Buy a business like you won’t see it for the next 10 years.” This advice from investment guru Warren Buffett remains the guiding principle Nilesh Shah where it relates to his investments. “I invest as if I will not touch it (investment) for the next decade,” says Shah, managing director, Kotak Mahindra Asset Management Company Ltd.
As is the case with many CEOs and senior executives of companies, a large part of Shah’s Property, also, linked to your employer. Most of his personal wealth (60%) is in equities – either employee stock options (ESOPs) or shares of Kotak Mahindra Bank which he had acquired long ago. (He also owns some shares in physical form so that he is not tempted to sell them.)
His other 15% wealth is in equity mutual funds, mostly in large-cap and large-and-mid cap category segments. Shah does not invest in passive funds, except as required by market regulator SEBI’s regulations. Under these rules, Shah, as CEO of Kotak Mahindra AMC, has to invest in all schemes of the fund house. But these rules came into force only in October 2021 and hence such mutual fund (MF) units form a very small part of Shah’s portfolio. Interestingly, Shah relies on a distributor to transact in MFs instead of opting for direct schemes.
“I don’t do active asset allocation due to the constraints of my job. I am a long-term investor by default. However, I would recommend investors to do active asset allocation if they have the flexibility,” he said, adding that his job attributed its heavy ‘buy-and-hold’ approach to the constraints and demands of its time.
Even though Nilesh Shah has grown his wealth in equities, he feels particularly unlucky with real estate. “I must have given token money for property at least 6-7 times in my life and every time the deal didn’t happen.” About 15% of Shah’s personal wealth sits in real estate. This includes his primary residence and property he has bought on the outskirts of big cities to get a steady rental income. “I buy properties in places where the city is going to grow,” he told Mint. Prefer commercial over residential property.
As for his primary residence, he often wishes he had heeded his wife’s advice and spent more money on it. “She told me you shouldn’t try to bargain when the house we live in, and she was right about it,” he adds.
Shah has a small allocation (8% of his portfolio) for loans, but it is mostly money kept in his emergency fund and short-term funds, which is being used for ESOPs. He does not depend on it for regular income.
Shah has very little allocation (2% of the assets) for gold. However, he is considering increasing it. “I invested in gold because my mother asked me to buy it for my daughters. I am looking forward to increasing the allocation to gold through Sovereign Gold Bonds (SGBs) as I believe central banks around the world would like to invest in gold after the freeze on Russian FX reserves.”
When asked about his vacation, Shah recalled a defining moment in his life. “My wife is a great planner. When we got married we went on a low budget honeymoon. We both promised each other then that we would celebrate our Silver Jubilee without any budget constraints. God bless us Have mercy and we can redeem our promise.”
“Wealth means the ability to perform Varnashrama (the four stages of a person’s life as per the Hindu ashram system). My job gives me good money and also helps in earning the goodwill of my investors.”