Carrying out the investment journey of Sapient Wealth’s Amit Biwalkar

Can you describe your current portfolio allocation?

I’m on 40% equity, 60% debt right now. The large position in debt has more to do with some of the liabilities that I have to pay. Otherwise, I am a balanced type of investor, with around 60-65% in equities and 30-35% in debt.

In equities, is the allocation higher for large caps or mid and small caps? Do you have a rough percentage on this?

It is more of a flexi cap and has some exposure to international funds. About 20% is in international funds and the rest is in flexi cap.

International funds are being continuously banned. Do you think this will hurt the portfolio?

We have seen that these types of restrictions last for some time, and then open up. ETFs (Exchange Traded Funds) are still open. You can take the ETF route, and invest globally.

What was your first investment?

I started my career with Sajag Securities in Pune, and that was an equity broking house. So obviously, the stock was my first investment. At the time, I was investing without any research or homework. I had the luck of beginners and made some money, and then I had some big loss. After that, it only went through SIP, and in the last four-five years, I think I have added PMS and advisory and private equity.

Which has been your longest holding fund since you started investing?

I was investing in DSP as I was working for DSP Mutual Fund. I have invested in DSP Opportunities Fund since 2004 in the name of my child. Another long lasting fund is a Fidelity Scheme – now L&T Flexi Cap Fund – which I bought in 2005. Normally, I don’t run unless there is a tactical call. Or we see that the market is moving sideways for two-three years. My average holding should be around seven years.

Did you make any changes when Covid-19 entered the markets?

I switched to 90% equity and 10% debt. That 10% debt was because I didn’t have the guts to put 100% in equity. Also this period was such that everyone said that Nifty will go back to 6,000 level. So, I thought, let’s wait for the bottom and maybe I’ll add that 10% as well but it never happened.

How many funds do you have?

I have seven equity (and commodity) funds in my portfolio and three in debt. These seven funds have a combination of international, domestic equities and gold and silver as commodities. These are all active funds.

Do you have a ballpark figure for your portfolio’s internal rate of return (IRR) since inception?

It would be around 14 per cent. This is almost over 16 years.

Do you have life or health insurance?

Yes, I have both life and health insurance. I think you should have life insurance at 20 times your monthly income, and I’m close to that number. I also have mediclaim cover. I also have a top-up policy which starts when the medical cost exceeds the basic policy cover. Due to this condition, its premium is relatively low. I also have a foreign travel accident policy.

If you had to name one scheme that has generated the most money for you, what would it be?

It will be very difficult to answer this, because time to time the investment has not come on a date. But I think mostly these are flexi cap funds. Earlier large-cap or multi-cap funds worked. I am not an investor in small-cap funds. I go the flexi cap route.

What is your approach to real estate investing?

The house I live in, and the office I work in are my real estate investments. I say if you want to enjoy your life, you upgrade yourself from 2BHK flat to 3BHK and then 4BHK because that flat is yours; You are enjoying the property. What’s the fun in buying a property where you’re not going to live or rent it out? The rental yield is 1-2%, while your housing loan is 7%.

Describe the circumstances surrounding the start of your sapient journey.

In 2008, I was with AIG. It went belly up in America. After that, we had just launched our infrastructure fund as infrastructure was the theme then. After the 2008 crash during September and October 2008, a lot of investors were calling our office’s landline directly. And it made me wonder why these people weren’t calling their advisors or bankers. Clients used to tell us that consultants and bankers are not taking their calls. That’s when I realized that a lot of customers had become orphans. So, that’s when we thought of launching Sapient. We started this in June 2009.

So, what was the AUM in the first or second year, and how has it progressed since then?

the first year was almost 70-80 crores. Half of the portfolio belonged to my partner Janak Shah, who merged his venture with my company.

In 2009, Fixed Maturity Plans (FMPs) were offering 8.5-9.5%. Pune is the city of pensioners. You have many banks, many co-operative banks. People are looking at fixed income instruments. So, we chose the FMP route, and it was an easy kill.

So, everyone thinks of building AUM through equity, but we have built our AUM through debt which really made us grow in the initial years and then as the FMP money started coming back, appreciation equity. and we made a SIP book and that’s how we started. So, the first year, it was almost 80 crores. next year we went 240 crores. Then we got a real big breakthrough when corporates in Pune started allocating their money in mutual funds, so, we went about it 350 crore next year.

today we 12,000 crores. This has been the journey in the last 13-14 years.

Most of your growth also comes from mergers. Please tell us more about this.

It is with like-minded people in other geographic areas. We were lucky to find Pallava Bagaria in the North-East and Paresh Kariya in Mumbai. Two years ago, Roopa Venkat and Dhruv Mehta also merged their practice into Sapient. It is very difficult to leave your own brand and merge into another entity.

When you look at the organizational structure, we tend to think of it as a Chartered Accountant firm rather than a business. Old partners can retire and new partners can join the board.

We came together because, as an individual IFA, we have no reporting boss, so we are bound to make mistakes as everything I think is right gets translated into the portfolio. So, if you have a board of directors, you are reporting to someone. I think this collaboration bought various assets and talents of the industry like Dhruv Mehta, who was the CFO of a very large listed company, and it was doing very well in lubricants. So, we bring in that expertise. Pallava is doing business for so many years. Paresh is a Chartered Accountant.

I think it all results in the betterment of the organization. So, everyone brings their own skill set and then you are accountable and responsible.

Any lifestyle changes you have made after the pandemic that you think will continue?

I used to love my whiskey, I’ve completely discontinued it after the pandemic. I am a keyboard player and I keep playing the piano. I am also a big collector. I have about 1,200 gramophone records at home. I walk at least 3-4 km daily.

Do you include your wife in your family finances?

Yes absolutely! Your spouse should know where you are investing in the house. I have a one-page net worth statement at home, and I update it every month.

It is very important that your family members are involved in your finances. You may not let investment executive decisions, but you should certainly provide them with information and knowledge so that they can manage their finances well.

Since my wife is a doctor, she also has her own opinion. Therefore, her portfolio goes according to what she feels; Guidance can come from me but when it comes to finances she takes her own decisions.

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