Investing from Swiss-desh

Value Research reader Harsh Beria's story is both interesting and unusual. He is pursuing Ph.D. at the University of Lausanne, Switzerland, and is working on how the changing precipitation regime affects groundwater resources globally. He is not a professional investor. As a 24-year-old, he is part of a growing tribe that has recently started investing in mutual funds. That is exciting because he is proof that smart youngsters see merit in long-term investing.

Harsh completed his primary and secondary schooling from Patna. His strong fascination towards numbers and physics got him through IIT-JEE. He spent five years at IIT Kharagpur, studying hydrology and applied mathematics. Harsh wanted to understand the response of global water resources to a warming climate. That brought him to the University of Lausanne. Harsh's work gets him to travel to beautiful places all around the world and work on some of the most pressing water issues of modern times.

Ask Harsh about his earliest childhood memories and he recalls his father. "My father used to trade a lot in the stock market when I was a kid. He was not a very successful stock investor and in the last few years of his life, he completely switched to FDs and RDs. However, he was a wise man and had instilled in me a very strong sense of saving," says the youngster.

After securing his Ph.D. position, Harsh went to a cousin's marriage. "My uncle, who is a financial advisor, introduced me to the world of mutual funds and helped me set up my first SIP. For me, the idea of investing was to better utilise my money and maximise my risk-adjusted returns over the long term. I had done some basic back-of-the-envelope calculations about how much money I would need as my retirement corpus to sustain a decent lifestyle and how much money I would need to invest to arrive at that corpus," he recounts.

Eager to make a good mark, Harsh started SIPs in five different funds - HDFC Equity (now HDFC Flexi Cap Fund), HDFC Mid-cap Opportunities, HDFC Prudence (merged with HDFC Balanced Advantage Fund), L&T India Value and Tata Retirement Savings (Progressive Plan). Like all newbies, Harsh let his uncle decide. The nervousness of a new investor gripped him, too. "In the first couple of months, I remember looking at my monthly CDSL statements very carefully to see the value of my investments and the disappointment I felt after getting negative returns. It was only after three months of investing that I saw some positive returns and felt a bit happy. However, I knew volatility was part of equity investing and I was only investing money that I did not need, so there was no real pressure," says Harsh, who was at that time enhancing his personal-finance knowledge.

Though two years is a short time frame, Harsh's investing experience has been positive. He still owns the funds, although he has made the smart move of switching to direct plans. He invests from Switzerland through AMC websites. The annualised returns in most of these have been in between 15 and 20 per cent. In the early part of 2017, when he was visiting India, he started SIPs in a bunch of other funds. "But I am now trimming down to five equity funds and one debt fund," he adds.

Why did he invest in those funds? Harsh has some answers. He says he chose Parag Parikh Flexi Cap Fund because the idea of value investing resonates strongly with him. He also likes the fund's international diversification and all the outreach work they do. "They have a very nice YouTube channel, where they post monthly videos about a sector or a theme or a company. I am an avid follower," he reveals.

He invested in L&T India Value Fund because although it is called a value fund, Harsh feels it's managed as a growth fund and provides some beta to his portfolio. The reason he invested in HDFC Mid-cap Opportunities is Chirag Setalvad, the fund manager. "He has been very successful even with a very high corpus for a mid-cap fund. This fund provides a mid-cap tinge to my portfolio," Harsh reasons. The young investor has DSP Tax Saver for ELSS needs and growth, while his exposure to Kotak Multicap (now Kotak Flexicap Fund) is because he feels it has a better stock selection than a passive index like Nifty.

Harsh manages his mother's personal portfolio just like he manages his. All her direct stocks are bought through discount brokerages and mutual funds through AMC websites. "We do not follow the concept of age-based asset allocation. Just because someone is close to their retirement does not mean they have to transfer everything into debt funds and see inflation eat up their life savings," he avers.

So, what goals does a youngster like him plan to achieve by investing in equity/mutual funds? Harsh says the idea of equity investments for him is to gain financial independence at a young age. He parks his emergency funds in sweep-in fixed deposits and liquid funds. For all the long-term needs, he follows a simple asset-allocation strategy. "When markets are expensive, as is the case now (2019), I prefer a slightly higher debt exposure (about 50 per cent). As markets become cheaper, the equity keeps on increasing. Ideally, if the market becomes very cheap, I will have an equity exposure of around 80-85 per cent," Harsh says.

Investing so far also has given him important lessons through experience. When he lost his father in 2016 and was really shaken, he bought an endowment plan, which was a poor choice. Quick to understand, Harsh only paid the first premium and discontinued the policy after one year.

Coming to direct equities, Harsh's first stock bought was from the pharma sector when the sector was in its downturn. He does not think his stock selection was wrong but believes he could have made the purchase in more than one tranche to bring down his average acquisition cost. "The experience led to the development of my first investing rule: never buy a stock at once, no matter how tempting it might look," he quips. His stock investing work is now much easier thanks to Value Research Stock Advisor. Harsh has built a portfolio of 18 stocks, 13 of which were taken directly from VR recommendations.

"I love the fact that after every quarterly result, VR provides a summary and its own take on the results. That saves me a lot of time and energy. While buying a stock, I have a very simple strategy. I invest the decided capital in a stock in no less than four tranches. I invest whenever the stock takes a beating due to bad results or a bad market day. And I wait for a significant time before I make the next purchase," the investor remarks.

It is not difficult to understand that Harsh admires Dhirendra Kumar and Value Research. "I believe that the only way to make money in equity markets is to keep things as simple as possible. A couple of good multi-cap (now flexi-cap) funds, maybe one mid-cap fund and one ELSS are all we need. I like the fact that Dhirendra emphasises this in almost every interview he does," Harsh says.

This story was first published in February 2019.

Do you have an interesting story about how your investment journey unfolded? Share with us on [email protected]