Aashish Somaiyaa, chief executive officer (CEO), WhiteOak Capital AMC, is very gung-ho on real estate, with 50% of his investment portfolio in this asset class. However, that was not always the case. “This exposure was built from mid-2020 till mid-2021 and it was a counter-cyclical decision. In the last 10 years, real estate did very badly but it went through a big churn, consolidation, and under-investment and is set to change,” said Somaiyaa during an interaction with Mint as part of our annual series Guru Portfolio.
This series was started in 2020 to gauge the impact of the covid-19 pandemic on the personal investments of leaders in the financial industry. This year, industry leaders tell us how their investment portfolios fared in the past two years, what has changed in their investment strategy, and the lessons they have for investors.
Somaiyya’s real estate holdings are a mix of physical residential and commercial properties. “I don’t see how I can be bullish about economic prospects without being bullish on real estate from hereon.”
No gold and debt
Before including real estate in his portfolio in 2020, Somaiyaa had been a 100% equity investor. He has never invested in debt except for parking cash in the bank account for emergencies and doesn’t look at gold as an investment option.
“I don’t think gold provides any investment purpose other than to cushion downside or cut amplitude of volatility when economic and equity market conditions are very bleak. If I can live with my portfolio value getting depressed and I’m fine without downside cushion to ensure I don’t miss on upside participation of equity on recovery, I don’t see why I should own gold as an investment,” he said.
However, Somaiyaa was quick to add that disciplined, systematic and risk-averse investors should not look up to his investment strategy as, unlike many, he can stomach extreme conditions in the markets and in his portfolio. He added that he reviews his asset allocation once a year or maybe longer, which most of the times is not deliberate or pre-planned. “I cannot call myself disciplined,” said Somaiyaa.
High risk investor
Equity makes up 50% of Somaiyaa’s portfolio, half of which is in small and mid-caps. On being asked whether he prefers direct investing or fund managers, he said he would do both if not for regulations.
“Due to regulations as well as company policies, I invest only with WhiteOak in listed equity and external managers in case of private equity.”
He doesn’t have international equity exposure yet but plans to invest in global emerging markets (GEMs) which WhiteOak will launch later this year.
Additionally, Somaiyaa is always on a lookout for opportunistic investments and maintains a home equity account for the times he needs to arrange funds for such opportunities.
As part of real estate investment, Somaiyya also dealt in REITs, or real estate investment trusts, briefly with a medium-term investment horizon and he realized that it is a better investment strategy over debt.
“Between the end of 2020 and 2021, REITs delivered well over 10%, which included yield and appreciation. I have withdrawn and redirected the money into equity.”
Somaiyaa understands the importance of the involvement of one’s spouse in family finances too well and hence, has made his spouse a signatory for all their investments. “Everything owned by my family is owned solely by my spouse or my family trust and no decisions are made without my spouse’s involvement. I personally do not own anything,” he said.
Explaining the rationale behind this, he added “If something untoward happens to me, I don’t want her calling my chartered accountant, advisor, the bank, insurance agents, mutual fund or brokers. I can guarantee that she will be in control and my entire immediate family will be absolutely secure financially in such a situation.”