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Investing lessons from Kotak Mahindra AMC’s Nilesh Shah


Buy a business as if you are not going to look at it for the next 10 years.” This advice by investment guru Warren Buffet has remained the guiding principle for Nilesh Shah where it concerns his investments. “I invest as if I am not going to touch it (the investments) for the next decade or so,” says Shah, the managing director at Kotak Mahindra Asset Management Company Ltd.

As with many CEOs and senior executives of companies, a large part of Shah’s wealth, too, is tied to his employer. Most of his personal wealth (60%) is in equity—either in employee stock options (ESOPs) or shares of Kotak Mahindra Bank that he acquired long ago. (He owns some shares in the physical format as well so that he doesn’t get tempted to sell them.)

Another 15% of his assets is held in equity mutual funds, mostly in the large cap and large-and-mid cap category segments. Shah does not invest in passive funds, except where it is required as per market regulator Sebi’s rules. Under these regulations, as the CEO of Kotak Mahindra AMC, Shah has to invest in all the schemes of the fund house. But these rules came into effect only in October 2021, and hence such mutual fund (MF) units are a very small part of Shah’s portfolio. Interestingly, Shah relies on a distributor to transact in MFs rather than opting for direct plans.

“I don’t do active asset allocation due to the constraints of my job. I am a long-term investor by default. However, I will recommend investors to do active asset allocation if they have the flexibility,” he said, attributing his heavily ‘buy-and-hold’ approach to the constraints of his job and the demands on his time.

Even as Nilesh Shah has compounded his wealth in equity, he feels particularly unlucky with real estate. “I must have given token money for property at least 6-7 times in my life and each time the deal did not go through.” Around 15% of Shah’s personal wealth sits in real estate. This consists of his primary residence and property he has bought on the outskirts of large cities in order to get a steady rental income. “I buy property in places where the city is going to grow,” he told Mint, adding that he prefers 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 that you should not try to bargain when it comes to the house we live in, and she was right about it,” he adds.

Shah has a small allocation to debt (8% of his portfolio) but this is mostly his emergency corpus and money kept in short-term funds, waiting to be utilized for exercising ESOPs. He does not rely on it for regular income.

Shah has a very small allocation to gold (2% of assets). However, he is looking to increase this. “I invested in gold as my mother told me to buy it for my daughters. I will be looking forward to increase allocation to gold via Sovereign Gold Bonds (SGBs) as I believe that central banks around the world will be looking to invest in gold following the freeze on Russian FX reserves,” he said.

When asked about his holidays, Shah recollects a defining moment in his life. “My wife is a great planner. When we got married, we had gone on a honeymoon on a shoestring budget. Both of us had then promised each other that we would celebrate our silver jubilee without any budget constraints. God has been kind to us, and we could redeem our pledge,” he said.

“Wealth means the ability to follow the Varnashrama (the four phases of an individual’s life as per the Hindu ashrama system). My job gets me decent money and also helps earn the goodwill of my investors,” he added.



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