How Motilal Oswal’s Pratik Oswal makes his money grow
Premium- Oswal swears by the ‘invest and forget’ mantra, invests close to 100% of his savings in equities
I was just 15 years old when I read the most complicated book ever; Theory of Investment Value by John Burr Williams." That, perhaps, explains why Pratik Oswal is head of the passive funds business at Motilal Oswal Asset Management Company Ltd. But, where it concerns investing strategy, he likes to keep it simple: invest and forget. Oswal, who is also the CEO of Glide Invest, shared his portfolio details and investing style for the special Mint series — Guru Portfolio.
As an investor, he identifies himself as a minimalist, which is pretty much evident in his portfolio. “I, essentially, invest close to 100% of my savings in equity, and it is mostly in one large equity fund which has been running for the last several years," he said. Oswal revealed that his equity fund is on the active side, as the fund house didn’t have a prominent passive business back then.
In the financial services industry, where most experts have exposure to debt, commodities and real estate, Oswal could be considered an outlier. He responded that his high tolerance for risk and non-tolerance of complexity has led him to build a portfolio that is based on just one asset. However, he doesn’t recommend investors to follow suit. “Most people may not have the sort of risk tolerance that I have. I would definitely recommend asset allocation to every investor," he said.
Oswal says his penchant for avoiding complexity has a lot to do with his family, especially his father Motilal Oswal, founder and chairman and managing director of Motilal Oswal Financial Services Ltd.
“Growing up, the first money lesson I got was the importance of being frugal. Also, I consider myself lucky that I was introduced to the concept of long-term investing, when I was 13-14 years old," he said.
Though Oswal says that he intends to stick with the one-asset strategy, his portfolio has a small exposure to alternative assets as well, which he calls his “legacy investments". He holds small investments in crypto assets, and international stocks and funds.
“I was working in San Francisco in 2016, and one of my friends was in Coinbase. Since I was looking to apply for a job there, I thought that investing in crypto would help impress the recruiter. Unsurprisingly, it did not work. However, after that, I’ve never bought crypto. Plus, I still don’t fully understand it and hence stay away from it," he said. Along with crypto, international stocks and funds are less than 0.5% of his overall portfolio.
Oswal believes that asset allocation is what drives investment returns— this strategy has delivered good returns over the long-term. Over the past one year, his returns have been largely flat.
Oswal is “super bullish" on India and doesn’t want to diversify the portfolio. However, he would like to explore startup investment in the future.
Oswal doesn’t have an emergency fund and invests any extra cash that he gets. “Whenever my savings account goes over a certain threshold, the excess amount gets automatically transferred to my mutual fund portfolio. I don’t really have a lot of cash and I’m always going equity at all times," he said.
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Oswal loves to read books, a hobby that he picked up from his father. He has just finished reading Antifragile: Things That Gain from Disorder.
Wealth, for him, means having better access to smarter people, with a lot more knowledge than you have.
“If you’re running a ₹50 crore fund, you will probably get access to an analyst with a big bank, whereas a ₹500 crore fund will get you in touch with the head of research. But if you’re a ₹5,000 crore fund, you talk straight to the CEO. I think that’s the big advantage of money. And that’s what motivates me to build more wealth and create more wealth for investors," he said.