Sundeep Sikka’s incremental investments go solely into fairness. However, that wasn’t all the time the case, says Sikka, ED & CEO, Nippon India Mutual Fund. “At the beginning of my profession, I used to put money into conventional debt merchandise. Over the years, fairness allocation has elevated as I’ve realized it’s the finest asset class,” he said during 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.
The portfolio
About 70% of Sikka’s investment portfolio is in equity, which is spread across mid-cap and small-cap funds. He does not invest in direct stocks. “After 2009, when I became the CEO, I haven’t invested directly in a stock to avoid conflict of interest. The only stock I hold is of Nippon in the form of ESOP (employee stock ownership plan),” Sikka stated.
On whether or not he would name himself a high-risk investor since his portfolio largely contains small- and mid-cap segments, Sikka stated he sees himself as a lazy investor as a substitute. “I like to remain invested for longer durations of 10-15 years, wherein small- and mid-caps are inclined to fare higher, so that they change into the popular alternative. An investor could be stated to be taking further threat if he chooses to put money into small-cap for the quick time period.”
For the same reason, he doesn’t make changes between market segments or schemes too often, neither in equity nor in debt.
“Active churning of portfolio depending on market activity may sometimes give you a rush that some action is happening. But I’m a firm believer of keeping emotions in check. Don’t let your emotions, market momentum or news flow take over your investment decisions as they should always be taken with a goal in mind,” Sikka stated.
Elaborating on his technique, he stated what’s necessary is getting the proper asset allocation whereas investing, and after that one simply must journey the market. “You can name me a passive investor in energetic schemes,” he adds.
Sikka has been investing in international equity for five years, though its percentage share in his overall portfolio is low. He prefers geographical allocation instead of picking funds on generic themes. “For instance, if I want to see the upside in semiconductors, I’ll invest in Taiwan funds,” he stated. Almost 99% of Sikka’s monetary property are in Nippon India Mutual Fund.
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Sundeep Sikka, ED and CEO, Nippon India Mutual Fund
Gold and actual property
Sikka will not be bullish on actual property as he believes that appreciation within the asset class doesn’t occur the best way it used to till some years again. Additionally, liquidity and rental yields are low, whereas the price of sustaining properties is excessive, based on him.
Real property makes up 10-12% of his portfolio, which incorporates the home he resides in and inherited property. As for gold, he has a small allocation of 3-5%, however all of it’s in gold alternate traded funds (ETFs). “I’ve by no means purchased bodily gold for funding,” Sikka stated. On being requested how he views gold as an funding class, Sikka stated gold acts as a pure hedge in opposition to each fairness and bond.
Family and funds
For Sikka, wealth means three issues—well being, training and relationships. “By training I don’t imply simply formal training, however your fixed endeavour to get higher on a regular basis in comparison with what you have been yesterday,” he said.
When one substitutes wealth with just money, the purpose of life becomes myopic, as per Sikka. “Money and career should be a means to achieve the three wealth goals of health, education and relationships.”
Sikka’s spouse has all the time been concerned in all their funding choices and her engagement within the household’s funds has elevated considerably post-Covid.
Sikka rues the truth that he was late to equities as he was all the time taught to put money into conventional devices of financial institution deposits and provident fund. Having learnt from his personal late begin, he often educates his kids in regards to the significance of together with fairness in a single’s funding portfolio to create long-term wealth.
Among different classes, Sikka needs to imbibe saving habits in his kids early on. “I inform them incomes will not be sufficient should you don’t save and make investments it in the proper asset lessons.”
Sikka has parked six months’ price of bills in a liquid fund as emergency corpus.
Note to readers: The article highlights Sundeep Sikka’s asset allocation and funding methods. Each particular person ought to tailor investments to their threat urge for food and time horizon.
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