The investment strategy of Sanctum Wealth’s Shiv Gupta

Shiv Gupta, founder and CEO at Sanctum Wealth, has moved from an active hands-on approach to a much more passive form in handling his portfolio.
Shiv Gupta, founder and CEO at Sanctum Wealth, has moved from an active hands-on approach to a much more passive form in handling his portfolio.


  • Gupta has a traditional asset allocation approach, invests in mutual funds and PMS with a diversified portfolio

I would be lying if I say I did not have any apprehensions. I was conscious of transitioning from a particular lifestyle to a relatively less predictable lifestyle. And finances were obviously a big part of it," said Shiv Gupta, founder and CEO at Mumbai-based Sanctum Wealth.

He was referring to his acquisition of the wealth management arm of Royal Bank of Scotland (RBS) in India in 2016. Since that acquisition, assets being managed by Sanctum Wealthhave gone up by a compounded annual growth rate (CAGR) of 29% to 17,000 crore, serving about 1,200 client-families now.

Gupta, who has been in the wealth management division for more than two decades now, said, “Over the years, I moved from an active hands-on approach to a much more passive form in handling my portfolio." Gupta reveals how his personal finance journey evolved over the years in an interview with Mint for the special ‘Guru Portfolio’ series.Edited excerpts from the interview:



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How has your investment journey evolved?

In the last 25 years, I haveexperimented with many styles of investing. As an international wealth manager, I was exposed to a broad array of instruments, including fixed income, equities and derivatives in all markets, currencies etc.

I used to quite actively trade and try and exercise control over the investments. When my trading calls work, the gains used to be a good multiple—like 8x-10x of what was invested. A bad year could have seen upto 60% declines as well. Remember, a lot of this is speculative trading. A disciplined trader would have had a slightly different way of managing the portfolio and the returns wouldn’t be as extreme as this. This tendency of investing has matured gradually.

Thereafter, I split my investments into a risk corpus and a long-term corpus. Initially, it was a 50:50 split and I used to trade only from the risk corpus. Now, I don’t even have a risk corpus. I follow a more traditional asset allocation approach.

But do you still trade?

I neither have the time nor am I sure that I’m very good at it. But, sometimes, when I see a dislocation in the market, if I have some excess capital, I may make an opportunistic move by taking tactical calls. For example, when the pandemic was upon us, I switched a portion of my fixed income into equities. And that percentage was relatively high. I generally maintain 30:70 debt and equity allocation. But, in 2020, I might have taken off 10% or 15% from the debt component and put it into equities. I believe dislocations provide good opportunities for outsized returns.

How did your portfolio look like during the 2002-’07 bull market?

By that time, the portfolio which I constructed in Singapore went through some evolution. I had a more stable portfolio with a defined asset allocation, skewed towards equities. I graduated— if I can use the word — to a balanced portfolio. My portfolio was also impacted by the 2008 stock market crash in a way you would expect a normal balanced portfolio to be affected. I think, at its worst point, it may have been down by 30%.

So, when the markets crashed in 2008, weren’t you worried or didn’t pull out any money?

Yes. I practiced what I preached. But, thereafter, I slowly transitioned from an international portfolio to a largely domestic portfolio. That was a big change as I moved back to India in 2009. The redemption of my international holdings was mostly driven by my liquidity needs back then. I also moved from an active hands-on approach to a much more passive form in handling my portfolio. The instruments in my portfolio would have been actively managed, but not by me directly.

So, you don’t invest in stocks directly now?

I invest in mutual funds and portfolio management services (PMS). I try to keep the portfolio diversified in terms of market capitalization, active and passive funds, funds following various styles, etc. I invest in passively managed ETFs when I just want to replicate the market performance and actively non-ETF managed funds when expecting an alpha from the fund manager or from a particular style of investing.

What’s your strategy for debt segment? Are you sticking to the shorter end of the curve now?

My debt portfolio has a mix of instruments. I follow a barbell approach—with a combination of long and short-term bonds. Also, I try to diversify across a few categories, including corporate bond funds, gilt funds, money market and credit risk funds.

Is exposure to gold only in the tactical portion of your portfolio?

Using Sanctum’s asset allocation framework, I allocate to alternative asset classes including gold, REITs and InvITs. There is a provision to invest 10-15% of the portfolio to these asset classes and under- or over-allocate to them as per the asset allocation recommendations.

Your views on real estate asset class?

I think about it as a part of the alternative asset class. This would have a role to play in a portfolio in creating better risk-adjusted returns by exposure to instruments like REITs, commercial real estate and private equity instruments depending on the size of portfolio.

Having said that, I have a problem when it comes to residential real estate as I think that their prices are distorted in India. The 2.5-3% rental yield on these properties is not attractive from a fixed income generating asset class perspective. Also, historical reasons for capital appreciation may no longer be present.

Personally, I don’t own a primary home. I live in a rented house. I have a country house, which is a lifestyle decision.

Can you name a few investments that generated more wealth for you?

I would like to answer this question at the level of the tactical asset allocation decision rather than attributing it to a specific scheme or instrument.

Maintaining an overweight allocation to REITs and InvITs in my portfolio was an extremely good decision. Also, the tactical asset allocation decision to have an ‘overweight’ on mid- and small caps, a few years back, has generated the best alpha.

On the other hand, had you asked me this question four years back, when mid-caps weren’t performing well, I would have said that it was my worst tactical decision too.

One success and one failure that you could think of in your personal finance journey.

I don’t think about it in those terms. I abide by asset allocation rules, some kind of volatility is factored in, and there is a certain return expectation based on core and tactical asset allocation.

I don’t spend too much time thinking about the components, which have individually stood out or not. I would expect the whole portfolio to work out right. But to give some perspective, I don’t think any success stands out in the same magnitude as the decision to overweight the mid- and small-cap stood out.

You bought the wealth management arm of RBS in 2016 to start Sanctum Wealth? How did you fund it and did you have any apprehensions with the transition from an employee to an entrepreneur?

I liquidated my assets to fund my stake in the acquisition. I didn’t take any loan. Regarding apprehensions, I would be lying if I say I did not have any. I was conscious of transitioning from a particular lifestyle to a relatively less predictable lifestyle. And finances were obviously a big part of it. I was apprehensive, but I planned for that. One of the big things about managing volatile circumstances in life is to expect volatile circumstances in life. That’s my philosophy towards the life, business and everything.

What is the lesson you learned about managing other people’s money? Did you ever have sleepless nights?

There were plenty of sleepless nights. Unfortunately, the services or products we offer are procyclical. Even if you have the knowledge, the fortitude, and equanimity to know that markets work in cycles and things will come back, you still have to grapple with people’s moods as they go through that experience. That can expose us to a lot of unpleasant interactions so many times. There is this concept of actual preference versus revealed preference. And many times, when we’re profiling clients, we ask them how they would react to a particular situation. Unless the person has gone through it, one doesn’t know how they will respond to it.

One biggest lesson for me in the journey of a wealth manager is to be in touch with clients, especially, when markets are not performing. That assurance is invaluable in building relationships over a period of time. Because investors are generally subjected to a lot of different influences. And if you’re not there regularly, we may not be able to get them to do what’s in their own interests.

Also, there’s one more thing called the endowment effect. People tend to value what they already have more than something that they don’t have. The best example of it is residential property. People don’t want to get rid of it. So, understanding these biases is very useful for a wealth manager.

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