Speaker A
How do you think a young investor or job seeker should approach the times now?
Swarup Mohanty discusses India's job crisis, investment strategies, and the future of growth on Sonia Shenoy's podcast.
Key Takeaways
- India's economic growth is hindered by skipping manufacturing, affecting job creation.
- Innovation and AI adoption are crucial for future competitiveness.
- Investment requires patience and understanding of long-term processes.
- Blue-collar jobs can be lucrative and should be respected equally as white-collar jobs.
- Financial planning, including insurance, is essential for managing risks.
Summary
- India is facing a job crisis due to skipping the manufacturing growth phase and relying heavily on services.
- The lack of innovation and AI adoption is a concern for India's future economic growth.
- There is a societal stigma around labor jobs, despite some blue-collar roles earning more than white-collar graduates.
- Foreign investors are cautious about India's slower growth prospects, impacting market inflows.
- Mirae Asset's AUM has grown significantly, but recent underperformance is being addressed with strategic adjustments.
- Young investors and job seekers should adapt to changing economic realities and focus on skill development.
- The importance of patience and process in investing is emphasized over focusing solely on outcomes.
- Insurance and financial planning are critical components of a sound investment strategy.
- The podcast highlights the evolving digital landscape and the need for innovation-driven growth.
- Swarup Mohanty shares his personal journey from Bhubaneswar to leading a top AMC in India.
Chapters
- 00:00Job Market Challenges and Economic Growth
- 02:57Digital Landscape and Personal Growth
- 05:53Education and Skill Development
- 08:44Changing Job Dynamics and Labor Dignity
- 11:33Investment Philosophy and Market Insights
- 16:35Mirae Asset's Journey and Market Position
- 18:59Investor Behavior and Market Returns
- 23:06Financial Planning and Insurance Importance
Full Transcript — Download SRT & Markdown
Speaker A
As we speak, the world has given its verdict on us. We are a country, according to the world, which lacks innovation. We've skipped a level in our growth. We've gone directly to services, missing the entire manufacturing piece, which every other country has built and
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hence jobs have been there. What about these 9 million graduates who are entering into the job market, [music] who suddenly have no jobs? Isn't that a crisis situation?
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Ruthlessly speaking, it's not the government's job alone to provide employment. It's the government's job to create an environment where employment can be generated.
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Possibilities are still large. I mean, we are talking about a country [music] growing at 6%, and if there are no jobs, then something is missing somewhere.
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Do you think that's one of the reasons [music] why we are seeing this mass exodus of foreign investors from Indian markets because of the potential of much slower growth compared to maybe what we are pricing in for India?
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Money moves to the dollar. People in India have been advocating global investing for a long time. And suddenly people have risen now after the R7 folded. This is something which people should anticipate. What is the highest selling item on Amazon right now?
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Phones? It's the induction cooker. Oh, really? It. Now, if the average person has woken up to the risk and is buying an induction cooker, the nation should have woken up yesterday.
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Our heavy reliance on oil and gas is another risk which is unfolding. Mirae Asset funds have been underperforming for the last couple of years after having a dream run in the preceding decade or so, right? What do you think has gone wrong and how are you
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going to sort of correct this imbalance? I think to be fair, Hey guys, welcome to the Money Mindset.
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Now, today I have someone who heads one of the top 10 AMCs in India today and who has taken the AUM from 400 crores many, many years ago to now 2 and 1/2 lakh crores. I'm speaking to Swarup
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Mohanty of Mirae Asset. But more than someone who manages so much money, he's also a friend, someone who I know for many, many years. So Swarup, thank you so much for being on the show.
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No Sonia, I should be thanking you for having me on your show. This short journey has been so spectacular. So always such a wonderful thing seeing you grow this way. My wish is always with you and looking forward to seeing
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further growth from here on. Thank you so much. I remember we had this conversation, you know, when I just started my journey and you were so supportive at that time about the evolution that we are seeing in this
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whole digital landscape. So thank you for that. No no, I mean I was very simple. It was very simple and I think I remember me telling you that if you can't do that then who will?
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I think you're absolutely tailor-made for this if I can put it very mildly. And then see how it's unfolded. Now I And today I'm telling you that it's just not even the foundation of what can happen. That's the
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scope of work in front of all of us. And it's up to us actually, I mean what we make of it. And I'm seeing that happening for you. I'm so happy for you.
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And you also had a spectacular journey. You know, I've revisited your journey several times in different formats with you. But someone who started very small from Bhubaneswar, came to Bombay and you know, built this whole large business and career for yourself. Uh today
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sitting as someone who manages one of the top 10 AMCs in India, Mirae Asset and 2 and 1/2 lakh crores, a little more than that in terms of AUM. Uh how has the journey been if you had if you had
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to summarize it for us? If you if you talked to me from my Bhubaneswar days, I would have said, you know, someone would have said I would be sitting here.
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I would have said that "Aapke muh mein ghee shakkar." Please, I'll take you out for lunch or dinner. It's been a good run to be very honest. But uh you know, when we started off the country was kind of liberalizing. I I'm
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born to two science professors. I'm married to a PhD holder, so education was a big part of whoever I was, but somehow when the country was changing, we thought careers can be very different. So, I started studying in
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commerce and one led to the other. But apart from everything, I remain very thankful for having worked in this line. I mean, let's face it. In this world when money is very difficult to trust people with, people trust us with their hard-earned
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money. So, sitting on a fiduciary chair is something which was God-sent probably and then I can never even thankful for that opportunity. And that opportunity comes with its own responsibility. The challenge is to probably see that responsibility through to the last day I
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work. If I do that much, I'll be very happy. Mhm. No, no. I mean, you know, and I've known you for so many years and hats off to you guys for managing money. It's really not an easy job. I'm sure there
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are many, many sleepless nights, especially at times like this, right? When it's such a tough economy, when jobs are hard to come by. Forget about investing for retirement, people don't have jobs today. So, that is the big issue that we are facing with our youth.
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Uh but from your lens, how is the Why is the situation gotten so bad, A, and how do you think a young investor or job seeker should approach the times now?
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So, Sonia, I think this is two-pronged. I mean, one is of course the situation is not what it should be, right?
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As we speak, the world has given its verdict on us. We're a country, according to the world, which lacks innovation.
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The AI landscape is, according to the world, we are missing that. That's a big part. The second part, obviously, is when you look at the broad country as such, every country grows with what I call levels.
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We've skipped a level in our growth. We've gone directly to services, missing the entire manufacturing piece, which every other country has built and hence jobs have been there. Now, when you look at services alone, it comes with a
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separate skill set. In the mid-90s or mid-80s, if you see, we identified tech very early.
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And apart from the engineering institutes, if you remember at this point of time, every nook and corner had a computer education sort of organization, right? There were many.
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Those organizations are now teaching finance, if you please, right? Somebody has to take that whole initiative to build that landscape for the AI or whatever jobs to come in.
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Now, from a job perspective, I have a little philosophical thought, and please bear with me when I say this. The biggest issue when it comes to this kind of a population is the lack of dignity of labor.
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We have defined that these jobs are right, these jobs are not right. And correct me when I'm saying what is going to unfold right now. Right now, a lot of those jobs which we had thought were not actual jobs have started earning more
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money than qualified jobs. Like which ones? I mean, why? I mean, a typical good Uber driver, a good plumber in Mumbai is earning a fair amount of money over, say, a tech passout from an engineering organization.
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But that's not a great place to be for an economy. No, but that will create jobs. Why should jobs be just restricted to a certain mindset?
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Because you have the highest number of graduates that are getting into a What is wrong with a graduate earning very hard in any form of life, earning good money, and paying a tax? Why should it have to be a certain job?
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But if you look at it that way, a person is not going to a good school or a college to graduate and then become a I'm not saying become a plumber, for example, right? There is that difference between white-collared and
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blue-collared jobs. And if there are graduates, then they have a certain aspiration as well. And in that context, you know, we have been a service economy for very long. We are not translating into a manufacturing economy as much as
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we would
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who are entering into the job market, who suddenly have no jobs, isn't that a crisis situation?
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The point I'm making is they will find jobs in a different aspect to what they were doing, and that creates a very different landscape going forward.
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Right? Today, I believe that if anybody wants to work, there is enough work around us.
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Sorry for being the devil's advocate, but that's the truth, right? Now, if you build some castles in your air, it's going to be diminished and uh destroyed very soon in this landscape, and that's that's the graveness of the situation that we are
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facing. That's the truth, right? Now, in that environment, how do people unfold is something Uh you see, for that See, my son is a tech graduate working in one of the largest tech funds at tech companies of the country. But, if he
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does not graduate from what he's doing to AI tech, he will lose his job.
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Right? The skill set up pressure Let's look at that same Uber driving skill set. Earlier, any driver can come to Mumbai and work uh because Google Maps is helping. 10 years ago, you needed to know the gullies of Mumbai to drive.
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It's not required. For that same plumber, you know, that plumbing is not just one tap. That thing that you have behind, which is the mixer, is more tech than anything, and that comes and adds to your phone now on the Google. So,
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skill sets across jobs are changing. The problem is not jobs. Problem is this change of skill set, which is hitting people. And unfortunately, our education system is not up there.
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So, somewhere people have to call this out. Somewhere at a policy level, we have to say that job creation is now a must for everybody. If you can say Swachh Bharat is needed, first is you have to identify and acknowledge that
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yes, unemployment is an issue. At at a macro level, right? And there's nothing wrong with it. Right? Once you address it, trust me, a lot can happen.
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But it is not being addressed at the moment. think it is even discussed. To the I'm so happy that you're raising this issue.
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According to me, the two big issues that will hit the country is job unemployment, which is unofficially at 9% or whatever, and of course people not having money at their old age. These are the two biggest ticking bombs of
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this country, and if they're not addressed, what used to be an incredible story, brilliant demographic story, can look very different after 2035. Because 2035, 22% of the same demography will be post-retirement. That is above 60.
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And in India, 11% of this people get pension. Rest don't. Out of that 11%, 76% work beyond their retirement for financial needs. That's the truth.
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So, when you look at the two ticking bombs of this country, one is retirement money, and one is unemployment. And together, they're not painting a very good story now, but it can be addressed is my simple point.
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How do you think the government can address it? What do you think is the need of the hour?
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See, I think if you go back to the '80s when I started my career, they said that tech is the future.
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Right? And send the then the ecosystem came in. Right? Whether you were a commerce graduate or you were an engineering graduate, you had to learn a computer.
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At this moment, when globally, and correct me, you track the markets, the globe is now global markets are kind of rewarding unemployment.
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Any organization which comes and says I've cut down jobs, the stock prices are growing. That's not the India problem, it's a global problem. Correct me if I'm wrong. That's the reality you are facing right?
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First, you have to tell the youth that this is the situation. And don't underestimate the capacity of the youth's brain to find a way.
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That starts at a social level. It starts at me as a parent level. If I'm not if suppose I'm a little more qualified, I've seen more years than my son. If I'm not telling my son son, this is what I
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feel and and maybe you should talk of these these people, then I'm not doing justice to my son's future.
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So, you're saying the youth needs to upskill in a way the government also needs to work on Sonia, ruth- ruthlessly speaking, it's not the government's job alone to provide employment. It's the government's job to create an environment where employment can be
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generated, right? Nobody taught those computer engineer I go back to the same example because of telling moment in Indian job creation.
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Nobody had taught those companies that here is the future in a computer training institute.
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Right? The Now, when you look at the future, the future is not about AI or anything.
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Future is learning what is a good prompt. Right? Somebody has to educate people what is a good prompt. It starts from there.
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Right? Possibilities are still large. I mean, you're talking about a country growing at 6% and if there are no jobs, then something is missing somewhere.
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And I feel that missing link is lack of knowledge that jobs will be found in some other sector and not this sector.
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Do you think that's one of the reasons why one of the big reasons why we are seeing this mass exodus of foreign investors from Indian markets because of the potential of much slower growth compared to maybe what we're pricing in
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for India? So, two three things. I think foreigners left See, in any adversity, money moves to the dollar.
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To the dollar? Always. In 2008, the one the great Warren Buffett had simplified things for me. The world will trade in dollars.
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Look at this whole thing. India was the third largest economy just two months ago. Today is the sixth because we might earn in rupees, but globally we'll be valued in dollars.
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Suddenly this 9% depreciation is you know, just torn us apart. And going back to third is now looking such a tall order. Damage can happen in such a short time. These are risks which are unfolding which we didn't know. See, in
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life nothing happens till it does not happen to you. Right? That's the truth. Okay. Yeah. So, this is unfolded, right? So, when you look at that, the first thing what was being available in US in the form of say
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just the sovereign yield fund and not investing in a currency depreciating market itself was incentive enough to move out. Secondly, if you compare the US market today in spite of the growth from a PE level to the growth
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level is far superior to what India is posing right now, right? And that's a dollar economy.
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So, it's not about India more than the opportunities are there. The world money is divided into two parts completely.
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The AI and innovation space is taking 100 out of 100 dollars. The rest is zero.
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I feel at one point of time India can become this brilliant non-AI hedge because we don't have it, right? That's what the world is telling us.
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your confirmation by stopping because That was just either we wait for that day because someday allocation will stop to there's that much you'll allocate.
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But in waiting is a lot of damage. And that damage is being felt, right? I mean, I'm sure you see it in your portfolio. I'm sure I see it in my portfolio on a daily basis. It's been 2
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years of underperformance compared to global peers. That I don't agree because if you look at the 25 years of Nifty 50, suppose I give a 25-year track of Nifty 50.
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Earlier Nifty 50 used to double in 7 years time. It's just that COVID which gave that base and suddenly it doubled in 3 3 and 1/2 years which has spoiled us.
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Right now we are reverting to that mean of Nifty 50 doubling in 7 years. Return expectation mitigation is more a problem than the returns.
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But if you're saying that AI is the tech is the future, people need to upskill, companies are not upskilling, right? The India has absolutely no presence in AI.
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I mean, to compare to the globe. Then, if I am an investor purely in India, I have a domestic investment of say 90% and 10% in international equities. My 90% is just underperforming for so many years.
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So, but again, Sonia, again, I bring back my statement because people in India has been have been advocating global investing for a long time. And suddenly, people have risen now after the risks have unfolded.
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This is something which people should anticipate, right? And then, fact is, apart from that, we are just 3 3 and 1/2% of global market cap.
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Big Forget the market cap. The businesses that are available there may not come to India for the next 25-30 years.
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So, from an investing perspective, it's not about, you know, market cap or whatever opportunities. It's about It's about building a bigger portfolio. What is true at at my level is also true at a macroeconomic level.
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If we are missing those industries, those industries should have been here as on yesterday, right? What is the highest-selling item on Amazon right now?
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Phones. Apple phone. It's the induction cooker. Think about it. Now, if the average person has woken up to the risk and is buying an induction cooker, the nation should have woken up yesterday.
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Our heavy reliance on oil and gas is another risk which is unfolding. Who knew that this small strip of sea could have this huge bearing on my personal life?
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Right? But you have to start working very rapidly on these things. Okay, so the Indian investor now woken up to the fact that he needs to have global investments in his portfolio. And you guys at Meria have a lot of exposure
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and expertise in in in global, you know markets especially now the South Korean market is doing fabulously well. Taiwan has been doing well. Uh tell me if someone has zero exposure to international investments, how do they start? Because a lot of the funds you
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know you have they're trading at a premium. There are these feeder funds which are very expensive. Um so it's not very easy to invest in global markets.
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So give me a like a 101 strategy. See I think first of all the first global strategy has to be the dollar.
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Because that's the widest acceptable currency. So investing in US should be the first port of you know a first destination. At this moment the objective of any portfolio forget global or Indian should be to diversify as much as possible to own different set of
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businesses. When you look at the businesses available in those markets especially energy AI innovation robotics our house call is is global defense.
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Okay, those are places and everything has an ETF there. So how do you invest because So unfortunately what's happened for us when we started this our entire ETF business, we thought we'll bring the plethora or the might or Mirae Asset
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global investments awareness to India. But then the stoppage of of mutual funds there has stopped that plan. So we started something on the GIFT City.
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And then a GIFT City portfolio on our global outbound sits exactly where India is not.
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It invests a little bit in China or greater China in the US we catch these futuristic trends of AI robotics, innovation, defense whatever you call.
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So give a complimentary portfolio to what it is in India. Unfortunately those come at a different threshold.
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We're trying to convert it into a retail fund maybe as we are not very confident of the back end of service there. So once we build that we'll What's the minimum investment for So it starts at $50,000. So so that's a
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different threshold. So becomes a little Inaccessible to retail, yeah. But once we bring it down to and we'll bring it down to $5,000 is our plan. But once we do that then it can be available to a broader sort of thing. But apart
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from that there are some very good stories outside Meru which time and again open out for subscription from various funds. I would definitely advocate the young to read up a bit and it's no rocket science. Just do a little
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bit of basic studies on what those and back yourself in taking those sort of calls on on investing that there are some very good distributors advisors out there who can guide you.
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So you're saying the best way to invest is through GIFT City? Right now for us because our funds are closed, we have two beautiful funds called Fang Plus. That's my favorite.
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As employees we are waiting for some redemption to happen there so that it'll open up a bit for us to buy. Is nobody's redeeming Fang Plus. It's so spectacular to see people holding on and that money continues to create money
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uh consistently and when you look at the next 2 3 years those 10 stocks are looking pretty good [laughter] going forward too. But that's been the behavior people who bought in early and have held on have really benefited from
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this entire growth of the US market. Uh but unfortunately both our S&P top 50 and Fang Plus are closed for purchase.
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So so and it'll only open if people redeem. I'm so happy that people are not and just they're enjoying this incredible ride of what's happened.
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So for a young investor today what do you feel how much percentage should be in domestic markets, how much in international markets and what should the overall asset allocation strategy be for this year?
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See asset allocation is very personal thing, right? Asset allocation is about finding yourself. Before you come to asset allocation you start thinking about what you want from your investment, right? And you can define what you want from your
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investment by starting with your income expenditure statement. I would ask how many young, old, whoever maintain an income expense statement on a monthly basis. Till you don't know that, you actually don't know how much money you need for your own spending, how much out
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of that you can invest, right? So, it starts from that basic. Once you do that, today the young's needs are very different from my need. And then the world is at their feet. So, just write down some of your needs or wants. Don't
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confuse your needs with wants. Right? But segregate them. And there's nothing wrong in wanting the world.
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So, put that From that, then you'll know when you need the money. Once you have that duration, then you'll know what is your return requirement. Once you know the return return requirement, then you can form a portfolio or what you call asset
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allocation. If your return requirement is 6%, the bank FD will give you 6%, right? But till you don't know that return, you cannot form your portfolio.
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So, finding that is no rocket science. It's just a little bit of Excel maths.
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[snorts] You need this money this much. Sometimes you will realize by doing that math that you don't have enough money. Maybe your dream is wrong.
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Then it will urge you to work harder to that dream. Right? If that's your dream, right? But putting that dream is very important.
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From there, you form Now, suppose somebody wants say 10-15 lakhs in 4-5 years. India is a growth economy. It's still irrespective of whatever, even after the oil thing, we're going to grow at 6%, right? You take out 50% of That's
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how I look at it, whether it's wrong or wrong. That's how I do my math. 6% 50% of GDP which does not contribute, meaning actual growth will be 12%.
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So, the projection from equity should be 11 to 12%. If you come to an active manager, you should expect one or two percent more, not more than that.
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Right? So, 12 13% you can still look at a good part. Debt on an average 6 7%.
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Traditionally, gold, thanks to the good run, is also at 13 14%. A mix of that becomes your portfolio allocation.
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Please understand the multi-asset strategy has a higher probability of giving you a median return than a single-asset strategy.
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Recently, I was reading an article where your own personal investments were featured on one of the papers. And in that, I noticed that you had no exposure to gold at all.
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See, [laughter] it is not exactly true. I did not have exposure to digital gold.
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See, okay, I come from the East, right? Where traditionally, we have a lot of gold.
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Forget the women, the men wear enough gold. Don't think only about with our gold. We all wore gold. Now, I'm reduced to a bit. But, traditionally, there's a fair amount of gold and jewelry at home.
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Which lies in the locker for whatever reason, right? So, I don't include that into the financial this thing. I did not till last two years did not have uh digital ETFs much. But yes, my exposure to silver is a little bit more than
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gold. So, what is your exposure to So, no gold at all in your portfolio?
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No, now I have. See, between we Look at Look at it as a family. My wife has exposure to gold ETFs, and we complement each other in our portfolio. She's taking an exposure, then I take silver exposure. That's how we do it. My silver
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exposure is more than the gold exposure. So, do you still believe that silver has a good good head room?
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The risk reward is in favor of gold. Uh because Even now? Yeah, because there's sovereign buying.
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Now, there's been a little bit of selling, so we are seeing that fluctuation. But here's my thing, okay?
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I say this in all forums. Traditionally we have been gold buyers. Year on year, generation on year, we go that one day and buy gold.
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And that one day we've never looked at price. We've just bought. Think about it.
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But you know my problem in that is, I'll tell you. So, with me personally, my gold jewelry, or whatever I buy, gold biscuits, gold coins, I will Emotionally I can never sell it.
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That's the third part. gold ETFs? Why? See, my my humble request, Sonia, think about it. Because you've practiced it over a period of time and had this unwritten rule that you will never sell it.
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You've made money. That is the principle of investing for any asset class. You identify a good asset class and you buy it.
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Right? You buy a good stock, you hand it over to your son or your daughter.
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But does that work today because somewhere, you know, I had a conversation earlier where this buy and hold strategy, that was a Warren Buffett teaching, right? That doesn't hold anymore because of the a third word now, called pray.
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Buy, hold, and pray. [laughter] Because see, if you had bought, okay, for example, if you had bought Reliance, Asian Paints, ITC, you know, the list is long.
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Uh TCS, Infosys, if you had bought and hold 5 years back, you would have only lost money. Let's be honest. So, this buy and hold really doesn't work. You have to recalibrate every few years.
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to take stock names, but a lot of these stocks that you're talking about didn't perform for a long time and would have given you returns in 2 3 years which have made up for all this. That's See, you own a business,
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then you take the journey with the business owner with the firm belief that when that business unlocks its value, it comes to you. That is equity holding.
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If you ask any of the leaders of these businesses of that you said, is this the best time to buy your stock? They wouldn't know.
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How do you expect a fund manager to predict those one year or 15 days? It's impossible. The fund manager or a stock owner should go in to buy exactly the way they bought gold.
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Exactly the way. Please, for heaven's sake, build bring your gold buying habit or or experience or the way you've done it to equity buying. And don't, for heaven's sake, bring in your equity buying habit to gold buying. You'll
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destroy both. And we are probably at a threshold of destroying both because never had we seen price. I know I'll take a lot of flak for what I'm saying saying now, but for the risk of it, we had never thought of price when we
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bought gold. We just went and bought. But when it comes to that same gold, you bang on. But same gold in the ETF format, suddenly it changes to a price.
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Then are we going to compound the wealth the way did in physical gold in the ETF format? We are not. I'm saying that today.
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No, my point is that even if you talk about stocks, right? I mean, if I had bought and hold 10 years ago, these stocks, I would not if I had not recalibrated my portfolio.
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Here's my thing. It's always about the portfolio. You can buy 10 stocks, right? Actually, if you look at the compounding, you don't need all 10 to perform.
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When you look at it at portfolio level, no fund manager has any if he or she owns 50 60 stocks, not 50 60 perform.
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You have to be more right than wrong. And in being more right than wrong, some of those compounders have been phenomenal.
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See, today, to answer your question, a lot has changed to the approach of the business. I'm sorry I have to say this, but valuation has become a bigger term than the bit business itself.
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But in this entire noise, there will be some businesses which will build businesses. See, this whole fintech thing you've started very well. Within that, you will see some of them rising above this valuation and creating long-term sustainable businesses. And their
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compounding, no, will be something which they themselves do not know at this moment. That's happened to all of us.
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When you yourself told our story at when I had joined Mirae Asset, if you had told me this would be a somebody had asked me what would be our AUM 10 years later. I have written that. He'd made me write
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down a trainer from the stage. That figure on that day was win 1/5 of what we were.
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1/5. So, that that's how it happens. 1 year ago, if I would have asked you, Sonia, do you think your whole venture would have been what it is in a short span of 1 year?
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You would have said, "Swaroop, you are my well-wisher." Right? But I'm saying today is just just you're not even scratched the surface.
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But it will be good if you stay completely honest to the core of what you're doing.
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Right? The valuation of this is an outcome. But what do you think, Swaroop, is the difference between successful and unsuccessful people? What keeps them apart?
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The There are two sides to the story. One is the process of what you're doing.
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One is the outcome of what you're doing. The person who is very convinced on the process and is confident that this process will lead to the outcome, more often than than not will succeed.
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If you're completely focused, and many are, on the outcome only, you will miss the process.
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But how do you know if your process is right? Yeah, that's not you're not born with that. I mean, all of us come there after creating a lot of mistakes. So, so that that only time is the answer. I don't
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have any shortcut to that. I mean, I'm saying this after 30 years in the industry.
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When I was young, I didn't know what was the right path, but I know at this moment that if we do this, and since we discussed this, you know, so for the last 2 years we have not in been in favor of the market. But
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we are extremely confident of our stocks, of our portfolio, of where we sit. We have absolutely no no iota of doubt on our process. Some people may disagree with us in the short run of 2 3 years. It'll It's bound to happen,
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right? But in the long run, if your process of stock picking is good, it always prevails.
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But it's being sure of what you've done. Yes, if in the short run you're going against the tide, you have to revisit your process. You have to go what we call a review of a portfolio or a rebalance of a portfolio. See if there
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there is anything missing. But if things are okay, then you have to back yourself. It's as simple as that.
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I'm so glad you brought out this topic of underperformance because I know you get a lot of flat for it, and I wanted to address it.
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I put out a question as to, you know, if anyone has any questions for you, please ask. And one of the most I think what do I say? Negative comments that came in, feedback, criticism was that Mirae Asset funds have been
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underperforming for the last couple of years after having a dream run in the preceding decade or so, right? At one point, they were the gold standard of funds, and now the last 2 to 3 years, the underperformance is very stark. I
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mean, if you just look at the Mirae Asset Focused fund, in the last 5 years, it's not even a 10% growth, while the category average is 16%. What do you think has gone wrong, and how are you going to sort of correct this imbalance?
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Yeah, I think to be fair, you picked out the only one which has not come back.
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[laughter] It's my bad luck. But in the seriousness of everything, you know, see, in 2023-24, even the regulator was calling out the uh the valuation of the market.
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At that point of time, we sat completely outside that market, and our view was in in cognizance of that that at this moment, these stocks we don't want to buy. And we are a fully invested fund house. We We believe in cash calls
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because we believe the investor through the distributor directly has given us money to buy an asset class. We will buy that asset class. In a short period of time some of our stocks may not be in the what do you call the cycle of the
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market or or what is the right word? I'm forgetting but may not be in in line with the market might be outside the market, right? So we prefer to do that and for 2 years like you rightly said as a 17
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years story. 14 years Q1 one. Right? 2 years Q3 Q4. But apart from focused if you see last year today we were probably Q3 Q4. Today we are Q1 Q2.
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Q1 Q2 is the first quarter and second quarter. and second quarter, right? Suddenly the cycle changes and stocks which are not in favor last year are in favor this year. But you have to ride that through.
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See there was a very interesting article written by one of the leading publications that 82% of the money comes through last 1 year performing fund and 82% of those funds don't perform the next year.
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Correct? Right right because momentum changes, cycles change. See you don't come to the fund manager to catch stocks. You come to the fund manager to catch cycles.
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But for those 2 years to be fair to my fund management team and we rehashed it with our board, our trustees, everybody. We did not find merit to be in those stocks at that point of time and if you see some of those stocks
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have corrected incredibly. Right? But yes there is work in progress on focused. If all the others have come back or over managers the large cap is also come back. This is still work in progress. Unfortunately what happens is
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30 stock portfolio. So changing positions in an illiquid market I call our markets very illiquid takes some time. But at the same time to be fair to go over is a deep value fund manager. Sometimes he tests your
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patience. Right or wrong I'm not commenting, but he's a very exceptional manager. No, I I have I'm 100% in agreement with you because I'm someone who believes that you need to be invested in a fund at least 7 years plus before you can
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take a judgment call. But I may be old school because the younger generation has not seen even two bear markets, right? So for So for an investor today who is disappointed with the underperformance in Mirae Asset funds, what would you want to say to them?
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See, finally it's their money, right? I'm nobody to guide or say anything on what they should do with their money. I'm just being honest. You see our track record, see our portfolio. If you find any stock which is bad, then call it out. Right?
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There could be See, when when such markets happen, no, while one part of the market really pulls up the market, it opens up the rest of the market for deep value.
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At this moment, some incredible stocks in our portfolio are available at some good prices. And we've consistently got And we have inflows, to be fair, right?
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If you If you're talking about 3 years of underperformance, we've grown in those 3 years, to be fair to all our investors who've shown that kind of faith on us, which is so humbling to see. Typically, if you put two two years
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of underperformance, money should have flown out. The fact that it is not, I cannot thank my partners and investors enough, is a fact, right? That they've shown. But somebody who's come in in the last 3 years have seen one side of a
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cycle will find it tough not only with us, but with the broad market. Right? But if you have shown patience for 14 years, then show us some more patience. Our processes are intact. If our process See, this is a fiduciary
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business, Sonali. Let's be very clear. We stand alone in this country. We are a stand-alone fund manager and we are the only organic global asset manager in India.
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We can only grow with fund management or in investor experience. But these three See, when when the markets have gone up in 3 years, doubled, while the market normally doubles in 7 years. This 3-year data can be dramatically wrong, not only for us,
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but for the broad market. No, but I'm not talking about the 3-year in absolute terms. I'm talking compared to the average also, your perform your fund has underperformed, right? It's a big way.
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last 1 year, we're back I mean, check If you look at the last 6-8 months, I'm not That's no indication of performance at all.
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Even if you look at a 5-year period. Excepting the focused, rest you can check.
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Okay. Okay. I'm I'm unfortunate that that [laughter] And it's glaring, so it should be asked.
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one of the questions that came to me, so I thought I'll It's not a wrong question. Please, it's an absolutely right question. Because the first 2 years of that fund was one way.
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It just hit everything right, and then it builds expectations, right? But the last 2 years have been tough for the fund, no denying that, but it's a 30-stock portfolio, so You see, some of these portfolios, not only for us, you know, when you look at
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some of the funds which suddenly start performing, they are stocks which had not been part of the cycle. And when they perform, typically what happens, and this is the biggest issue, right?
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Forget Mirae Asset, let's just keep it aside. Uh What is the mutual fund advice to the market? The mutual fund advice broadly is this fund has performed, hence it's a good fund, you should buy. The stock advice is this is stock which will
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perform. The stock advice in this same market is completely futuristic, based on analysis. Because of that, bulk of our investors continue to abide funds which have performed, by the nature of the advice.
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That needs to change a bit. You have to check portfolios which are not sitting in in the momentum market for tomorrow, because you're investing for tomorrow.
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Right? And I think a broad part of our portfolio does sit there. Okay. Uh so that's that's about the underperformance. Now I won't make you No, no, you can, ma'am. I'm I'm [laughter] See, you see, I've been doing this
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very candid, actually, to be honest. That's why I've pursued it further. can't hide it. It is there in the open, right? My job is to explain, right? And if it's there, it's there. I'm not somebody or to be fair to my fund
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management team, we've never shied away from this. But yes, what we say is that we have full conviction on our portfolio.
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And time will tell. Sometimes that time can be 3, 4, 5 years. That is equity investing.
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But patience, I think, is running thin now across the markets, right? See, globally, there's a brilliant slide by this incredible writer called Carl Richards. This is not India. There is the investment return, there is the investor return.
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The average mutual fund return of any flexi cap on a 15-year horizon would be 14, 15%. How many actually get 15% CAGR return on a 15-year performance?
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Portfolio. All that was required is invest and stay at home. But the most difficult thing to do is not do anything.
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Right? This is a 6-year growing market. This 3-4 trillion economy, irrespective of what happens on a rupee term, will double in the next 7-8 years.
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Right? The person who sits and doesn't do anything will make money. Only two people, for the sake of reputation, Sonia, I'm telling you also, only two people make money in mutual funds. One who loses their account statement.
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And one who is dead. No other Because you have to do something. While there is so much money See, money is made You and me have made money in mutual funds. We have not lost our account statement, and we are very much alive.
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Sonia, can you go and track how much the fund has actually performed and how much See, we track our purchases. Here's something. Let's get a little serious, right? Whenever we analyze ourselves, you know, we analyze ourselves or our
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pride in investing through our purchases. Can we go and track our redemption track record?
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And you go and see those NAVs that you thought was bad and hence you redeemed and see those NAVs today.
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And I don't want to see tell you what your face will look like. Right?
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Track your redemptions. And a lot of story on investing can be learned from your own behavior on redemptions. See this stock market is very fundamental.
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The day you think the stock is bad and I want to sell the stock, somebody necessarily has to feel the stock is good and has to buy it for your trade to happen.
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Right? So there are two sides to every story. So while you track your purchases, please it's a it's a humble request. Please track your redemption track record also. A lot of learnings actually come from your redemption. Then you learn that you can make money by not
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redeeming. That's real wealth. So there is now this whole narrative on social media as well as to how India has not performed for many years and global markets are, you know, running away.
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And India has lost out on many themes like AI, robotics, ML, all of that. So India will continue to not perform.
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And so there's this fear mongering, this little bit of you know, there is an overall atmosphere of resentment towards Indian stock markets, right? You can sense it as well.
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How does one read into that? Two three things, okay? I'm not even disagreeing on what you've said right now. But what has structurally happened to the stock market is pretty phenomenal in the last three, four, five years.
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This spate of public issues, I know when we talk about IPOs it's more held in the negative way than in the positive way.
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But what it has done is actually broaden the market. The number of categories which will become industries going forward that has been created in the last 3 4 years. I can go on naming say hospitals, we the AMC market, the
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capital market itself, chemicals, textiles have all been added in the last 3 4 years. These were non-existent.
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So, and all of them are mid and small. So, when you look at that in perspective, the Nifty 50 is no longer the standalone face of the market. It has become Nifty 500.
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Right? And a lot of possibilities are in this 450 stocks now. The fund managers in 2016, I'm not trying to sell a fund, but I'm just giving an example. When we stopped our mid-cap fund, the Mirae Asset Emerging Blue Chip, I know you all
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had covered it then. We stopped it because of lack of opportunities. That is not so today. If you look at the last revival, you look at the small-cap space itself.
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The smallest small-cap is bigger than the smallest mid-cap of 2019. Right? The market has expanded. What are you asking your fund manager to do? Out of these 500 stocks, give you 80 90 good stocks.
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Right? But with that comes with the only thing of patience. Sit in this market. I can revisit this every year, Sonia.
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So, you still are convinced about this India growth story. fully invested as a fund house. We have absolutely no See, in adversity gives you opportunities. Because things are like this, some of the prices that are available now were extremely expensive
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last year. Right? The whole key is to identify this. Now, to be an investor, the fundamental requirement is to be an optimist.
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Right? If you feel tomorrow is going to be worse, then don't come into this investing world. It's going to hit you very bad. Things can get gloomier also.
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By the looks of it, if this war continues another 5 6 60 days, it can look worse from that. If it looks worse from that, the same stock will be available at a slightly cheaper price.
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Do you have that ability to do it? That same person will not comment if the price of the house they stay in does not appreciate for 5 6 years.
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Correct. Why is that behavior different with this asset class? Because I think the house that you stay in does not pay your No, bills.
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that you stay in does not have a daily NAV or does not have a stock price. Our transparency is the price we pay.
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It's not liquid asset, no, that's why. So then, if you're not if you're okay with your house which you had bought for investing does not appreciate for 5 6 years.
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It's perfectly fine. But why are you not giving that same time? Anybody who will tell you that I made money in real estate would be over a period of 15 20 years.
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If you made it in 3 years, it's been just luck. The same philosophy, all rules of asset classes are the same. It's not that equity will behave differently than this.
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People are comfortable sitting on gold and not making money for 8 10 years, right? They will not flinch. They will not even discuss.
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But why See, as we mature as equity market investors, we'll also develop that. You go to the US when the markets had corrected in 2008 2009, actually institutional had sold, retail had not sold.
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Right? In Europe, they they're perpetual investors. But my only worry is that every country has a zone.
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I'm just worried that this behavior comes after the bulk of the returns are away. That that'll be very sad.
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What behavior? The behavior of holding. Holding. See, in our lines, you know, a good distributor advisor in a global market, a private banker is above 45 years of age. And I had asked a very dear friend friend, why is
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that so? He said, above 40, you finally have the ability to hold allocation. Before that, you are always fluctuating. The ability to hold allocation is the key to wealth creation in in capital markets.
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You should always rebalance, review, but you have to be you have to hold asset the asset class. You hold others very nicely.
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Right? I'm just saying the same person, the same person's behavior towards real estate gold and like you rightly said, this is something which is my takeaway from this discussion. Gold versus gold ETF, the behavior I have seen. Why?
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Okay, 45 minutes passed by really fast, Swarup. I didn't realize that it's been it's been such a long time, but we discussed many things, but I have to ask you this because I'm sure recently you saw that there was this whole
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controversy about, you know, retirement. And I asked what I thought was a very simple question that, you know, if I do spend about 1 to 2 lakhs a month, and I am 40 years of age, how much will
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I need at 60? Now, the answer was 40 crores, and I get why there was rage, anger, you know, backlash on it.
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Because it seems like a very unattainable and unnecessary number. But the larger argument really from my standpoint is that A, people are not even talking about their retirement, which is an issue. And B, people live in constant fear and anxiety about how much
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money they need. Because whether it's 40 crores, whether it's 20 crores, whether it's 30 crores, we are not having those money conversations. So, I wanted your take on this. A, how much money do I realistically need at retirement? By me,
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I mean an average 30-35 year old who is earning in a metro city and has expenses. So, let's take 50,000 rupees a month expenses, right?
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What should the retirement math look like? See, first of all, Sonia, and I told that to you post that. I'm so happy you started this discussion. This discussion needs to be had or at every point of life.
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Because at that age, whether you may have a companion or not, the only thing that will be your friend is money.
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Right? You might want to die, but that ventilator will not let you die. And the cost of ventilator per day, you go and check, right? So, first is if you don't want money, then you be absolutely healthy.
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Right? Then then nobody can do anything to you. But the need for money is dire.
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And that's something which people must realize. If I do a simple math, and I'm I'm assuming that you're talking about two lakhs in a city called Mumbai, which is an expensive city. And if you want to retire in Mumbai,
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No, let's let's reframe that, okay? If you spend 50,000 rupees a month, right? In a tier one city, how much do you need at the age of retirement?
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See, depends on two things. The erstwhile advice was post retirement, just shut down and lead a very very meaningless life, frugal life. That's not something which anybody who's spending 50,000 today wants to do.
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Wants to do more with life, right? If that be the case, then I would without any any subject to anything, and it's doable, at least 10 crore. That's where I would start from. That's where I would start from. And it's little bit of planning
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will take you there. See, you it's not about how much you earn. It's about how much you invest.
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If If I were to give you my AMC's track record, the largest portfolio belongs to my branch manager of Bhubaneswar.
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And he's paid a Bhubaneswar branch manager's salary. Just to put things in perspective, some people in Mumbai do not have that portfolio.
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It's about how you invest. And I say this with a lot of pride, that this young boy, he's not a young boy, he's a man now, has identified this early in his life and he's built his portfolio, right? He
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has a wife and his daughter, he has a car and a house, everything apart from that portfolio. Simple reason I gave this example is that it's never about how much you earn.
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[snorts] It is that disciplined investing, but more important, the need to invest. I mean, I'm just putting a gut because this 10 crore is something which I had said before COVID in one of the shows.
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And people had really broken down on me. So, conservatively, please understand India is going to get more expensive.
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Your hospital requirements will be needed. If you want to a little bit of lifestyle expansion, you deserve that lifestyle expansion, that's why you work. So, then at least and it it do a little bit of math. There are enough
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planners or your calculators on screen, just do that. It's not much. A 35,000 rupees SIP at a top up of 10% every year at a growth rate of 10% gives you 1 crore in 10 years.
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But the value of that 1 crore in 10 years will be No, but that is how it compounds. After 10 years, the compounding really starts, right?
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I'll give you a very simple math. We talked about underperformance, let me discuss one fund of mine, okay? 14 years ago, I invested a lakh. That is 14 lakhs today. You will say 1 lakh per month, fantastic. 1 lakh per year is fantastic.
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Now, if I don't do anything and the fund gives me 10%, I get 1.4 lakhs a year.
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That's the math on 14 lakhs, I get 1.4 lakhs. But you've done the hard work of 1 crore. 1 crore compounding on the next 10 years is is incredible, right?
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But getting that first crore is always the toughest. So, please, it's a brilliant country to be in. You're the only country that is growing at 6% irrespective of what is happening to the world.
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So, if the math works out, then why do you think there was so much backlash around that number?
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Lack of planning. Sorry, I know I'll take a backlash on that. People have not planned their requirement. Ask any people. We we do this theory this exercise in our AMC. Because kitna paisa lagega? You'll be amazed how many people
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do not know kitna paisa lagega. You'll be amazed. The person who is writing in all earnest state and I'm asking that person who has written, have they written down a plan and actually checked at 6% just 6% inflation. I'm not talking
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about lifestyle inflation, which will be a killer. At 6% how much they will need?
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On your math at 2 lakh the person will need 8 to 9 lakhs. On per month when he or she is 60. If you want an 8 to 9 lakh rupee per month, your portfolio has to be 20 crores.
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Okay, so there was so much backlash around that 40 crore retirement number, right? Uh do you think it's justified?
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Do you think um it is an unnecessary figure? Do you think it was just clickbait? What's your view?
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So, I just hope that that debate will give rise to people actually writing down how much they need.
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Nine out of 10 people are probably 9.9 out of 10 people don't write down how much they Don't do a simple math. You've given an example of 2 lakhs for a 40-year-old at 60 how much they will need, right? If you're spending 2 lakh
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at 6% compounding, that is 8 lakh at 40 roughly that much. For 8 lakh at that point of time, you will need 20 crore at a 4 or 6% withdrawal plan.
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Recently I was doing My plan is on 6%. Recently the AI bot that I use said that at 6% if market goes sideways for 3 years, you will eat into your capital, so don't do that. So, I had to
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recalibrate it to 4% right? My withdrawal rate at 4%. Now, I think at 4% I'm safe. At 4 or 6% that's at 20 crores. That is not taking into account any lifestyle expansion.
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Inflation is not the bigger issue. Lifestyle inflation is the biggest issue. Right? But the argument is that if you're spending 2 lakhs per month now, you may not necessarily spend that much post-retirement because you know you know your kids will be out and
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I don't agree. [laughter] I feel like I'm only going to end up spending more, but you tell me.
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When has anybody spent less than the previous one? See, it's the previous advice where post-retirement you will start leading frugally. Nine out of 10 Indians do not want to do that, which is the right way. You've actually worked
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very hard for your retirement and that post-retirement when you have time on your side, you will start fulfilling a lot of your fantasies which you could not do because of lack of time. And all those fantasies, all those requirements
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need only one thing, that is money. If you calculate that and prepare for it, it is very easy to do that. It cannot be done physically, it cannot be done on a gut. It is the requirement for financial planning is far more important
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than any health checkup is where I look at. You can hide your wealth health and be okay with it.
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You hide your wealth, you'll be on the street is a reality. Unfortunately or fortunately, whatever, I don't want to get into those words, it is a fact that discussing money in India has been a taboo.
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That needs to break as on yesterday and I'm so happy that your discussion has actually woken up a lot of people. I just hope that it does not just restrict them to just give feedback or give a view on what it leads to them now
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sitting down and doing the math for themselves. They will realize that it's not very way off from from a 2 lakh spending perspective. Now, if you think 2 lakhs is what, then you cut it down to 50,000 and see whether somebody who's
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spending 2 lakhs can actually live a life with 50,000. Because that is what it will mean.
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Another thing I noticed since you talked about health, and I think we had this discussion a while back as well, that you have a very high insurance cover, right? I think you have a three crore insurance cover or something for you and
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your wife. Don't you think you're over insured? Each to his own. I do agree it's a little bit more. It was four post COVID because I became a little paranoid.
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Realistically, I'm three now, but I think two or three is good. I will not go below that.
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Why? See, you go to the hospital, what is the first question? I'm sorry I have to say this. The first question is do you have insurance?
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No, no, insurance is fair, but a three crore insurance for a couple comes off a specific thing. I saw my father spend 15 days in the hospital.
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And I saw how much money was spent. So, it is based on it's a little more than what people do, but at least a one crore my son is covered at 75 lakhs. He's 26, 27.
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So, on an average, how much how should one calculate how much insurance cover they need?
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So, it depends on your health checkup. If your health is great, then you can have some normal checkups. I do come from a diabetic background in my family.
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So, if diabetes comes in, everything changes from the medicine that you have. Right? Yes, I'm born to two zoology professors, so a lot of this comes genetically to me. I'm just being honest, but yeah, I'm a little paranoid.
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I'm not even discounting that. I'm paranoid about my retirement also. I'm absolutely paranoid. If you ask me on in June, when you are 82, how much will you withdraw? It's a laid down plan, right? I know how much I'll
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withdraw. Yes, yes, yes. It's it's a laid down Excel, and it is revisited every Why do you think you're so paranoid about money?
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I'm not paranoid. I want to lead a life. I've just acknowledged the fact that I need money for that life. I don't run after money. It's not that. If you say that I I spent my 30 years of my life
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without negotiating with money with any of my employer or any of my bosses. Uh if I'm saying this that Air India can check back, right? But that's you can't talk of the outcome. But I acknowledge the fact that if I want to lead a
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certain amount of life and I was very good if I went back to Bhubaneswar, but I'm not in Bhubaneswar.
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And if I have left home, I have left home with certain things in life. I want to do certain things and I'm right because that's my life, right? And for that I need this much of money as simple
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as that. If you need that much of money, it cannot be a dream. You have to put it in a plan. You have to write it down.
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That's all I've done. So, you're saying for a couple, average couple, minimum living in a city of 1 crore cover is something you need.
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There was a I think Times of India did something. I think I if I'm getting the publication right, it said 3 and 1/2 crore per family on a tier 1 city. I'm just saying that with the lifestyle expansion, it is 3 and 1/2
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crores per individual of the family. Insurance cover? No, no, no. The retirement kitty. Oh, retirement Oh, insurance.
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No, no, no. See, you can be happy, but I would say even if it's a 50 lakh cover, don't make it a floater.
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Make it 50 lakh per person. 50 lakh is not large spending in a hospital anymore. You go to a decent hospital. To be on the safer side, then again, it'll be that same thing. Then you're praying that the other person will not fall ill.
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We'll I would definitely look at 50 lakh per person in the family. Not below that.
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Okay, 50 lakh per person in the family as an insurance cover and 3 and 1/2 crores you said is the corpus that you would need today.
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Per person. That was some insurance at a tier 1 city. Uh but I would say three That was per family. I would say because between that survey But what age at like At 60.
Speaker A
Oh, at 60. Okay, okay, okay, okay. That was the broad thing. But I would say 3 and 1/2 percent per person in the family, then you're at a beginning stage. That is without any glamour to your life.
Speaker A
Okay. [laughter] All these numbers can get very overwhelming, but you're right. I mean, the conversations need to be had and they haven't You know, I guess as This is my view at least. a lot of us grew up
Speaker A
with these subconscious money beliefs, right? Like I grew up with a lot of my parents had like money avoidance. Like for them money was taboo, money was bad, investing in the stock market was like a gamble. You know, they feel then they
Speaker A
feel they don't deserve to be rich. True, true, true. I completely agree. of us. So I have You're talking about my parents now.
Speaker A
Exactly, [laughter] exactly. So money avoidance is something a lot of people go through. And then they they Now you have to work on breaking out of those patterns, right? And you can only do that like I broke out of that pattern
Speaker A
because I invest all my money in the stock market. But a lot of people have not broken out of their subconscious patterns. And I think that is where this argument about retirement and corpus gets very uncomfortable because having
Speaker A
money conversations make people uncomfortable. And that's something that we've had today. Yeah, yeah. I mean if you don't have it, then the risks are very large. See, there's a risk to investing, there is a risk to not investing. At this moment in
Speaker A
this country, the risk to not investing is very large. Okay, Swarup, we've really had a great time chatting with you. Thank you so much for being on the Money Mindset.
Speaker A
Pleasure. Thank you so much for having me. It was so much fun.
Topics:India economyjob crisisinvestment strategybuy and holdMirae AssetSwarup MohantySonia Shenoy podcastmanufacturing growthinnovationfinancial planning
