Motilal Oswal, who has invested 100% of his money in equity and equity mutual funds, is averse to debt and real estate. “Equities in the long run have generated 15-18% return, why would someone invest in debt at 6-8%? As far as real estate is concerned, historically, returns have not matched that of equity,” mentions Oswal, who teamed up with his friend Raamdeo Agrawal to start a broking business about three decades ago.
Oswal currently holds a 35% stake, which is worth Rs.2,500 crore, based on the current market price. Oswal is candid enough to admit that, of late, his investment in mutual funds has fetched a higher return compared with those generated by MOFS stock. But Oswal is bullish about the long-term. “We are building several exciting verticals such as home loans, private equity and asset management. Each of these businesses have the capability to scale up and create wealth in the long run,” opines Oswal.
Oswal has taken time off active fund management, but he still vouches for the investing prowess of Raamdeo. “I always look up to Raamdeo for advice and tell him: 'whatever you buy, buy the same for me.' Even today, we stand by our investing credo 'Buy right and sit tight',” grins Oswal.
But the journey as an equity investor has not been an easy one. At times Oswal’s portfolio value has fallen by 50-60%, not to talk about the countless investment mistakes the duo have made in the past. “We have been wrong several times, but that is the fun in equity investing.” The losses were not debilitating, as winning stocks always made more money than the losing ones. Importantly, instead of betting on a wider basket of 150 stocks, the duo brought down the count to 30-35 very high quality stocks, thus ensuring that market volatility did not pummel the portfolio.