one manage their fear in a market like this

I think it’s the most important thing over and above few things that you mentioned and um you know let’s say we have 60 lakh investors in our funds the industry has three four cr investors not all of them are experts who read balance sheets or understand maths u but what they bring to the table a lot of them not all of them a lot of them bring to the table is the long-term faith that if history has shown in the last 50 years that good companies have created immense value they have helped consumers around the world do beat inflation and build purchasing power whether you see American stock market whether you see most other stock markets of where good companies have resided and likewise for India it’s important to look at that picture for you know maintaining faith without faith being in markets is not going to be easy without faith these are exactly the moments when you should not worry is when we will worry and get out of the market you know I’ll give you another very startling uh and very interesting statistic my The oldest fund of DSP uh has a 28 year track record. In these 28 years, it has earned 19% CAGR. So more than 100x is the value it has created. Which is that? Which one is it? Uh it’s DSP flexi cap fund. It was it was the first one we launched. Uh and in in in this uh 28-y year period almost 6 lakh people have invested, stayed invested, moved out. the number of people who have participated in this entire 28 year journey from day one till today is less than 20 now less than 20 um so the point I’m making is every 3 4 years the average holding period of the fund industry itself is 3 three and a half years so every 3 years people get out because when they but why do they do that because I think when we bring them in we bring them in with a lot about talking about the here and now and mostly money comes in euphoria mostly money comes comes hearing great stories. I think um one biggest learning I have had after the first 10 years of doing bad investing myself is to kill my kill the senses which uh you know receive these stories uh is to just say that you know what is my job? My job is to collect units every month because my salary is coming every month. I don’t have uh an inheritance of large chunks of money. So I’m a salaried employee. So I have to I have no choice but to invest monthly and um every month if I invest if markets fall my enemies will fall. I’ll get more units. So in 2008 is when I realized that you should celebrate falling markets not celebrate rising markets. For someone who wants to still be an investor if you are going to put money in you want lower prices. For my father if he has to take money out he needs higher prices. So for most of us today who are listening, most of us are still going to be consumers of investing, right? We’re going to build our portfolios. So I think we need to train our investors to not worry about volatility and tell them that this is part of the game. Uh but what about when you hear news reports like you know promoters are are selling out in an IPO. There is manipulation. There is a front running of stocks. You know it’s just the uh promoters and VCs that are making money and retail is left holding the bag. So when you hear stories like this, then you lose faith in mutual we need to again look at data that this has happened over 20 30 years enough number of times enough scams have happened our our markets have become far more robust over the last 20 years our regulators have done an amazing job transparency is at alltime high today you can question fund managers on social media you can you know have them come and talk to you 10 years back who had access to even understand these things so things have improved a lot you have to look at the silver lining as well but more importantly you’re right that when it is our hardearned and you see it down 10, 20, 30%, it’s not easy. But first of all, markets are still at an all-time high today. So those who are having portfolios which are down 20 30% have to introspect that what did they buy in the first place which at an all-time high market level the portfolios are down. But even if you had invested in say a small cap fund, the funds underperforming down 5%. And see over a long period of time small cap funds earn 2 to 3% more than a basic large cap fund. That’s what historical data shows. a well-managed small cap fund and I come from an industry where forget just DSP there are enough peers who I have respect uh who have done a great job in managing small cap funds where you know governance checks are there uh lot of accounting filters are in place to ensure you know you don’t get bad companies in the portfolio but inherently small caps will be volatile u our small cap fund again which has you know which was at some point rated as the best fund of the world you know some global news news magazine gave that award 2 years later it fell 50%. Now it didn’t mean that it was a bad fund but the nature of small caps is volatile. The index was down 67%. So that’s the nature of the beast. So point I’m saying is that two years back jumping into small caps blindly was a mistake. Today doubting equity because of that is also another mistake. What I’m again and again repeating is that the nature of market is to fluctuate and from very high levels when markets give very high returns generally in the next two to three years either they’ll fall or they go sideways or they’ll fall and recover and go sideways for a period 2008 to 13 markets gave zero returns but an SIP investor in those five years earned 8% return peranom because he averaged all the way down and then he got so all the way down he acquired more units and when the NAS moved up on higher units the NA so here the maths we need to know is only one NAV into units is our formula. So my job is to acquire units. Uh the market job over a period of time is to grow the NAV. But the NAVs may grow but if you don’t have units what is the point of that growth and most investors behaviorally the biggest bigger mistake they make is they invest when NAVs have already risen. So when they’ve already risen you are already you are buying lower units because you’re buying at high NA and and in the next 2 three years generally NA will side go sideways after rising sharply. So if you can keep this formula in mind that my wealth is equal to NAV into units uh and if I have a 10ear horizon periods when markets fall are great opportunity to increase units uh and in the next round NABs will rise. If you just plot the 10ear history 20 year history take 10 year rolling return of any small cap fund you will never be disappointed. Uh it has earned two times to three times more than inflation. It has earned two to two and a half times more than what a bond would have earned. So time horizon is very important but if we expect markets to earn every year or two uh I think it’s a wrong expectation and that expectation will always be disappointed. So tell me if someone is an investor in this market for the long term what are the mistakes that one should avoid making four or five things that you would completely avoid doing in this market. So one you know I’ll not chase something which is uh hot today uh so something which has done extremely well today. See there’s always this tendency let’s go one year back. One year back the narrative was uh capeex cycle manufacturing infrastructure funds engineering funds defense funds small cap funds thematic funds. Today we are just saying that they are bad. So what do we learn from this that what has become very popular generally will not be profitable because what has become very popular gets overpriced. uh I always uh keep this in mind and I have tweeted this last night also that I look at long-term median returns, median returns, median rolling returns slightly complex and these are the type of maths things that we should learn that if the median return of um let’s say silver is 8% over 20 years but last one year is 94%. Which return will attract you? Most of us will say 94 is great and hence let me invest in silver today because now it has given 94 but it has given. given means it’s gone. Someone who invested one year back earned that not you who’s going to come today. So the biggest mistake to avoid is to not chase blindly only because last one year return is very high. So today for example uh there are obviously lot of onground trends about demand for silver rising uh supply slowing down uh industrial demand rising because of EVs uh central banks also starting to invest in their u investing book not in their long-term book. Now this can all unwind and it can fall 20 30%. Silver for 10 years has given zero return. I’m aware of that. Yet there could be small probability that it still continues to rise. So what would I do? Will I go and put lot of new money there? No. But I’ll invest in a multiasset fund which between 5 to 10% can invest in silver. Today it has around 3%. It was 5% few days back it has brought it down. So that’s one way in which I could invest. Or I’ll size it. I’ll say okay in my 100 rupee portfolio let me go up to 3 4%. but not go overboard because just one year return is high. So the takeaway is don’t chase what is very hard. Last year people who chased small cap and midcap stocks stocks first not even funds without understanding the fundamentals of those companies without asking questions it’s governance and a lot of those stocks are down 30 40%. So I think investors make such mistakes because they don’t do the homework right. They don’t see the the uh the boundary conditions. See every asset class which earns higher return also in phases will take away those returns. So don’t chase uh hot themes, hot funds. Don’t chase last one year returns. Don’t buy narratives and stories. Stories and narratives are all all everything which is English which is nice to hear. What is nice to hear? what is interesting to her becomes the narrative becomes a talking point becomes part of all WhatsApp group messages every day like can you give me an example I’ll give you an example last year you know there was this narrative that um China because it’s a prison uh US because it’s um it’s it’s a decaying slowing economy Japan Europe has gone nowhere and only country where money will be made is India we’ve heard this enough number of times And we have you know chest thumped around it so much. But the question and some of this are all uh truths. It is not a lie that China is not a democracy. It is not a lie that you know US is slowing slow growing slower than India. It is not a lie that Europe for 10 years has seen significant decay in you know its economic health. All of them are true. India is the second or the fastest growing economy is also true. But at what price are you buying it? So if you buy all the good news of India at 2530p valuations and ignore all the bad news of the world at 10p there are chances that you will miss out on the opportunities. So valuations play a very important role but since you’re talking about chess thumping don’t you think they’re doing a little bit of extra chest thumping about India as well for the long term? That’s what I’m saying that again I’m saying that we should not chest thump a rational investor’s job is to quietly earn money save money deploy money and not talk about it. We have learned from our traditions that it’s okay. So I we always I like you know people who do things rationally, quietly, subtly uh softly and not u you know whichever way beyond extremes. So um a sensible investor would say that when um you know some of the best American companies have 20 to 30% return on capital which is two times of corporate India and are at the same valuation as India and growing more or less at similar rates and have such competitive advantages that they can get profit pools of the world without them you know we don’t start our day if you open our mobile and see the screen time the six apps you see will all be these global names u so while there is always this hype that they have run up and hence there’s a bubble there but some of it is deserving also. So have some exposure there. Uh there are very dominant companies which are providing battery to the whole world. One is from China for example. Uh if that is available at 11 and 12p because of uh you know um political narrative around China to the investor how do I care what is the political I can size that in my portfolio 1% in my portfolio. as a fund manager we do some of these things or there are periods when um some European companies uh companies like Louis Vuitton which some of them are part of our portfolios they are down 60%. uh because they had become too expensive. They had become a part of rosy chess thumping narratives 5 years back. Now they have normalized. So they are growing at 7 8% like many companies here in India. But their ROIs are good uh and their long-term growth rates even if they are 6 7 8% but at 11p you’ll not go wrong there. So I think discerning and blending these things is very important. So what I’m saying is that India has inherent long-term growth because it’s the second um you know fastest growing economy maybe first now compared to China also uh it has um capitalism the entrepreneurs in India respect capital our ROC’s are the second highest in the world uh US is at 18% because of the top seven eight names printing like I think Apple itself will be in excess of 75 80% RO because you know everything uh whatever they have deployed in capital they don’t need to do more everything goes to back to profit so there are dominant companies like this there India has 15% 16% RO which is higher than many parts of the world so any country where the soil is fertile for companies to create profits and where the shareholders are willing to share those profits with where the entrepreneurs are sharing it with shareholders and if the shareholders are disciplined to have a 10 year 15 year horizon they will make money and that we have seen in last 30 years there are enough business models in India some of the banks some of the monoline auto companies some of the speciality chemical companies pharma companies who have created immense wealth so you know this is something interesting point I’ll highlight for many good stocks which are you know which you must be observing every day in your life when you buy some medicines or when you buy a consumer item or you uh use a credit card of a bank just look at their absolute returns over the last 20 30 years if these companies have been around for long these numbers are 15,000%, 20,000%, 25,000%. But we look at read these numbers in IRS as 12%, 14%. So 12 and 14 doesn’t seem very attractive. But when you let it compound and see the absolute value of it, Bakshar we keep talking about it, right? Warren Buffett, I think what 55 lakh% is the return he’s made over some 65 years. And you know what does he say that people take wrong lessons only from me or half lessons from me. They take lessons like buy good businesses, add good valuation. That’s great. But the most important lesson is that I’ve been investing for 60 years, 70 years. The lesson of time is something that no one is willing to take. So I think the biggest mistake we make is we think investing is a short-term game. It is a T20 or it is a 100 meter race. Investing is nothing but a marathon. Anything in the short term is random. You may make money, you may lose money. But if you just build a portfolio and give time to it, uh you will compound. you will see wealth growing up. The last point I’ll say is that asset classes are volatile. So if you have a single asset class portfolio, it will conf it will have to go through sharp volatility of its own character. Uh equity has standard deviation of 16 units which means every year you know it in the worst year it has fallen 50%. Gold in the worst year has fallen 40%. Silver in the worst year has fallen 60%. So there will be years once in 10 years where you will go through such periods of fluctuation. be aware of it up front. If you can embrace it, ignore, you know, build that portfolio and live through it. If you cannot embrace it and most of us will not be able to embrace it because who wants to lose money and that’s where you have to mix asset classes. So, you know, our visiting art, I’ll share it with you later on. It shows four asset classes. Indian stocks, global stocks, gold and bonds. Uh Indian stocks over 30 years have earned 13%, gold has earned 12%, global stocks have done roughly around 9 or 10%. and bonds have done seven. So seven is the lowest return. 13 is the highest return. Highest volatility is with gold. Second highest is with uh stocks in India and the world. And the safest is bonds. So safety will give you 7% return. If you’re okay with that, continue with that. But if you want 12 to 13, you will have to take fluctuations. Now when you mix these four asset classes in a certain ratio, the mixture gives you a 12% long-term return. But the volatility is one/ird that of equity. So it brings down volatility but still allows you at least 10 to 12% return as your first step for many investors who can’t digest volatility. That can be a compromise to make. It can be an intelligent compromise to make. And that’s where the role of hybrid and multiasset funds. I have one very simple formula that when storytelling is at its peak, when narratives are high, when euphoria is very high, when last 5 year returns look very good. So like when last 5 year returns are 20%, whereas the long-term return is 12 13%, it means mean reversion has to happen. In such periods, I choose to invest in hybrid funds because that’s when you are moving down to uh second or third year of of driving. From the fifth year, I will go down to the second or third gear. So is this a good time to invest in hybrid funds? I still feel that because valuations are still rich um hybrid funds would be sensible for medium-term time horizons and for investors who can’t bear fluctuations. But for those like again there are many who say yes I don’t care I can digest I can confront volatility. Market falls 20% I’ll buy more. I have cash flows coming every month. I’m a 10 year 20ear investor. For them equity is fine. So what do you do when you identify a good stock and the stock falls about 20 30%. For example, I’m you know the recent thing that’s coming to my mind is say canes you know um a great company great business em growing etc has gone from 600 to 7,000 in 3 years but now it’s fallen 40% because of these corporate governance issues how do you what do you do here so I’ll avoid on any single company but the framework that generally we follow see always in a mutual fund it’s a portfolio approach so there are some stocks every year which are down 20 30%. Now if your thesis is right and if the company is still solid and continues to grow or you have an you have this view that this company over the next 3 years 5 years is going to grow its profits by 15% or double its profits and now the stock is cheaper you will buy more. Sometimes it may so happen that you know you thought this is a great company it is in a great phase of growth but something suddenly changed in the economic environment and and that likely growth has got damaged has got impaired for the next few years. But in this case is corporate governance issues is it a deal breaker when you pick stocks? Again each individual investor has uh their own ways of analyzing. So there are some investors who say that if because of corporate governance issues stocks are down 50% and I’m getting them cheap. I’m willing to take that call. Um is one way of life. Our way of life is if there’s a corporate governance issue first you get out. uh you know you don’t uh you know because you don’t know how long how deeper is it because governance issue means that there’s something which is um uh hidden now you don’t know the quantum of what is hidden you don’t know the gravity you don’t know the materiality of that and you don’t know how long it would take to resolve and then you’re playing in blind and sometimes you get out and the stock runs up now these are things which will happen in market there’s nothing bad wrong about it see it is not perfect science let me tell you the best investor of the world they typically get 55 to 60% of their calls Right. It also means they get 40% of their calls wrong. The best investor of the world. It’s just that when they get it wrong, they uh risk manage fast. Uh they they know how to move on and they move on and and that’s the way to you know con so so accepting this is very important. Many investors you know many times you know in any mutual funds portfolio including ours some stocks would be down. One would ask that okay why are these stocks down but that’s nature of the market. M so you said the things to avoid is don’t chase trending uh stocks beyond and which have made your asset classes far above fair value. Now this is not easy for an investor to know fair value for the stock fair value for aggregate sector then for the whole fund. These are very difficult things to do. Uh and which is why um I go back to the simpler hack that I gave as an investor. I will see if the asset class is long-term potential returns at 12% for example and currently for the last 5 10 years it has given 20%. Incrementally uh don’t chase that asset class or tone down or dial down your exposure to that asset class uh and allocate to something else. On the other hand let’s say 2 years back if the long-term returns of gold was 12%. And it is 12%. The near-term the last 1 year 3 year 5 year return of gold was 6 or 7%. So it was earning below its capacity. So ultimately mean reversion would happen. Which day onwards it will happen you don’t know. Let’s say I had invested in one of our you know gold aggressive gold strategy uh 4 years back. In the first year it fell 20%. In the second year it fell another 8%. And after that it went up 200%. So net net I’m fine now but the first 18 months I looked like a fool. I felt that. So you’ll have to be okay with that. See you you the idea is not to try to win every day. My idea is to win the long-term marathon. So you said then your first 10 years of investing you made a lot of mistakes. What were they? Exactly what I said not to do. So I used to invest and move every 3 months. So I was in a mutual fund. So you I had my mobile app. So you could press few buttons and keep shifting. And in a mutual fund there are always five 10 products. When you have 10 products, one fund will do well and nine will not do well relative to it. Right? And in the next quarter the second start doing well. uh 6 months later the seventh fund starts doing well. So you know you feel that okay now this has started doing well so let my money should go here so let me switch uh and that switching from uh you know from your lane into the lane where the car has just moved ahead and then when you go there you realize your lane only was good uh so avoid doing that number one avoid churn you know once you invest have at least a 5year horizon uh otherwise don’t invest uh that was the first uh biggest mistake I stopped making the second mistake was you know in those periods you you would remember 2006 78 were were eras where very weak companies had g of 3 4 500%. Companies had no business model governance was not in place. So at that point I used to invest in stocks also now I don’t do that but buying stocks without knowing what is that business about buying stocks without even asking that is it making enough return on capital uh to cover for the debt cost uh you know fixed interest rates in India let’s say 8%. So there are many companies who don’t even do 8% ROE but the stock may have gone up sharply because of again storytelling narrative blindly buying into them and some of these stocks are down 80 90%. Uh since then and they never recovered because they were never worthy of investing in the first place. So these are periods see we are in a glorious period of last 10 years and so many people thanks to digitization have entered and digitization while it has revolutionalized rightly gratefully thankfully uh access and simplicity of investing they’ve also made us uh swipe fast uh it’s like that Tinder world you keep swiping left right you so if you do that with investing uh returns will not come to us you in investing uh we need to be slow uh we don’t have to keep taking fast decisions and like I said you know you look at some of these global companies which have a 50-year track record India stock market track record that’s why I’m saying US companies the absolute return of the stock even if it is a 15% compounding over 50 years uh is some 50,000%. So I keep asking myself I started in 98 so I have completed 27 years of my investing. The matter of pride for me will be how long can I be an investor. The length of my investing will be my uh matter of pride not one year 12% or 20%. Uh and I think it is the length which is the most important point and I’ll tell you why I say this mathematically in the formula of compounding we all know that uh it ends with raised to the power of t. So t has the most exponential mathematical sign. T has exponent next to it. Return plus sign. So plus is weaker than exponent. And that is the message I want to give that time is the hero in this journey. So you’ve been investing for 27 years now. Yeah. Thankfully because I joined this industry. I started my career being in this industry. I started in 98 and 99 is when I joined the mutual fund industry. So day one you were taught these lessons. So what uh how much more grateful can I be where I was taught investing and paid for that. I was paid every month see uh and that over time uh and then surrounded by great people around you you learn the right techniques. So uh in your investing journey it was largely equities only or did you invest in others like maybe bought a house when you were younger real estate a lot of that? No. So um when I was getting married in 2003 or four uh my dad said that if till you don’t buy a house um I’ll not let you get married. So the lone lake I had a small home in in a faroff suburb. Uh after that for almost 20 years I have not bought real estate because I I see again I apply maths. Real estate yields in Mumbai are 2%. Rental yields. Uh real est in Mumbai real estate is the most expensive. Infrastructure is not the best. Uh still you overpay. You pay more than many other parts of the world. So my logic was through my mutual funds if I can earn average of 12 to 15%. In old days we were earning higher returns because markets were cheaper. When you invest in cheap markets you earn higher returns. So why compromise at 2 and 3% rental yield. So I never bought a house till 2021 in the period of covid. Uh after covid markets had doubled and that’s when I realized that in covid time we used to do a lot of these zoom calls all calls were digital right work from home. So I started seeing the walls of my home for the first time through my videos. Otherwise at work you don’t notice these things. Then I realized that uh I needed an upgrade is needed. An upgrade is needed and it was a rented house and then so what age were you when you bought a house? Be four years back 46 or 47 and stocks had done very well. So markets were very expensive. So I thought I wanted to do some profit booking. So till the age of 47 you didn’t buy your own house. So one small house you keep that that was again lying idle but till 47 I didn’t buy a home I I lived in a in good rented homes which are very good homes in in good localities but at 2% yield a debt fund was giving me 7 8% return every year and equity fund was giving 15 16% over a period of time so mathematically didn’t make sense but of course there are different joys when you have your own home you know you have your own space um so it is an emotional decision it is not a mathematical decision But each person has to take a call depending on what type of phase of life you are in. You want to build capital first or you want emotional you know safety first. Uh it’s a trade-off. There’s no right or wrong. I’m not saying what I did is right or what I did was wrong. My because I was mathematically inclined looking at these data points and I felt that buying a house in Vipara at that point in time with my limited capital was not easy for me. So I thought let me accumulate capital first and rented homes were available of my choice. We needed a giant mand next to our home great society cha garden ta you know closer to my son’s school all tick marks were there except the maths. So here money was compounding and here for like [clears throat] 7 8 years prices had moved nowhere [snorts] um so and stocks continue to grow at 15% at least over a six seven year period. So that’s how I I uh did my uh investments. any major regrets that you have in your investment journey or in your in your life journey overall? Thankfully, I’ve been very fortunate on all parameters. Good family, you know, good education, good colleagues around me, great industry, I learned from everyone. Um, how many people can become a CEO in a world of 700 cr people. So, uh, I have only gratitude. So, I don’t have any regrets. Thank you. Thankfully everything has been great and uh the only regret is when COVID happened stocks fell 40%. Uh I moved only 10% or 15% from debt to equity start of correction. Every sharp correction feels like it is a start of correction. So I followed all my behavioral principles. I followed all my discipline principles that when stocks are down 40% you have to go into equity. You can’t theorize that time that what will happen. So I shifted 15 20%. But still another 20 30% remained out because I thought I’ll wait for some more time. Uh of course that was your fear kicking in. It was not fear it was because see in March those lockdowns who knew whether they will last for 3 months or 3 years. Who knew whether vaccine will come or not come. So the alternate uh future directions were unknown. So it was also risk management that I don’t want to be all in because you know I don’t know how long is this going to last and I can’t be fully in equity in a pandemic which I’ve never witnessed in my life. I only read about it that it happened in 1918 once and how the world was so bad but when you live through it so you always want to keep some safe buffer. So I shouldn’t call it regret. It was good risk management actually risk management but no regrets to be honest. So uh what are the behavioral uh traits that one should have uh to be a successful investor? We were talking about one of them which is frugality right so that’s why I remembered but um what do you think are the top three or four behavioral traits one should have see I think u investing is about delayed gratification and um uh there is this experiment um uh I forget the word it is about if you tell kids that uh you know read uh one poetry today uh I’ll give you two chocolates tomorrow if you don’t read uh I’ll give you only one so kids who have that patience s to you know wait for tomorrow. Generally it has been seen that they do well in life. So delaying a gratification is very important trait uh in investing because the the the benefits of this uh craft of investing are backended. The benefits are not known on day one. Uh you go and buy a perfume you can use it right now and you can realize and generally they are time tested. investing whether they are good or bad is generally known 3 years, 5 years, 10 years later and in between there are periods of doubt like this year is a period of doubt. So that’s the reality of this game. So one is to you know be long-term and you know delaying your gratification which means not overspending on things that we don’t need and not getting excited that there is an Amazon sale of 40% where prices are first jacked up 40% and then you and many times you don’t need those things. uh so uh you know I have seen my grandmother who who lived for 97 years and uh when she passed away her entire life was one small suitcase her clothes were within that her one or two books were within that she didn’t have uh and she was the most happiest person in life frugal life lived well uh that’s the lesson that I take then that why should I keep chasing so I have this habit of buying fountain pens now about the Third fountain pen has no incremental utility but you keep buying it just sometimes to show off to friends who who also like fountain pens. So uh sometimes um I think we spend money on what we don’t need and few people are blessed to have enough wealth that all these things matter but most people you know who have come from where I have come or all of us have come as middle class people the first few years of our life has to be about saving enough but is frugality and delayed gratification something that you learned through your childhood conditioning or is it something that you cultivated over time? I think see most of us I think not just me uh I come from uh from an era where we were all u you know born in 1970s and ’ 80s uh we all know what was our per capita what was the amount of money in our households it was not everyone was largely paycheck to paycheck exactly so it was not out of habit cultivation it was no choices right [laughter] choice but today the world is different today the world is but actually not so again less than 1% people have wealth in the whole world less than 1% others show that they have wealth but very few people have really you know free cash flow so I’ve seen my parents working for 12 hours you know traveling in a train from church to bur and after that walking home not taking an auto because you know saving money so you have learned these things by observation I won’t even say it’ll be a lie to say I’ve learned it I had no choice most of us had no choice and then it becomes habit and then um then when you start investing and you start seeing returns coming the mindset is you have to save and then it is also about your preferences or patterns of life. So what gives me joy is um thankfully are things which don’t need too much of money to someone else what gives joy could be things that need too much of money. So that is a blessing for me that what gives me joy is relatively cheap and then see when you also invest and you understand business models you know so today let’s say if I have to buy a product I know which brand this belongs to so I jokingly tell my wife Louis thankfully she also doesn’t have that habit it is a 70 80% profit margin business so it means just for that label you are paying for something which is worth 10 Louis Vuitton [laughter] because there are there will be enough people who can troll me for saying these things that you don’t No, I’m with you. I’m and I’m not moralizing that buying a Louis Vuitton is bad. I’m not making that. I’m saying it’s my preference that many brands charge for the brand premium not for the utility. Uh many cars will charge for the brand logo not because the engine is the best not because safety is the best. So somewhere you realize that for my utility how much is good enough and I’ll pay for that and the rest why will I pay for the shareholder to make money I rather become the shareholder. No, I agree with you and I’m of the same mindset. But one narrative is that we are perhaps of this mindset because of our conditioning, right? But that was good in our parents’ time when they didn’t have money. Now the dichotomy is that our mindset is one of frugality but our wealth speaks our wealth that we have built speaks a different picture like you can afford all that and more. Like I was doing a podcast with someone earlier, a big fund manager and he said till today I cannot I cannot bring myself to buy a business class ticket although I can maybe take my entire family or business class but I still can’t you know that mindset shift has not happened. So I think that it happens to me. I go to Hong Kong that is a bit problematic to be honest you know. So it’s a trade-off again and these are personal choices to make. So you have to decide at what stage you want to uh dilute your comfort zone. So when I have to go to Hong Kong to meet my niece, uh I go thrice in a year. So initially I used to say I I can’t take business class because why should I take business class? Now I have done one compromise. One trip I’ll take uh business class or class I forget what is it called? Premium economy. Premium economy. So one trip I’ll do premium economy and next uh like one trip is economy. Once in a while I’ll see now if I travel to UK or US which are very long distance flights. But you can afford this. So now so that’s the mindset change I need to make. Uh but it takes time. So from economy premium economy one step I’ve taken once in a while business one step I have taken but it’s not still very easy. Uh and uh why is it not easy? If 50 years of habits you can’t change overnight or in your mind you have to make this quick um you know snap that today onwards I’m very different and let me now think differently and it’s also again a trade-off like premium e economy when I went last time it was very comfortable it was the first throw it was as comfortable so I felt he largely it’s about convenience only exactly so I think we need to spend where uh you know we it gives us joy ultimately and there are see you’re right that many people today who say that we don’t want to accumulate assets We don’t know units. You are a mutual friend. We want to experience life. We want to travel a lot more. We want to live life differently. We want to spend on our friends and family. That gives me joy. Great. Nothing wrong with that. If you can afford it, you should do it. But if you cannot afford it because the other guy who can afford it is doing it. And if you do it, it will hurt your future. So we have to first safeguard our future, our family’s future. uh ring fence that and then we can start taking these calls. So in your 20s if you had to do things differently and for people who are in their 20s or early 30s watching right now what do you think would your what would your advice be to them? See I think like I gave you this data point that um uh you know Indian markets have really created value for in fact over 30 years it is the best performing market in the world. Last one year two 3 year 5 year may be lesser or last 10 years could be poorer than us but over a 30-year period has created immense value for uh believers of uh investing and for those who have had patience. So the only input I’ll give you because this is what I was not I was impatient. I was reckless. I was constantly churning and jumping. So two big big mistakes I used to make is invest on past high returns and invest for small periods of time and constantly change asset classes. That friction the tax paid buying high selling low would have created significant impact on my small portfolio that time. Thankfully it was a small portfolio. Today if I behave that badly it will have significant impact. Um so to a young investor I would say you you have the best raw material on your side which is time. Buffett has said many times that do I trade my wealth with time today? Uh I have very few years left and someone at 20 has maybe 80 years left and very likely with the type of medical innovation happening we might all live longer. But if we live longer if our money does not last our lifespans we will be struggling. So I only two things which you should be you know taking care of is good health so that you can live a good life for long and if you live for long compounding will automatically happen. Don’t interrupt it. uh be patient with your money. So start early, save more, stay disciplined and uh don’t uh take poor investing decisions. Poor means two things. Don’t buy at high crazy prices and don’t buy low quality uh junk quality. Many most people don’t know what they are investing in. So avoid that mistake. Know what you’re investing in. Ask questions. If you can’t do it on your own, ask search for a good distributor. Search for a good adviser. Do your homework. uh today uh so much of information and insights are available thanks to the type of work you are doing you know learn and then take decisions don’t be frivolous with your hardearned money okay that’s some very sane advice I thought we’ll talk a little bit about um international investing because you folks have an offshore fund from Gift City now we’ve just launched one for LRS okay tell me a little bit more about it like why should I invest in international uh funds through the gift city route so firstly uh it’s not necessary to do international investing or or it’s not any different than Indian investing because ultimately both are equity investing and both are doing the same thing which is buying companies valuing companies and deciding at what price to buy and then staying invested for long. So both at its core will give very similar long-term outcomes with similar intermittent volatility individually done. uh the only reason why I personally have felt and that’s why we promote to our investors also is there are enough uh periods when one market does well uh one geography’s market does well and the other slows down you know the decade till last year India did exceedingly well US did exceedingly well um and the decade prior to that US had zero returns uh China was the best performing market so in every phase uh companies from different countries tend to do better or worse uh it’s a function of that country’s um economic cycle uh geopolitical situations um or it is also a function of the business models of these companies. So there are many business models which are today not available in India um you know some of the business models like like the Amazons of the world or the Kang Kang is a Amazon equivalent in Korea or uh trip.com in China or 10 cent in China. These are business models where uh you know life may shut down without them. Um they have created that type of presence in day-to-day lives by building or by designing business models which are very difficult to replicate. They design so their success comes from their design not from luck or not from other external factors. Can you tell me more any examples? So take Amazon for example. you know uh today they supply thousands and thousands of SKUs to thousands of cities in the world. Can it be replicated? Can a global Amazon be created? Uh not easy. It’ll take maybe 10 more years to do that. But isn’t that a story that has already played out? I noticed you have these stocks in your global funds. Of course. Of course. Amazon, Meta, Tencent are all stories well known, right? So Amazon of course has played out because a lot of returns have been made. But um there is still no other Amazon which has come for you to you know move to something else or I’ll give an example of we have this company called uh Tencent. Tencent similar story with many more levers you know people chat on WeChat people do commerce on WeChat like on Amazon uh it’s a very integral part of uh you know that uh ecosystem and because of whatever political reasons that market had cracked down after co the stock was at 10 times or less than 10 times on valuations. So sometimes you get great businesses at reasonably cheap valuations. So what we look for is not about whether the company is global, whether it is an American company or a Chinese company or an Indian company. Is it a good company available at good valuations? If if you get such conditions right, your odds of making superior returns goes up significantly because the core is not China investing, Japan investing, US investing, India investing. The core is good businesses at good prices. I think that’s something that investors should really narrow down to. Today we have that opportunity to participate in different parts. Um so there are great banks in India, there are great asset management companies in India, there are great uh pharma companies in India which are market leaders. There are couple of auto companies in India which sell the highest number of two wheelers to the world. So there are certain companies certain things where we are good at happily that portfolio but there are periods when they are very expensive and at similar points in time there were many companies in in Europe or in US which were going through their down cycle. So if you’re able to spot these type of businesses so so we have couple of strategies uh you know the the most uh tax efficient and uh convenient way of global investing is through a mutual fund uh where uh and and within that personally my favorite way of investing uh is a single fund which has choice of Indian and global stocks. Why as an investor should I keep jumping various funds in a single fund the fund manager will allocate between good India businesses and good global business. That is the first way to invest. So you have that fund. We have a fund. We have a fund called DSP value fund. Um that’s one way but that has a limit right as of now the limits are still open. So if you want to do an SIP for the next 10 years very happily we’ll welcome you to do that. If you want to put lot of big lumpsum money we may not be able to take because the limits are still not very large. So how is that different from investing through G city? So now I’ll come to that. Now at large um all mutual funds will struggle with limits or are currently struggling because those limits of $8 billion are almost 95% or 98% full. At the margin some open limits are there for one or two funds that I mentioned. So if you want to not worry about when will this limits get over what will happen after that will the fund dilute the global component those questions could be there in your mind. Reserve Bank um um you know has this liberalized emittance scheme window through which uh Indian investors uh you know save for global expenses either for future travel or future expenses of uh kids education. So under LRS um almost 20 $25 billion gets transferred outside. Investing is one component of that and thanks to the gift city ecosystem that the government of India has you know very beautifully built over the last 10 years today we can launch a fund on gift city which can invest globally. So we have launched a 100% dedicated fund uh on gift city uh for global investing. Now this fund doesn’t have a fundhouse level limit or industry level limit but this fund has individual level limit. So you and I every year annually per pan number can do 2 and a half thousand or two and a half lakh dollars. So roughly around um 2 cr rupees perom per person. And what’s the minimum investment? So we have done a retail fund which is a $5,000 minimum investment. We want more people to you know get exposed to global investing in a more institutionalized way versus you know yourself going and again searching for stocks anywhere in the world and not uh taking the right decisions. And how does the taxation work? So here um the taxes are paid by the fund. Whatever returns you make after 5 years, 10 years are taxree in your hands. At the fund level, the taxes are 12.5% if you hold stocks for more than 2 years. Uh and on the dividends that we earn on some of these companies, uh it is 40%. So the dividend tax is high which is a marginal you know um uh disparity from the Indian mutual fund taxation. But dividend incomes are anyways not very material in your entire gains. So if over a long long-term stocks earn 12 to 14% return, dividend yields are only 2%. So on that you’ll pay 30% extra tax on that margin of 2%. So ignore that for a moment. But broadly if on uh Indian equity mutual funds you’re paying 12 and a half% tax on long-term capital gains. Here the effective lended tax somewhere if you be a long-term investor will come somewhere close to 14 to 15%. Over a long period of time. a marginally higher tax but you are able to complement and blend. Now the beauty of blending this is so I had given some time back I had mentioned that standard deviation for uh Indian markets is 16 units and standard deviation for global markets is 14 units but when you blend the two long-term return still remains the same of an equity asset class but standard deviation comes down to 10. What does that mean? So it means the fluctuations of the NAB of a blended portfolio are lesser the volatility drops basically. So you know when global stocks do very well our value fund underperforms. Um but when global stocks fall a lot our value fund does well because the India component would have done well. Likewise this year when Indian stocks have not done well the value fund had only 65% in Indian stocks. The balance 30 35 was in global stocks. They did better. So when individual component does badly the combined portfolio does far better. So when you invest through gifts city uh the remittance is in dollars. So from here you convert your rupee from your rupee account you instruct your bank to convert it into uh dollars in our gift city account. So the money will get transferred to our gift city dollar account. From there we will go and buy portfolio companies. So as of today it’s a very soft launch that we’ve done. We’ve raised around I think 80 crores or so and the portfolio is only 55% invested. We are very gradually building the portfolio but apart from Amazon and Tencent that you mentioned uh there are more interesting names in the portfolio like Trip.com, Kang uh Nintendo, BYD, Burkshshire Hadway, uh Constellation Software. It’s a it’s one of the finest tech company which keeps doing acquisitions uh but each acquisition is RO accretive. So it’s a great example of capital allocation story over the last 40 years. Then we have Brookfield from Canada. We have RDN from Netherlands. We have Universal Music Group. Uh we have Deckers if you wear hookah brands of brand of show. So it is owned by Deckers. The stock is down 65% in the last 18 months because of tariff uh news and uh you know the US China trade relationship. So the stock got hammered. Great businesses. But so so you are able to capture good businesses of India in our India portfolios but you’re also able to capture good business of the world when they are going through a down cycle. Either their market cycle is bad, their flow cycle is poor or the company’s industry cycle is bad and that is why good businesses when stocks are cheap. So today most investors in India so blending it is a great way to build more resilient long-term portfolios. Okay. So why should I invest through the gift city fund when I can invest in your regular value fund? You can. So like I said the regular value fund maybe if I get the next 3 400 crores my limits may get over the limit will get exhausted. So then you have to rely on me that we will not we’ll stop taking new money in that fund so that the ratio of 70 7525 will remain intact. If you don’t want to you know take that call uh and also want to build a 100% global portfolio. See because all of us are almost 99 100% exposed to Indian stocks. So someone who wants to start incrementally adding global stocks the gift city is a very uh credible alternative. So how what should um the asset allocation be towards these international funds? If you have 100 rupees how much should be in domestic equities? How much international? How much gold? See see like I said um um you you you are fine with 100% Indian portfolios also. uh it won’t necessarily change your outcomes dramatically over a 10 20 30 year period because broadly all equity markets over time converge to that long-term returns of 12%. And let me say that mostly equity markets over a very long period of time last 50 60 year history shows um um inflation plus another 4 to 6% extra return. So some countries have given 4% extra some have given five some have given six. Right now US and India have given six. We are the best performing countries right now. next 10, 20 years someone else may be the best performing who knows. So doing global allows you to you know be relevant if something else becomes important. If India continues to to do well as it has done in the last 30 years doing global investing may be a bit suboptimal as as we speak on any day I come with this belief that I cannot forecast the future. I cannot give you a definitive answer that India only will do well or global only will do well. I have no definitive answer and hence I mix. But someone believes that no I think India itself will do well I can. So keep that context in mind before you hear my next answer. Now asset allocation is always personal. Um each of us can have unique asset allocation. There are enough people who have zero in gold and there are many who have 20% in gold. So there’s no right or wrong answer to be honest. It’s like saying key you know what should be my diet today. Uh your diet would be very different. Mine is very different. Personally in my portfolio I think I have around 25% in global uh uh portfolios through my mutual funds and through the LRS bucket. So currently my portfolio would be 40% of Indian stocks 25% global stocks. So it is 65% still in stocks. These 65% can fall 30 40% if there is a global meltdown once in 8 10 years it happens. It will happen it will not not happen just because I fear it. So someday it will happen. So 2/3 of my portfolio is in growth assets between Indian and global stocks. One/ird of my portfolio of the balance 35 is in bonds and gold. Um gold has done extremely well. So incrementally I will probably slow down my allocation to gold. So I my approach of investing is not investing a lot more in what has earned a lot more in recent times. Yeah, you were saying that. Yeah. So that is my approach. Now this is a anti approach to the trend approach. Momentum as a factor also globally has done very well over 30 years that what has done well you keep topping up on that. Don’t uh debate what is doing very well till it stops doing well. It can continue to do well for the next 10 years. Who knows? So see in investing um and you will probably next time not call me again because I don’t have definitive views about most of these things. The only definitive view I have is uh don’t overpay irrationally for that asset class and u don’t be a short-term investor broadly. I think I will be in the top 5% investors of the world from a return point of view not from a capital point of view. So that is my approach. No, I’ll definitely call you again. [laughter] But in this last segment we have something called a viewer query segment and we’ve got lot of viewer queries. So I thought let me just you know toss some of them to you. Uh one is writes to us. She says, “Thanks for the opportunity. Here’s my question. If one has bulk capital, what should be the strategy to invest across assets like equity, debt, and gold? My thought was to do an STP to a multi-asset fund given the fact that most assets are heated up. Is this a sensible approach? You should call Isha next time because [laughter] she already knows the answer. She’s sorted. She’s sorted. And uh I’m doing the same right now. All the bulk capital that I have, if at all what I get bulk capital is in a hybrid fund or multiasset fund. Uh so right now that’s what I’m doing. I don’t want to take sides with any single asset class right now because all asset classes are fairly priced. Nothing is decisively cheap or attractive. Indian stocks are also fairly priced. Global stocks have also run up. Gold and silver have also done more than equity. Uh bonds interest rates are reasonably low. They are not very high right now. So basically spread risk is the theme for me right now rather than chase return. So I would do the same thing. Okay. Uh I’m sure you get asked this a lot. If they practice value investing, why did they apply in some overvalued IPOs recently like Lenskart? No comments on anything which is about a single stock. Okay. Uh there have been a lot of MNC’s selling their Indian counterparts such as Whirlpool with so much selling being absorbed and ownership. Do these companies offer good opportunity with a 1 to2year time frame? See in equity investing with 1 to2ear time frame is like a toss of coin. Anytime one year you could lose 30% return or make 30%. And so one to two year is anyways a wrong time horizon and most of these MNCs are also selling because they are finding valuations to be much higher than what they believe should be fair value. Um and [clears throat] and hence these companies could still go through some periods of time correction. And generally I don’t personally do single stock investing. So I am not an expert to guide on one or two or three stocks. I’ve always believed in a portfolio approach. A portfolio approach does not earn the highest return but also does not earn the lowest return. A single stock approach or a 10 stock approach can give you highest returns if you are skilled and lucky or it can give you the lowest worst return if you’re not skilled or you are unlucky. So mine is a middle of the path approach portfolio of funds uh where there will be some stocks which would have done very well there will be some which would have not done well. So that is the approach that generally I we ask most people to follow because we don’t have the wherewithal to understand company by company individually and there’s a lot of fluctuation there’s a lot of role of luck in these things. Okay fair enough. Uh someone asked with FBI’s dumping 1 and a half lakh crores year to date and the rupee at record lows should long-term investors pause global funds or double down on SIPs for currency plus valuation mean reversion. So there’s a dichotomy in the question that the input matrix is one year of dumping one year of currency fall. The question also is about long-term investing. So both are not uh in sync with each other. For a long-term investor in the last 20 years, if I have been a long-term investor for 28 years now, I have seen the currency being dumped every year for example, right? Every year the currency is lower. So every year had I thought currency all time low, what should I do now? I would have not compounded at 15 16% return. I think uh long-term trend of currency depreciation is is very natural in emerging market countries. In spite of that, if there is inherent profit growth in that market, you will make money. Having said that, we are in you know a phase where valuations are high and which is what I’ve been saying for the last uh you know hour or so. This is a period to be diversified in Indian companies, global companies, little bit of bonds, little bit of gold, broad-bas if you buy gold, you’re getting currency depreciation benefit. And if you’re buying global companies, you’re getting currency depreciation benefits. Um so um this is see for a long-term investor, it is never a good time to stop investing. And you have some or the other asset class to invest. What is the point of keeping money idle in a bank account at four or 5%. Correct? So stay invested in hybrid funds if if worried about volatility otherwise ignore the volatility. Is 2026 a year when we will see a real correction in the market? Um could be or or could be time correction. I think what we are going through what we are witnessing even the last year 25 we had 20% correction first then markets bounced back another 25% so we back to square one and they’ve been sideways. So the first year of time correction we’ve gone through 1 year and 3 months now September 24 was the last peak we are at the same price right now. Maybe it might continue for a year or so for Okay. If the world is moving towards dolization, could Bitcoin become the most trusted global currency since no single nation controls it? So, should one think of investing in bitcoins from this POV? Leaving aside all the other arguments. Um I don’t understand Bitcoin. I tried studying about it in 2015 16. It went all over my head. Who owns it? No one owns it. Then who owns it? Where can it get lost? uh what is the formula of uh its design uh can overnight governments come and do something about it because it becomes a challenging force to their he who knows I don’t understand which as of today I have nothing in bitcoin and over and above that it’s not regulated yet so I anyways can’t comment on it neither can I invest in it okay fair enough uh what would your uh long-term target be on the nifty for the next 5 years never done it in last 30 years I don’t even remember a nifty K u it has helped me still earn my 15% CG so I ignore these targets are they allowed to invest NPS money in international if yes what is their exposure not yet not yet okay okay fine last question they are both sets of funds small cap and small cap 50 quality index funds as a fund house what do they believe what will save investors in a better approach to invest in small caps see we launched the quality index we were the designers of this quality index along with NSE and nifty and we were the first to launch This and our thesis was that typically the small cap index is 250 companies and history shows that more companies in the small cap index are generally fragile in terms of business models or uh volatile to economic shocks and business cycles and having a quality filter uh at least eliminates weaker companies or weaker business models. So my bias would be to always uh think of quality. Having said that, in the last 10 years, any stock with high roe in the small and midcap universe has run up very sharply on valuation. So if you want to invest in small cap quality index, do it through an SIP. Don’t do a lump. Okay, last question. It’s a bit controversial. If you don’t want to answer, you don’t have to. Uh when will they find another Adita Kimka and start a good healthcare fund for small investors? Uh please read Chira Dougli’s uh investing approach. Uh look at his portfolio over the last 5 years. um you’ll be happy with your dag okay but do do fund managers manage matter that much because you know that’s been my primary concern about active funds that when I invest in an active fund I go by the fund manager 10 years later the fund managers vanished then what to do see do fund managers matter good fund managers matter obviously and not so good fund managers don’t matter uh is it a worry that every few years fund managers may change yes it is a natural phenomenon why can’t they change I have changed my jobs four times You have changed, you have been more long-term, but you have also changed. I’m sure your viewers would be telling CNBC that why is this churn happening? So, churn is going to be natural and the industry has also matured now for 25 years. Many of the old guards will retire. Younger teams will take over. So, it is a reality that fund managers do matter if you choose the right fund manager. If you are able to if you have the knack of choosing the right fund manager, most often you get to know the right fund manager after 10 years because only after 10. Like I said before, this is a game of getting backended outcomes. Uh the feedback loops are late. You get to know the goodness or the mediocress of of any talent much later in this business. And it’s not about the fund manager, anyone of us who are in this business. So it takes time. Um my portfolio largely still is with active funds. Uh I know the team that I work with. Uh I have hired most of them. uh I also feel that uh maybe I have the arrogance or belief that uh even if you have to hire new managers we’ll be able to attract the right talent as a platform DSP DSP has been around for 170 years so we’ll be able to get people but it is not easy um and which is why we also with all humility tell investors that if you one can’t identify a fund manager in advance if you can’t choose him at the right time if you can’t be loyal to him when he’s not doing well A great fund manager also 3 four years can go through underperformance. We’ve seen that with some of the iconic managers of India and most of us give up on them at that time and then when they do very well the reversion of mean doesn’t work for us. So another approach is to start with an index fund at least meet the index first in trying to beat the index we don’t even meet the index. So we with all humility we say both options are there. If you can understand how to choose a good fund manager we upfront put out our investment frameworks on our website. We have very transparently written down what each fund manager thinks, how he you know thinks about growth, valuation, portfolio construction, risk management. Uh every year our fund manager writes an annual letter on his strategy on what were his mistakes, what could he have done better or worse. These are only with the intent of making you uh understand the fund manager better. We hope that our fund managers remain for very long periods of time. But it is a reality of life that things change. So, I don’t have a very easy answer to this, but thank you so much for taking the time. It’s been a long time now, and I’ve taken up a lot of your time as well, but it was a great conversation. Uh, we’ve really learned a lot. So, thank you for being with us on the money mindset. Thank you for doing this podcast in your new version, and wish you all the best. Thank you so much. Thank you.