“People are going to live longer. Most people plan for life till 80 post-retirement. If they start to live beyond that and there is no planning for that, it can start to really pinch. Besides this, if I have worked so hard during my working life, I should have a better life in my retirement. So, it is important for me to plan for a larger retirement kitty to take care of my inflation-adjusted lifestyle expenses,” Mohanty said.
Mohanty says these factors have prompted him to target a higher retirement corpus. “I have crossed the minimum target on my retirement corpus. As these are the last years of my accumulation phase, I want to make most of it by continuing my investments and even take tactical calls, and get as close as possible to my new target,” Mohanty said in an interaction with Mint on ‘Guru Portfolio’, a series where leaders from the financial services industry share how they manage their money.
Investment mix
Mohanty maintains an asset allocation mix of 70% in equities, 20% in debt and 10% in alternates. The alternate pie includes his investments in art and startups.
Over the past 12 months, his portfolio has delivered returns of 6%, while over the past five-year period, it has returned 23% annualized returns.
Mohanty says what worked for his portfolio over the past year was his large-cap exposure. “Large-cap funds outperformed their respective benchmark indices. Thematic investments such as healthcare and banking also did well.”
Within his equity portfolio, Mohanty’s market-cap split is largely skewed towards large-caps and mid-caps. He attributes this to his heavy exposure to Mirae Asset MF’s Large- and Mid-Cap Fund. His large- and mid-cap fund exposure is 50%, while pure mid-cap and thematic funds account for the remaining 50%.
He is betting on themes such as manufacturing, healthcare and banking. “These themes are a long-term structural play in India,” he said.
So far, Mohanty says, he has avoided small-caps to avoid high volatility in his retirement-linked investments, but he may add some small-caps. “After the correction, there are opportunities in the small-cap space.”
As mentioned earlier, Mohanty wants to be more tactical with his investments. He pointed out that he missed the gold rally over the past year (despite his bullish view), just to stick to his asset allocation grid. “I have realized I need to be more vigilant of tactical opportunities and act on them in a timely manner.”
Mohanty has one-fourth of his equity exposure through passive funds. His passive fund investments include a factor-based fund, an international fund and banking & financial services fund, among others.
About 80-85% of his mutual fund portfolio is invested in Mirae Asset MF’s schemes. He says that he looks for non-Mirae schemes for style diversification.
Alternatives
Mohanty’s alternate investments are spread across art and startups. Art investments account for 65% of his alternate portfolio, while 35% is in startups.
His startup bets include a health tech startup and a regional-content OTT platform for Oriya-language content. As Mohanty himself originally hails from Odisha, he said the pitch appealed to him.
He says his art investments are fully handled by his wife. “She does all the research on the artists and art types that we should add to our portfolio. By now, she has created a wishlist and we add to our collection as and when there is an opportunity. Last year, we added another art piece from a ‘master’,” he said.
Unlike market-linked investments such as mutual funds or ETFs, where price discovery happens on a minute-by-minute basis, how does Mohanty and his wife evaluate their art investments?
“Once you get into that circuit and you know the good galleries in the country, there is a broad consensus on the prices of each painter. Admittedly, it is not a very liquid market, but I am also not buying to sell in the near future,” Mohanty said.
According to Mohanty, alternates give his portfolio another dimension, but these are high risk, high return investments. He said he will not go beyond 10% on alternates in his overall portfolio, given these investments have lower liquidity.
Insurance and contingency
Mohanty has a large family health cover of ₹3.75 crore. “I have seen ₹25 lakh of my savings just going for my father’s medical expenditure. After this, I have tried to take as much medical insurance as I can for my family. I have got ₹3.75 crore medical cover for my family; ₹3 crore for my wife and I, and a separate ₹75-lakh health cover for my son,” he said.
Mohanty believes that life insurance should take care of debt and potential earnings of the earning member, as much as possible. So, he has three times his debt (home loan: ₹4 crore) for his term life cover, which is about ₹12 crore. He recently upgraded his house as his son has decided to stay with them instead of going abroad for work. This purchase was partly funded by the sale of his previous house and his Nifty 50 ETF investments.
“As a net effect, my home loan is the same as what I was carrying for my previous house as of last year,” he said.
However, he doesn’t maintain a separate contingency fund now. “Now, my equity gains are large enough to meet any contingency requirements and can be easily liquidated, if needed. However, large insurance covers are also in place,” Mohanty said.
Travel goals
Mohanty is an avid traveller. Next, he plans to visit the idyllic villages of England and says he would like to drive there. He plans for his travel expenses at the beginning of the year by parking the required funds in a liquid fund.
Keeping finances in check
Mohanty says he likes to track his expenses on a monthly basis, which helps him maintain his savings rate. He keeps his savings rate at 35%. He has been compiling a net worth statement annually for the past several years, which helps him keep him on track towards his financial goals.
