‘Systematic planning is essential'

Mr Sailav Kaji, Director - Institutional Equities & Chief Strategist, Padmakshi Financial Services has worked for over 12 years in equity, institutional broking, quant and derivatives research, and been involved in the management of over $15 million for HNI clients. Excerpts from the interview:

What are your top financial goals?

My top financial goal, in a nutshell, is to manage a return generation from my portfolio to beat nominal GDP growth (real GDP growth + inflation).

How are you planning investments to meet your goal?

Diversification. I have made a portfolio allocation which is diversified across equity, fixed income and commodities such as precious metals. Further, these investments have a mix of a fixed lump-sum and an SIP component which helps in averaging out the portfolio costs.

When did you start investing?

I began investing after I started my first job, back in 1999. I made my first investment in the stock of Hindustan Unilever.

How has your portfolio changed over time?

Over the period of my investing, I have changed portfolio composition based on growth and productivity aspects of various sectors. For instance, I think that once a bull market is around two years old, some profit-booking in investments which is channelled into defensives will occur. When I feel valuations have peaked, I shift into FMCG and pharma.

How do you plan investments to beat inflation?

For one, FMCG stocks over the longer period beat inflation and provide growth upsides. IT too has been doing the same. Another strategy which is a good way to be one up on inflation is to include fixed income options when the interest rate cycle is trading up. Interest rates are currently at a three-year high, so you can take advantage of that.

What is the one key learning that you take away from your investment experience?

Discipline. The discipline about profit goals keeps me focussed on how to make the most of opportunities when markets are bullish. You need to control the greed for ever-higher returns. So, I've learnt to make a systematic plan at the time of investment which will help me make my profits and then invest the capital again in markets. And as I said earlier, I gravitate towards somewhat defensive stocks at this time. This approach especially helped me back in January 2008. In the two days post-IPO of Reliance Power, markets crashed; but I had already booked as much as 60 per cent profits and shifted it into FMCG and pharma stocks which didn't fall as much.

What has been your most profitable investment?

Recently, it has been Reliance Infrastructure, which, in the last rally, has more than tripled my initial investment.

Do you draw inspiration from any investment guru/book?

Well, for a firm grounding and understanding of economic aspects, I have looked towards Alan Greenspan. As far as investment philosophy goes, the work of Warren Buffet is of great value. It helps one remain focussed in times of panic.

How do you suggest young investors start their investments and make a financial plan?

To start with, I suggest that a newbie investor form a three year plan. Determine the desired return first and then begin working out the proportion between asset classes Keep in mind that stock selection should be done with a two-three year time frame.

What is your message on savings and investment to investors starting their career?

At the start of their career, young investors can keep the proportion of savings in fixed income and annuity products on the lower side with equity on the higher side. As their careers progress, their fixed-income proportion vis-à-vis equity should rise and above 50 years of age, it should be no less than 50 per cent.

COMMENT NOW