The economic order that has guided investors for generations is being rewritten. As technology platforms, global capital and private businesses take on roles once dominated by governments, Saurabh Mukherjea, founder and chief investment officer of Marcellus Investment Managers Pvt. Ltd, argues that the assumptions underpinning traditional investment strategies are breaking down—and that investors need to rethink how they build portfolios.
What led to the consistent underperformance of Marcellus’ India portfolio till last year, and what has changed now?
At Marcellus, we invest in clean, well-managed companies. We do not invest in public sector undertakings or in companies in heavily regulated sectors such as real estate. Our style worked well in the five years running up to Diwali 2021. Then we hit four tough years as the economy boomed post covid. In 2026, however, all our portfolios are back with a bang as the economy continues to be buffeted by internal and external challenges
How are you seeing the economy based on recent developments?
The idea of nation-state took shape in Europe between roughly 1550 and 1850, when it was adopted by Germany. The model had one army, one government providing education, healthcare, and infrastructure like railways, funded through customs and tax unions. Small states were consolidated into larger ones under a deal in which the state provides services, and citizens pay taxes and customs duties in return.
After the Second World War, the idea became the dominant global model, and this is how our country is also structured. That construct is now fading in three ways: First, nation-states are finding it harder to collect taxes as elites have become tax savers, and corporations increasingly base themselves in low-tax jurisdictions.
As a result, global corporate tax rates have roughly halved over the last 40 years. When the state can't collect enough tax, it can't fund public services, which is why education and healthcare in India are already effectively half-privatised. Even the air and water in our homes are "privatised" through air and water filters because the state can no longer guarantee these basics.
Second, the state's original monopoly on coercive power is shifting to Big Tech. If someone creates a fake social media account impersonating me and defrauds people of crores before disappearing, going to the local police station achieves little, I have to go to the social media platform itself. Likewise, if a software license is revoked, the police can't do anything about it. Power over reputations, livelihoods, and businesses increasingly sits with tech platforms, not governments.
And along with coercive power, taxation power is migrating too. A Microsoft license fee or an AI token is arguably a more foolproof way of extracting revenue than income tax. Third is jobs. As protests like the one at Jantar Mantar make clear, formal jobs simply aren't being created at scale. People are shifting to gig work, not just according to Swiggy, Zomato, Ola and Uber, but according to NITI Aayog's own projections, white-collar gig work is set to triple over the next five to six years. As salaried employment, and with it tax deduction at source, shrinks, it becomes even harder for the state to collect tax.
What are the consequences of all this?
Profits that used to stay trapped inside a nation-state will increasingly flow out to America through the tech stack, and to China through the clean-tech stack. As profits leave India, we should expect Indian stock market profit growth to slow, and market capitalization to gradually leak from India towards global markets. In effect, stock market returns are migrating from the periphery to the centre, which is an argument for investing globally.
Regime change also becomes less consequential, because essential public services once provided by the state will increasingly be delivered by the private sector, creating opportunities to profit from investing in hospitals, diagnostic labs, security services, and education. At the same time, as profits are leached from the periphery to the centre, the rupee will come under pressure, making manufacturing exports far more competitive than in the past. Much of the old economic narrative, built entirely around the nation-state, is becoming outdated.
What do you think will happen to the current SIP book supporting the Indian market?
If returns are migrating away from India, it's no surprise that thousands of investors have already begun doing global SIPs. Even a taxi driver in Bangalore can see the pattern: the phone in his hand runs on Alphabet's software, the hardware inside it is Chinese, and the EV on the street is likely Chinese too. He starts asking, 'I've invested in India, but can I do a global SIP as well?' As more people take up international gig work, they're also likely to start investing directly in the countries they work for. This decade will end with global gig work becoming the norm, and the old idea of only buying Indian mutual funds will start to feel archaic.
What's the one actionable takeaway for investors?
There are really three. Diversify globally, question the old wisdom of investing purely in large government PSUs, local real estate developers, metals and mining, or telecom, simply because you happen to live in India. This is a form of home-country bias that no longer makes sense. In India, a tilt towards essential public services now delivered by the private sector, like hospitals, healthcare, diagnostics, and education, as these are the areas that will increasingly substitute for what the state used to provide. Prepare for a weaker rupee, and benefit from it by investing in manufacturing exporters. The old assumption that India can't compete in manufacturing exports is being questioned. We believe India has become genuinely competitive, and the old rulebook no longer applies. As a rule of thumb, allocate at least a third of your equity portfolio to global investments.
Are there risks to investing globally?
Any equity investment will have its ups and downs, but diversification across geographies makes it highly unlikely that your entire portfolio falls at the same time. Over the last 25 years, the US and Indian markets have fallen in unison only twice during the Global Financial Crisis and during covid. Outside of those two episodes, they haven't. That means global diversification doesn't just chase returns, it genuinely builds resilience and reduces the concentration risk that comes from being invested in a single country.