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Home / Money / Personal Finance /  Why Mirae’s Surana has unshakeable faith in equity

He recounts the excitement of buying a car from the money made on the Kotak Mahindra Finance shares during the Harshad Mehta bull run. His faith in equity, as an asset class, is unshakable and his conviction shows in his investment choices—almost all his money is invested in Mirae Asset Mutual Fund’s schemes. Neelesh Surana, CIO, Mirae Asset Investment Managers (India), talks to Mint as part of the ‘Guru Portfolio’ series about his personal finances and how he got into equity investing. Edited excerpts from the interview.

What’s your current asset mix?

If I exclude one residential place, it is almost entirely in equities via mutual funds. This is all invested in Mirae Asset MF’s schemes. I don’t have any investment in debt or gold. This, however, excludes EPF. It’s primarily invested across five schemes. About half is in Mirae Asset Emerging Bluechip Fund and the Tax Saver Fund which are self-managed. The remaining is spread across the fund house’s midcap, focused and healthcare funds.

Do you think your portfolio is fairly high-risk?

No. Risk cannot be generalized. It is a function of your needs, temperament and time horizon. I believe that despite their inherent volatility, equities deliver far superior returns over the long run. If you are looking at it from a 10-year or longer perspective, then it’s absolutely fine. For example, I have been an investor in Mirae Asset Emerging Bluechip Fund, which, since its inception 12 years ago, has grown 10x, or recently, our Midcap Fund, which has doubled in three years. While these returns are on the higher side, even if I assume a sustainable range of around 15%, the power of compounding is significant. Being in this profession, I have higher conviction in equities.

My investment horizon for all the equity funds is almost perpetual, unless there is a need for money. Healthcare is a differentiated product and I am comfortable from a decade-plus view on this sector. But my asset allocation could be a bit skewed.

My personal view is that any corpus beyond the next 3-5 year’s needs should go in equities. Also, one should not invest more than 25% in a fund house, and ideally the investments should be spread across 4-6 managers.

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What about your international equity exposure?

I don’t have any international exposure. One can say you’re putting all eggs in one basket; but within equity, my portfolio is very well diversified. Youngsters should have some exposure to international stocks because that gives them an opportunity to invest in dollar assets with rupee that can be used for an overseas education. All things being equal, you get the benefit of say, 3-4% rupee depreciation.

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Will you shift from equity to debt as you near your retirement?

Not likely. Closer to retirement, as all major commitments are met, it makes sense to increase rather than reduce equity exposure, provided an emergency corpus has been set aside.

Your view on real estate investments?

Beyond one home, real estate investing, in my opinion, is not advisable. This is owing to many hidden costs involved such as stamp duty, municipal taxes, maintenance expenses, etc. Besides, the tax on rental income is very high.

What is the investment strategy that has worked well for you?

Actually, it’s the power of compounding that has worked and delivered satisfactory returns.

Do you have any personal investment regrets?

I wish I had invested 5-10% in international equity maybe 10 years ago. This is not from a returns’ perspective but more from the point of view of investing for your child’s overseas education. Our fund house didn’t have such an offering then.

Tell us about your early equity investing days.

During my engineering college days in the early 1990s, we would read magazines such as Capital Market, Dalal Street, etc. Later, I started subscribing to a weekly newsletter from Value Research which showed how to analyse companies, although I did not fully understand all the nuances of the markets back then. The markets also were not completely evolved . I did invest small sums in IPOs, many of which turned out to be junk, but there were a few good ones too, like HDFC Ltd. The IPO that I remember the most is that of Kotak Mahindra Finance, which came just before the Harshad Mehta scam. I was allotted 100 shares for 4,500 in my mother’s name in late 1991. Within six months, this multiplied to 1.20 lakh during the Harshad Mehta bull run—more than 25x. We bought a car with this money.

How did you get into professional equity investing?

After completing my engineering, I joined Blue Star. Alongside, I continued with my hobby of investing in stocks. And then somewhere, it struck me that I could convert this hobby into a profession. That’s when I decided to do an MBA and come to Mumbai.

After my post-graduation, I got an investment banking job. Although this was a hot job then, I left it after a few months and moved into equity research. After having spent a few years at sell-side research, I moved to the buy-side with a PMS. In 2008, I moved to Mirae Asset and it was sort of a startup like experience. This period coincided with the start of the global financial crisis and our business was just starting. The next five years were very challenging for the mutual fund industry in general and for new entrants like us, in particular. It looks easy now but this has been a journey of ups and downs. 

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