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In this insightful episode, Divam Sharma, Co-Founder of Green Portfolio, joins Harshita Dudeja, Market Writer, Outlook Business, for an in-depth conversation on the current Indian market scenario, global economic shifts, the emerging investment opportunities in India, and an interesting thematic fund centred around ethical investing - Shariah Fund.
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00:00India will be a sweet spot for investing where you would have positive trade relations as a country
00:06as well as you would want to invest into the manufacturing.
00:09FII is coming and investing heavily into India is inevitable
00:12and that is definitely going to happen.
00:14It might take three months, it might take six months.
00:17I don't think there's any challenge to it
00:18and that will ensure that the markets will rise like anything.
00:22India has manufacturing as well as consumption.
00:24What will happen more?
00:25Your 100 rupees will be zero.
00:27But the upside is unlimited.
00:28I think markets are very productive assets
00:30rather than keeping your money in cash
00:33or rather than keeping your money idle in unproductive assets.
00:37I think if we channelize, if we are able to channelize money into the markets for a long term
00:42and in terms of the economy it is good, in terms of generating higher returns it is good.
00:46So if you look at ethical funds in India,
00:49there are only a couple of ethical mutual funds.
00:52Mr. Trump would either be written in golden words or in black words.
00:56Such kind of a tariff war the markets have not seen.
00:59A lot of people used to come to us and say that
01:01hey, I do not want to invest in sin stocks.
01:03What we are doing in the Sharia Fund is similar to what we are doing otherwise.
01:07If the world is going to end, it is going to end.
01:08If the world is going to continue,
01:10I think it is a great time to invest in Indian markets.
01:14When facts change, I change my mind.
01:28John Maynard Keynes, this statement rings quite true right now.
01:32With a turbulent geopolitical situation at play,
01:35alongside tariff mayhem and back-to-back flip-flopping policy stances,
01:39making estimations around what's coming ahead has become an increasingly difficult task.
01:46For investors, it's like playing chess in an earthquake because there's so much happening.
01:51We will be diving into all of this today,
01:53but beyond this chaos, we will also explore a very interesting thematic fund.
01:58Have you ever heard of Sharia-compliant fund?
02:00Now, for sure, it might sound philosophical and religious at first,
02:04but what happens when we combine it with the stock market,
02:08when we combine it with the concept of profit?
02:11It's an interesting contrast.
02:13You see, when we think about investing,
02:16the first thing that comes to our mind is profit.
02:19But what happens to our ethics?
02:22What happens to our belief when money is on the table?
02:25We have a very special guest with us today who manages such kind of fund.
02:29And the surprising part,
02:30it's not just limited to one religion or philosophy or belief.
02:33Welcome to the third episode of Bulls in Bazaar.
02:36And today we have with us Mr. Devam Sharma,
02:38the co-founder of Green Portfolios.
02:40Welcome to the show, sir.
02:41Thank you so much.
02:42And thank you so much for coming, actually,
02:44because it's perhaps not a very great time going on for D-Street.
02:48It seems like we are in a very chaotic time.
02:51With Trump imposing tariffs on nations,
02:54we might see another full-fledged trade war.
02:56And considering China set for that retaliatory play,
02:59some are even saying that we might already be in one.
03:03So, uncertainty is high, volatility is high.
03:07How are you seeing the current market movement?
03:10See, definitely tricky times.
03:12This is something which we have not seen in the last 100, 200 years at least.
03:18And something new, whichever, whenever it comes,
03:20it actually creates volatility in the markets
03:24and it ensures that there are corrections in the markets.
03:28So, this is a tricky situation, definitely.
03:31Every day we wake up, we pray that,
03:34hey, Trump should not lose his mind.
03:37Trump should not lose his mind today.
03:38So, we are all praying for him to be sane all this time.
03:44But if you look at it, I think it is pretty interesting times for India as well.
03:50Right?
03:51So, if you look at how...
03:54It is a direct war primarily between China and US.
03:58And everybody, if you talk about in the market,
04:03are thinking that, hey, this is going to be positive for India.
04:06So, ultimately, we are going to be beneficiaries in terms of
04:10being a country which has manufacturing assets.
04:14And we being primarily focused, as a fund house,
04:18we being primarily focused on manufacturing since very inception.
04:24We are looking at it very positively.
04:26So, primarily, you cannot time the market,
04:29you cannot catch falling knives.
04:30But you should look at it as an opportunity
04:35because these are times when you get very good assets for cheap.
04:40Right?
04:40And you are actually getting good assets
04:44where there is good potential growth in the future
04:47and you are getting comfortable valuations.
04:50So, definitely, whenever you are investing in the markets,
04:54even if you hold one stock,
04:56at all times, you carry risk.
04:58Sometimes, the risk is high.
05:00Sometimes, the risk is low.
05:01Right?
05:01At these times, the risk is slightly higher.
05:05But a lot of it is panning out.
05:07Definitely, if the things get worsened,
05:10there could be a lot of impact on India on the short term.
05:14But I think if you look at it from 6 months down,
05:1712 months down or 24 months down,
05:20it should be a great time when we see in hindsight,
05:23it should be a great time for
05:24anyone who is doing investments in India.
05:27So, patience is the key here for investors.
05:30Exactly.
05:31So, coming to your AUM,
05:34you have a very interesting theme-based fund,
05:36the Green Ethical Portfolio or the Sharia Fund.
05:39Can you give our viewers some brief around how it works?
05:43See, as I told you that we work very closely with our investors.
05:47So, we keep on talking to them, trying and understanding what requirements they have.
05:53So, ethical portfolio, if you look at these,
05:57there are a certain set of people who have certain beliefs,
06:00but they still want to invest in the markets.
06:02And I think markets are very productive assets.
06:05Rather than keeping your money in cash or rather than keeping your money idle in unproductive assets,
06:13I think if we channelize, if we are able to channelize money into the markets for a long term
06:19and in terms of the economy, it is good.
06:22In terms of generating higher returns, it is good.
06:25So, if you look at ethical funds in India,
06:29there are only a couple of ethical mutual funds,
06:33but in terms of PMS,
06:35participating in the broader markets,
06:38there was none.
06:39So, we keep on evaluating what type of products we should offer and should be very niche.
06:45So, we found out that opportunity and we talked to a few investors and then we identified that,
06:52hey, this is a very big opportunity because a lot of people want to invest in the markets.
06:56They want to participate in the growth story of the economy,
06:59but they are not able to do that as they do not have an opportunity.
07:03As well as some investors were doing it in beyond the ethical funds,
07:08who have those practices or beliefs,
07:11but given an opportunity, they would want to shift to those areas.
07:18So, ethical fund restricts certain sectors,
07:23like there are certain sectors which are prohibitive to invest.
07:28So, it restricts certain sectors.
07:30So, there are two, three criteria.
07:33There is a sectoral criteria where there are certain sectors which are restricted
07:37and should not be invested in and then there are certain ratios,
07:42financial ratios which are looked at while investing, right?
07:46Then basis that there is a screening of companies, right?
07:51Some companies are compliant, some companies are not compliant.
07:54Then after that, even despite being compliant,
07:58some companies might have income from say interest or traditional financial systems.
08:04So, those in income are purified through donating the money, right?
08:10So, what see we as fund managers, we do our research as we are doing for everyone.
08:17There is an institution which gives us that scholarly advice on which stocks are compliant and not compliant.
08:24We are partnered with them exclusively and basis that we provide a portfolio of compliant stocks for that set of belief, right?
08:35And basis that like at the end of the year,
08:38we provide a donation or a dividend purification or a purification ratio
08:42where you can like donate that kind of like money which was not earned as per the principles
08:49and you can purify your income.
08:52So, this product has done wonders for us.
08:56A lot of people, a lot of Indians who used to live in Middle East or other countries
09:01and earning very well, they did not find opportunities to invest in India.
09:07But now, we are getting people to get back that money to India to invest, right?
09:14A lot of money is being channelized from unproductive assets to productive assets.
09:17So, and that too, we are participating in the broader markets, right?
09:22We are giving them opportunity to like participate across the markets, right?
09:27Otherwise, a few of the funds that were there, they were only large caps, right?
09:31So, I think ethical belief is for, could be for anyone, right?
09:38It could be for Jains, it could be for Muslims, it could be for a lot of other people, right?
09:43It is on your belief.
09:44A lot of people, in fact, a lot of people who are like Agarwal's or Baniya's also used to come to us
09:51and say that, hey, I do not want to invest in sin stocks.
09:54I do not want to invest in non-vegetarian stocks.
09:57So, everybody has beliefs, right?
09:59But we as market participants, our thought process has always been that, hey, how do
10:05we ensure more of participation and how do we ensure more of financial independence?
10:12That's where if you look at as a fund house, what we are doing, we are very closely working
10:16with our investors and trying then and understanding their needs.
10:21So, what is the average rate of return of Sharia fund as compared to other non-Sharia funds?
10:26See, we have significantly outperformed.
10:28If you look at other funds, a lot of our investors, you talk with our investors also,
10:37they come and thank us that, hey, you have given us this opportunity, right?
10:42And if you look at the alpha that we have created versus other funds, it would be double
10:48than what they are generating, right?
10:51So, and these are markets, right?
10:53So, it might be down or up.
10:55But what I am trying to say, at least double kind of alpha is what we are generating to
10:59the other funds that are available.
11:01So, we are not only giving that opportunity, but we are also trying to do justice with that.
11:11So, it is a traditional research that we do and we are topping up with the rules that are there
11:18or the compliant stocks that are there.
11:20So, what kind of sectoral stocks do you actually focus on in the Sharia fund?
11:25What we are doing in the Sharia fund is similar to what we are doing otherwise, right?
11:30But there is just that there are certain set of compliant companies or non-compliant companies
11:35we are taking off from the portfolio and investing in the rest.
11:39So, it is the same philosophy, same thought process, but there is a filtration other than
11:43the filtration that we do fundamentally.
11:45Okay.
11:46So, any top stocks, not stocks, but sectors that you focus on?
11:51So, top sectors, as I said, we have been focusing on a lot of manufacturing place and we like pharma,
11:59we like chemicals, we like auto components, we like defense, we like electronics.
12:05So, a lot of manufacturing focus is there in our thesis, but the primary core where we
12:12are focusing, if you say one word, I would say manufacturing, right?
12:17So, I think that is the space where you would find very simple businesses, but very scalable
12:25businesses coming at very low valuations.
12:30So, you would find a lot of great companies which could do well from here.
12:34So, we are fairly diversified across like 8-10 sectors, but the core theme, if you would
12:42say, would be manufacturing.
12:45So, stock markets at the end of the day, it's about generating profits.
12:50And even if I take a bit of religious perspective, isn't it unethical to take interest?
12:55I mean, correct me if I am wrong, but how do you maintain this thin balance of staying
13:00ethical without compromising on returns?
13:03See, it is like, see, our investment philosophy is the same.
13:09We do not deviate from our investment philosophy.
13:12We have seen different market cycles.
13:14There are times where versus the markets we have not done well.
13:19There are times when versus the markets we have done exceedingly well.
13:22But we believe that there was that ad, right?
13:26Like when you are standing in a queue, that queue is not moving.
13:30And then you move to the other queue and that queue starts moving.
13:33Right?
13:34So, ultimately, you have to, if there is no fundamental impairment or a complete shift in philosophy
13:41that you are provocating, you cannot move with the market movement.
13:44So, your philosophy has to be the same, right?
13:47We keep our philosophy as consistent.
13:50The ethical fund or other funds, the philosophy is the same, right?
13:54It's the same stocks.
13:55It's the same screening process that we do fundamentally.
13:59But on top of it, there are certain stocks which certain sect of people would not want to
14:05invest in.
14:06There are certain SIN stocks, there are certain other stocks which certain people do not want
14:10to invest in.
14:11So, we take them out of the portfolio or we do not invest in that.
14:15But the criteria or the overall broader theme or the broader space that where we are working
14:21is the same, right?
14:22So, it is not difficult at all.
14:24If we are making alpha in the general portfolio, the ethical portfolio will also make alpha because
14:30it is almost the same stocks minus a few stocks.
14:33So, can you give our viewers some number like with what AUM you started and where does it
14:39stand now?
14:40So, we started off with like a few friend and family kind of investments back in 2018.
14:50And like when we started, it was just 20 crores odd.
14:57Today, so like before the market fall, we were sitting at 950 crores AUM and 350 crores
15:03AUA.
15:04After the market fall, I would say we are sitting at around 700 crores AUM, around 250
15:09crores AUA.
15:10So, somewhere around overall around 1000 crores of assets is what we manage.
15:15And we are also starting off with an AIF where we have certain commitments.
15:20And what I believe is that, hey, the kind of sticky investors that we have, the kind of
15:27top ups that we are getting and the kind of valuations we are at, right?
15:31So, this business, if you look at journey from zero to 100 is the toughest, 100 to 500 is
15:38slightly easy.
15:40500 to 1000 is slightly more easy.
15:42Then it gets easier, right?
15:43Because the compounding starts to happen, right?
15:46It's a very sticky business.
15:47A lot of investors that are with you, are with you, right?
15:50They, who have seen cycles, made money, they are with you.
15:53So, I think like very, very soon you would see us like multiplying from here.
16:01We are targeting like say around 2000 to 3000 crores kind of an AUM over the next one to
16:07two years.
16:08The kind of valuations we are sitting at, the kind of the top ups that we have gotten, the
16:13cash that we have deployed at these valuations, we are very confident of that.
16:17So, if I talk about foreign investors, the banners of unpredictability are quite high.
16:23Even during the last MPC meet, we saw RBI governor acknowledge the fact that global uncertainties
16:29remain high.
16:30So, in all this macro turbulence, where do you see foreign investors FII is heading
16:35to?
16:37See, I was looking at a fact, I was, we were looking at MSCI index just recently.
16:43So, around COVID, India's weight on MSCI index was somewhere around 8%.
16:47And today, if you look at MSCI index, we are sitting somewhere around 20%.
16:52So, at this point in time, if you look at FIIs, they do not have an option other than India,
16:57which is a large economy, which is a growing economy, to invest, right?
17:01So, it is clearly visible that they cannot, with the trade war and with the kind of uncertainty
17:09between US and China, you cannot increasingly invest in China.
17:13India, and you will have to diversify.
17:16And India, even if you look at March, India's weight on the MSCI index increased by almost
17:230.8 BIPs.
17:24So, we are going to see increase in the investments of FIIs in India.
17:35So, and even if you keep it aside, why were FIIs going out of India in the first place,
17:43right?
17:43FIIs were going out of India because they felt that the market are expensive.
17:49They had other options that, hey, earlier what used to happen?
17:52Like, you have India, India is looking expensive, hey, let's move to China.
17:57Hey, China is looking expensive, hey, let's move to third country.
18:00Let's move to Brazil.
18:01So, now, it is more of a realignment of the global trade where the globalization is moving
18:08towards bilateral trade agreements.
18:11And what this is going to do is you are going to invest in nations where primarily you have
18:17bilateral trade agreements with.
18:19And if you look at US, which is the biggest FII investor, you would have more alignment
18:26towards countries like India.
18:28Even if you look at other countries also, like India will be a sweet spot for investing
18:34where you would have positive trade relations as a country, as well as you would want to
18:39invest into the manufacturing.
18:42So, if you look at this overall situation, I think this is very positive for the FIIs.
18:50Even if you look at yesterday's numbers on the FII, FIIs were invested heavily on cash segment
18:57as well as F&O.
18:59So, I think the valuations have corrected the situation such that where you have to actually
19:06participate in India.
19:08The FII is coming and investing heavily into India is inevitable.
19:13And that is definitely going to happen, it might take three months, it might take six
19:17months of volatility and uncertainty where the FIIs might hold back their horses.
19:22But that is, I don't think there's any challenge to it and that will ensure that the markets
19:30will rise like anything.
19:33So, in fact, we are very positive on this opportunity and we think that the market should
19:38rise sooner than later.
19:41As we announce the bilateral trade agreement with US, we should see more of FIIs coming
19:46in and more of markets starting to rise and the second half should be very good for the
19:49markets, we think.
19:51Even if we believe in India's growth story, which seems quite optimistic, markets at the
19:57end of the day are moody creatures.
19:59Do you think at some level, market sentiment has started to outweigh technicals and fundamentals?
20:06See, definitely yes.
20:07If you look at the number of, like the numbers that are coming in mutual funds, the participants,
20:14a lot of participants have shied away from the markets of the last few days in particular.
20:20Definitely the sentiments have taken a center stage and this is what happens, right?
20:25The retail investors in particular, when everything is going good, they would be the biggest like
20:33buyers in the market and when everything goes bad, they would be the biggest, like they would
20:39go out of the market or they would not participate.
20:42I think it should be the contrary, right?
20:44For we as fund managers, also, we try and educate our investors where we talk to them
20:50that, hey, these are the times when you invest, right?
20:52These are opportunities which you get in five years, seven years, right?
20:57Like last opportunity we got in COVID was the opportunity which everybody like repents,
21:03right?
21:03If you, hey, if I would have bought this thing, if I would have bought this thing, I would
21:07have made this much money.
21:08So, these are times when the investments that you do would make most of the money, right?
21:17Definitely the fear is at the highest at this point in time.
21:22The technicals and everything else have taken a backstage, right?
21:27Momentum stocks are not doing that well and people are looking on Trump news on a daily
21:35basis than looking at technicals at this point in time.
21:39But I think if the world is going to end, it is going to end, right?
21:43If the world is going to continue, I think it is a great time to invest in Indian markets,
21:50considering the kind of manufacturing assets that we have and considering the kind of consumption
21:56that we have.
21:57If you look at US, they are consumers.
21:59If you look at China, they are manufacturers.
22:01But India has both, right?
22:03India has manufacturing as well as consumption.
22:05So, yes, the fear is there.
22:08But we as investor, if you look at, it's a lot of psychological aspect that comes into play
22:15while investing, right?
22:16So, when you look at it from that angle, I think this is a wonderful time to invest.
22:21Yes, you cannot catch falling knives, but you can do a staggered investments.
22:26And that's what retail investors or like even H&I investors should do at this point in time.
22:36And that's what we are seeing from like talking to a lot of H&I investors as well.
22:40A lot of H&I investors, when we talk to them, they are in fact topping up their investments.
22:45So, I think that thing is very positive as a development, right?
22:50Like if you look at 5 years back or 10 years back when the markets were not that deeply penetrated,
22:57whenever the markets used to fall, it were the FIIs who used to command the markets.
23:01Now, FIIs are on the backstage.
23:04And we who understand the economy, even the corporates, they are on the center stage, right?
23:09So, even despite short term, there could be some sort of uncertainty or apprehension
23:18amongst the investors or fear amongst the investors.
23:23I think people who are deep pockets, people who understand the markets now have seen the cycles,
23:30they are very positive on this opportunity.
23:33And we are seeing that kind of inflows also in our fund in these times.
23:38Okay, so fear often takes the better of investors.
23:41Just a casual question at hand.
23:42How do you convince retail investors or common investors that no, we don't want to be scared?
23:48Trust the depth of the market.
23:50Trust the fundamentals.
23:51I am sure it's not an easy task because as a person who has just entered in the market,
23:55I won't deny the fact that yes, fear sometimes breaks.
23:59What if it's going and it's going and it hits the bottom?
24:02See, look, at this time, you have to be very open and with your investors and you can say it right away.
24:12You can't say anything else.
24:14So, I mean, we are so candid that what will happen more and more?
24:20You can be zero of 100 rupees.
24:21But the beauty of the stock market is that maximum thing that can happen is 100 rupees is zero.
24:29And that is also a hypothetical situation, right?
24:32It's not going to go to zero, right?
24:34But the upside is unlimited, right?
24:36So, you have to be patient.
24:39And that you can't do anything in that.
24:42If you don't have patience, then you will never reward the market.
24:45So, we do a lot of hand-holding with the investors, talk to them.
24:52Because any investor, even a small investor or a large investor,
24:57the money that they are investing is very hard-earned for them, right?
25:00And it is very important for them.
25:03So, whatever money they are investing, we work very closely in terms of trying to hand-hold them in these times, right?
25:11Because when everything is rosy, everybody is, like, super aggressive.
25:15But when things turn, people tend to get skeptical, right?
25:19And what we have seen is, we have seen COVID times, we have seen other times when we have hand-held people.
25:28When they spend one year, two year, three year, and when they go out of that cycle,
25:32they become advocators of you.
25:34Whenever we meet after that, like people who we have hand-held, like, somewhere around COVID,
25:42and they have seen growth after that fall.
25:45These people are now, whenever they meet, they top up their investments.
25:50We meet only over coffee, just chit-chatting other stuff, then the markets, right?
25:57Then the actual what is happening in this talk or that.
26:00So, then it becomes more of a comfort area.
26:02So, we have to bring those investors in the comfort area.
26:05And definitely, when you are starting up, you will be more apprehensive, right?
26:09So, it is a lot of hand-holding, and that is very much required.
26:14And second thing is that, whatever we are investing is, you have to be confident.
26:18You are sleeping over that stock.
26:19You have to be very confident in what you are doing, right?
26:22So, we are very confident of what we are investing.
26:26We are keeping a cushion of valuations.
26:29India is a strong economy.
26:30The growth is visible, right?
26:33You have to give those pointers to your investors and take care of their apprehensions.
26:40You have to talk it out, right?
26:42And you have to be very candid while talking it out.
26:44So, talking about the cyclical slowdown phase witnessed during the second half of last fiscal,
26:51how do you see the current market positioning?
26:54See, definitely, if things turn more ugly from here, right?
27:02There could be dumping coming in from China.
27:05There could be, like, a lot of investors or a lot of consumers could defer their investment decisions
27:13or consumption decisions.
27:14A lot of people might lose their job.
27:17So, like, there could be, definitely, the sentiments could turn ugly also, right?
27:25That we have to be wary of, right?
27:28Like, these are uncertain times.
27:29The market has not seen such kind of a time.
27:31Had it been, like, say, so, when war happened, markets had seen wars, right?
27:37Like, nowadays, when war are happening, markets do not move, right?
27:41So, when COVID happened, markets had not seen that kind of a pandemic for ages, right?
27:46So, then that reacted so much.
27:48But when it came out, now, pandemics, like some pandemics, small pandemics, were seen and markets did not react, right?
27:57So, this is a situation which the market, such kind of a tariff war, the markets have not seen, right?
28:03So, the reaction will be there, the sentiments will go for a toss, there will be volatilities.
28:11But what I want to point out is that if the money has to go somewhere, it has to be Indian markets, right?
28:20And the kind of trade relations or the overall geopolitical relations that India has created over the years is amazing, right?
28:30Like, the kind of relations we share with each and every country.
28:34Like, we are not in bad relations with most of the large producers and consumers and large economies in the world.
28:42I think that is going to be very positive.
28:44And see, the world is not going to end consuming.
28:47The world is not going to end overall, right?
28:49It is going to continue.
28:51And when it is going to continue, the manufacturers will be there, the consumers will be there, the business will be there.
28:59It might be a blip, it might be a fall.
29:01Yes, Q1, Q2 results are uncertain.
29:04And we feel that that uncertainty in guidance could come up in the Q4 numbers which are being announced.
29:15That guidance of negativities might come up in Q1, Q2.
29:19But after that, I think it should go very well, right?
29:24And what market does is market discount, like market starts reacting before the thing actually happens, right?
29:33When the visibility of a bilateral trade agreement would be there, when the visibility of these things getting over would be there,
29:39markets would start moving up before that, right?
29:42So, I think, yes, the sentiment could go for a toss.
29:48Yes, there could be, things could get more ugly from here.
29:52But if you look at this, it is an amazing opportunity, right?
29:56It, like, it is giving you a three months, six months kind of an opportunity to invest.
30:02You might take a staggered approach to invest in this, in this times.
30:06What I would also like to point out is that, see, valuations have corrected.
30:11India's consumption is very strong, right?
30:13The kind of middle class population, aspirational population that we have is also, again, very strong, right?
30:19So, domestic manufacturers who are going to cut down China imports,
30:24domestic manufacturers who are going to get opportunities to export to Europe or US.
30:30See, US and Europe are also not going to completely shut their consumption.
30:35They are going to continue their consumption, right?
30:37It might be 10% fall in their consumption, 20% fall in their consumption.
30:42But the rest of the consumption they are going to do.
30:45And if they are going to consume, see, China is definitely a large participant in their, like, supplies.
30:53But the market share of China should go down and India's market share should go up, right?
30:57And that's where India as an economy is also focusing.
30:59If you look at the kind of efforts and the kind of lists that are coming out here,
31:03these are the sectors which where we are going to focus for exports, right?
31:07There are certain sectors where we have focused over the last few years.
31:10If you look at the last four or five years, we have focused on PLI.
31:14We have focused on make in India.
31:17There were 22 PLI sectors where we focus, right?
31:20We focus on pharma, chemicals, auto components, defense.
31:24A lot of sectors where we had know-how, where we were still importing from China.
31:30We try to take that business.
31:33And we are in now in that time that that base has been made, right?
31:39And I think that the manufacturing assets that we have,
31:42even if US says that, hey, today I am going to start manufacturing in US only.
31:47It is going to take years to create those manufacturing assets, right?
31:52But the countries who have manufacturing assets other than China are going to significantly benefit, right?
31:58And the valuation of these manufacturing assets should significantly benefit.
32:03And I think India has significant manufacturing assets,
32:06which you cannot easily create over the next four or five years.
32:09So at least for the next five years, India should get business.
32:13And there should be a shift, right?
32:15And the consumption is not going to end.
32:17It is going to reduce by some points, right?
32:20So India should benefit.
32:22How much cash are you holding right now?
32:24See, we started off in September.
32:27So we are like investor-investor mindset, right?
32:30When we invest or we reallocate the funds,
32:34we think that, hey, if we are getting things for cheap, we will invest.
32:38If we are getting things for expensive, we will sell and we might not reallocate.
32:42So when we were in September, we were not finding opportunities.
32:47So we were sitting at, even in the new allocations, we were sitting at 50% cash.
32:51Even more than that in certain situations.
32:53But as we talk about today, like what happened was then markets started falling.
32:58We never knew what Trump is going to do.
33:01This is something which is beyond imagination, right?
33:03You cannot imagine what Trump is going to do tomorrow, right?
33:08So what he did on 2nd April was completely unimagined.
33:13So when we saw the market fall, when we saw the market fell, like in Jan, Feb,
33:18we actually started investing back, right?
33:23And we found a lot of opportunities coming for cheap, right?
33:27When the markets were 35P, we were investing in mostly average stocks, which were 20, 21P.
33:33When the markets fell, we were investing in like 10, 12P.
33:38We were getting companies at 10, 12P.
33:40And that was very comfortable.
33:42Now we are also getting companies at single digit P.
33:44I think so.
33:45So we look at stocks, then a lot of noise across the macros, right?
33:51So, and I think that has paid us well.
33:53So at this point in time, we are primarily more invested than sitting on cash, right?
34:01Like we might have 4-5% cash, but we are considering the opportunities that we have at this point
34:07in time, we are more greedy in terms of buying assets, right?
34:10Because the kind of valuation they have come to, if you'll hold them for one year or two
34:16years, you'll definitely going to make huge money, right?
34:19These are like times when a lot of valuations have gone down to COVID levels.
34:23And we have seen what has happened in 2021, 22 in terms of the kind of returns that people
34:28made.
34:29So we are more greedy in terms of our allocation at this point in time.
34:33And we are allocating.
34:35But in terms of our fresh allocation, like say someone who's topping up their investments,
34:40giving us fresh funds.
34:42In those cases, we are like staggering the investments in say 1 to 4-5 months kind of a
34:49time horizon because the situation is, we'll keep on evolving and is volatile.
34:55But in terms of our existing allocations, we are very much on sitting on stocks.
35:00So are you still betting on small caps?
35:02See, that is where we have made most of the money in our lives.
35:06And that is where we want to be, right?
35:08I think small caps, mid caps is where you make most of the alpha, but it tests most of your
35:13patience and it requires most of your discipline.
35:16And we as fund houses, that is our DNA.
35:19And that is where we differentiate, right?
35:21So definitely we are going to do that.
35:23And we continue to like a lot of companies in small and mid cap.
35:29It's not, it's a, I think it's a very stock pickers kind of a market now, right?
35:33You have a lot of, like if you look at one year back, two years back, anything and everything
35:39was running, right?
35:40Even like, like you had seen a lot of SME companies and a lot of companies which came
35:46up with IPO, they had no business model or completely like someone having a Yamaha dealership,
35:53someone having a Aata Chakki coming up with IPOs.
35:56So those were different times, right?
35:59Like, but you definitely, it's a stock pickers market.
36:02You have to look at fundamentals.
36:03You have to look at red flags.
36:04You have to look at valuations.
36:06You have to continuously like keep on talking to the management, keep on understanding the
36:12business cycles, keep on understanding if there is any impairment because of the
36:16tariff war or trade war.
36:18But you have to, like, I think this is the space where the most of the alpha is going
36:22to be made.
36:24Second, a lot of manufacturing assets, a niche manufacturing assets, and we like, tend to
36:30like manufacturing assets.
36:31We tend to like, in fact, we tend to like a lot of assets which are exporting to countries
36:37like US.
36:38So, like, in fact, in our portfolio also, we, like say someone who is getting orders from
36:45Tesla, even if a small order, we tend to like those things.
36:49So, like, the kind of manufacturing, such kind of manufacturing companies are mostly
36:55small cap and mid cap.
36:57Ironically, not a lot of large cap are very, very niche manufacturing assets.
37:02So, if you want to find good manufacturing assets, a lot of them are small and mid cap.
37:07So, we definitely are investing in the space and we are definitely going to continue doing
37:14that.
37:14If I talk about the new technologies that are coming in the markets, like AI and algo trading,
37:21investors seem more active than ever in chasing profits.
37:25So, are you kind of adopting similar technology or have you already?
37:28See, adopting technology is very much, everybody should do that.
37:34AI is, again, inevitable, that is going to come in everybody's life.
37:39And we are also looking at AI for various aspects, like our research aspect or getting more data
37:47points or for our marketing functions or a lot of other functions, right, for content creation.
37:54So, we are looking at AI, leveraging that as an organization.
37:59But if you say that we be proactive in terms of like just buying and selling basis AI or
38:07just playing momentum, see, that is not our DNA.
38:10So, we have kept our DNA as investors who are investing in fundamentally strong companies
38:17with no red flags and who are investing for at least 2x, 3x kind of returns.
38:25If I am investing for 10%, 20%, yes, I might play momentum.
38:29But if I am investing for at least 2x, 3x kind of returns, I have to have patience.
38:33And I cannot be, have very high churn ratios, right?
38:39So, as a portfolio, our churn ratios are not that high.
38:43And yes, we are going to continue trying to leverage technology on an ongoing basis for
38:51our fundamental research.
38:52But in terms of evolving our trading strategy or changing that basis, what the markets are
38:59doing, I don't think so.
39:01Even if you look at the data that came, 95% of the traders are making losses.
39:06And I think the 5% are the ones who are long-term investors.
39:12So, talking about the Sharia Fund again, are the fundamentals of a green portfolio and Sharia
39:18Fund the same or is it just the nomenclature that you use?
39:22See, green portfolio, when we created this name, this name has multiple like areas, right?
39:31There's a news that came out that, hey, Adani is investing $1 trillion in its green portfolio.
39:38See, we got very excited like Adani is investing $1 trillion.
39:41So, now green has evolved as a like as sustainability and other areas as well.
39:47But when we started off, we took this name as like markets in green and markets in red.
39:52So, green signifies positive, positivity and that's where we started off, right?
40:00So, in the Sharia Fund, the fundamentals are definitely the same, right?
40:04As I said, it's the same philosophy.
40:06But Sharia came out or Ethical Fund came out just recently.
40:12Like, it's been one, one and a half years.
40:13But as an organization, we are there since many years now, more than six years after the license.
40:21So, it is particularly like different, different things, right?
40:27So, green is for positive growth.
40:30A lot of, in fact, if you correlate, a lot of Ethical Funds were not giving green returns.
40:34So, we are trying to bring those green returns into this space.
40:38Very interesting concept, I must say.
40:41I think we have reached the end of our podcast.
40:44So, do you have any kind of advice or message for investors who are probably in pain after Trump's back-to-back move every single day?
40:54So, everybody is in the same boat, right?
40:57We are in a market where the valuations have significantly corrected and these type of valuations you rarely get.
41:04Our economy is strong.
41:06Our financials of the companies that we are investing in or that are available in the market, a lot of companies are very strong.
41:15Our consumption is strong.
41:16And if you talk about very large funds across or FIIs, they are very bullish on India.
41:24So, overall, we are sitting in a very good situation.
41:30And I think rather than seeing it as a threat or rather than seeing it as a fear, investors should see it as an opportunity.
41:41And take this opportunity with both hands.
41:45Because the world is going to continue, the economy is going to continue and the consumption is going to continue.
41:50There is a realignment and that realignment is positive for India.
41:54So, it is great, exciting times.
41:57Rather than getting fearful, it should be a positive sentiment that you should carry.
42:02And you should invest with a discipline and with a long-term mind frame.
42:06Okay.
42:07Thank you so much for giving out your time, sir.
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