Where the rich are investing - 2019

Parag Desai's Investment Mantra and Asset Allocation

An insight into the investment preferences of wealthy Indians

Though the largest share of Parag Desai’s personal wealth is held in debt instruments, his fondness for equities is clear (as a cup of Wagh Bakri Green Tea). “There is no doubt equities come with risk but its return is higher than other asset classes. Besides, there is the advantage of liquidity,” he says. At the same time, the stability that comes from debt investments cannot be ignored. “That is critical when you consider the long term,” he says.

Desai looks at a few specifics before investing in equities. “The ability of a company to innovate, the vision of its promoters and the potential for higher margins are the most crucial parameters. I also look at a company’s financial prudence or just how well it manages costs,” he says. As a part of the promoter family of the Wagh Bakri Tea group, Desai is ably supported by a family office of professionals. Besides, he also does his own research, and engages in regular conversations with investment managers. 

Over time, Desai has tweaked his investment strategy, to include riskier bets. He has been moving money to arbitrage and liquid-plus funds. Desai explains, “Over the past few years, fixed deposit rates have plummeted, while returns from mutual funds and real estate have been impressive.” He stays invested in equities — one third of his money, just as it was a decade ago — believing them to be currently undervalued. “In the long term, equities will deliver very good return,” he says.

Desai’s approach is to stay invested for the long haul — regardless the asset class or its valuation. “A good example is real estate, where it is difficult to exit during a lean period. However, land holding has its own perks if one is willing to wait,” he explains. That Desai is a smart investor is evident — he bets on realty projects that his friends are working on!