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In April 2020, when covid hit India and the country went into lockdown, Mint spoke to industry leaders in the financial services space to understand the impact of the pandemic on their personal investment portfolios. With the passage of a year, we are going back to our respondents to see how things have panned out and whether there are any lessons for investors. In the fifth part of the series, we talk to Zerodha co-founder Nikhil Kamath, who is a fresh participant in the series this year.

Kamath launched True Beacon, a hedge fund, in September 2019. Hedge funds are the high-risk, high-reward counterparts of mutual funds, given their ability to go long as well as short the market (gain from rising and falling markets) and take on leverage (debt).

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Paras Jain/Mint


But Kamath is far more conservative with his personal investment portfolio. He has a balanced portfolio, which is 50% in equity, 43% in debt, 5% in real estate and 2% in gold.

PREFERRED STOCKS

Within equity, Kamath sticks to large caps and is increasing allocation to IT and pharma stocks, segments that do well in crisis situations such as the current covid wave. Within debt, he allocates primarily to tax-free bonds and government securities. His allocation to True Beacon, the hedge fund he manages, is just 5% of his personal portfolio. His personal equity portfolio has returned 40% over the past year, below the 62% rise in the Nifty (as of 14 April).

“I run a hedged book even for personal investments. Gains and losses are tempered," Kamath said by way of explanation.

KEY TAKEAWAY

The takeaway from Kamath’s relatively conservative portfolio compared to the nature of his job managing True Beacon is instructive in itself. Individuals who deal with risk in their professional lives may be better off keeping risk low in their personal investments. For instance, if you are running a startup, having a portfolio highly invested in other startups may leave you very vulnerable to economic downturns.

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