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Shenoy, who has been an entrepreneur all his life, doesn’t invest in gold or own a house. “I even don’t plan to own a house. I also don’t like gold and I don’t like real estate. I am a financial asset guy and not a real asset guy,” he says. The founder of Capitalmind shared his portfolio details for the special annual Mint series – Guru Portfolio — to understand the impact of the pandemic on the personal investment portfolios of leaders in the financial services space.
Equity is the biggest allocation in Shenoy’s portfolio at 85%, and he invests all of this money via four portfolio management service (PMS) strategies of Capitalmind. These strategies are across large-caps, mid-caps, and small-caps along with US stocks via exchange-traded funds (ETFs), a momentum play, which is an algorithmic strategy, and an index. The allocation is around 30-40% each in large-caps as well as mid-cap and small-caps, while around 10% is in US stocks.
As an investment strategy, Shenoy doesn’t believe in market capitalizations. “The problem with capitalization-based weightages is that you assume that all companies in a certain market cap will do well at the same time. Since all market caps are correlated, it doesn’t matter how much you have in each, as long as you understand the underlying businesses,” he said. Shenoy, however, admits that a significant amount of his returns has come from small-caps, which have gone on to become mid-caps or even large-caps. According to the financial services space expert, he isn’t allowed to invest in capital instruments such as stocks on his own, so he routes equity investments via his PMS.
However, he invests in bonds on his own, which is around 15% of the overall portfolio. For Shenoy, debt investments are primarily from the perspective of liquidity.
“My core concept of debt is that I would buy bonds that are listed on the exchange. So you have these bonds that were issued in 2013 and 2014, which continues to trade in the market. But they trade at extremely attractive valuations for debt. Debt today offers 4.5% to 6% kind of returns. But some of these bonds give you 8% to 10%. So I use them as a better allocation than cash,” he said.
Again, when it comes to debt investments, Shenoy doesn’t believe in ratings. He revealed that once he bought DHFL bond after it was rated default, purely as a recovery play. “I will not buy debt just because it is rated AAA because I don’t believe in ratings. Instead, I want to trade in certain companies. Ratings matter less than understanding what the company does in the first place. I prefer to take the debt of an operational company rather than a financial company,” he said. Shenoy also revealed that his latest set of acquisitions have been long-term government bonds through the RBI Retail Direct Platform.
When it comes to emergency fund, Shenoy’s keeps the corpus in a liquid fund, which is good enough for around 10 months. The expert also doesn’t have provident fund in his portfolio but has a small exposure to public provident fund.
In terms of insurance, he has a term plan along with a personal as well as group health insurance plan. Interestingly, Shenoy revealed that he has never owned gold and most probably will not do so in the future. “If I would do so, then it would only be like a short-term fixed income kind of an instrument or trend or momentum-based trade,” he said. The expert also doesn’t dwell into alternate asset class, as he finds it to be a “distraction”. He also doesn’t have exposure to crypto assets. Right now, Shenoy is focused on making his startup bigger. “I’m better suited to make Capitalmind stronger and take it to its new future. I’m spending more money buying shares of the startup and this is my biggest alternate investment. If I’m allowed to, I will buy more and more of Capitalmind shares, rather than anything else,” he shares.
The founder of Capitalmind also has investments in infrastructure investment trusts (InvITs) and real estate investment trusts (Reits), which he calls quasi rent income. “Some of my speculative money is there, which is giving upwards of 12-13% returns.”
In terms of lifestyle changes post the covid-19 pandemic outbreak, Shenoy has grown a liking for black coffee and eats more protein and less carb. Shenoy, who has done the salsa, climbed rocks and built toy rockets, now orders out a lot more than he used to. “That’s because the number of options that are available to order is multiplying. So, I order home-made food from an actual home. Also, the kind of things that I eat has gone up quite substantially,” he shared.
When it comes to vacations, the Shenoys went to Goa in December last year and plan a small trip to Delhi next. Deepak will also be visiting New York and Omaha to attend the Berkshire Hathaway annual conference in the US soon.
As an investor, Shenoy reviews his portfolio once in six months, when he looks to make any meaningful changes. “I look at the return numbers only from the perspective of what I want, which is roughly 12% a year. If it’s more than that, I am happy,” Shenoy said.
(Note to readers: Through this series, we try to highlight the basic tenets of personal finance such as asset allocation, diversification, and rebalancing. We do not suggest replicating the asset allocation of Shenoy, as personal finance is individual-specific and differs from one person to another.)
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