Why Scripbox’s Risk-Taking CEO Adheres to Asset Allocation Principles

Scripbox’s algorithms typically build portfolios by selecting a mix of large- and mid-cap funds with consistent long-term track records, with more emphasis on recent history. For the debt portfolio, according to Scripbox, the algorithm selects funds that perform consistently better than the CCIL Broad TRI Index, an index that tracks the top 20 traded Indian government bonds based on volume and number of transactions.

Shinghal shared his portfolio details for the special annual Mint: Guru Portfolio series, which began in 2020, to understand the impact of the pandemic on the personal investment portfolios of leaders in the financial services space.

The series looks at how respondents’ investments have fared, the changes made to their portfolios, and the investment lessons they have for investors.

Asset Class Views

Shinghal has around 60% of the portfolio’s exposure to equities. He believes that equity helps beat inflation and build long-term wealth. 10% of the equity portfolio is invested abroad for diversification. He also sees this international exposure as a hedge against dollar fluctuation/depreciation to meet his future financial target.

“My daughter wants to study abroad, so investments abroad help hedge the dollar,” she added.

Although Shinghal has a 20% allocation for real estate (in the form of properties), he does not believe in it as an asset class considering the cost of buying and selling the property and its illiquid nature.

He also does not believe in including the house as part of the net worth, saying that it is not an appreciable asset that can be used for emergency purposes or to generate returns. But he is positive about new emerging asset classes that are tied to real estate (eg REITs).

Regarding his angel investments, he said: “As an entrepreneur, I support entrepreneurs. So, I have some angel investments.”

Bring

Shinghal strongly believes in putting his asset allocation principles into practice.

First, he identified himself as a high-risk investor based on risk profile. In addition, he identified his financial goals as retirement and his daughter’s education.

Based on the investment horizon available for each objective, the asset allocation of the portfolio has been determined, which is reviewed each year based on the requirements.

For example, he said he recently moved some stock investments into a fixed-income portfolio to meet his daughter’s education requirement that comes in the next few years. Since Shinghal is exposed to angel investing, we asked what his advice would be for someone who also wants to invest in startups.

So, he said, “if the financial advisor or wealth manager says that a portion of one’s portfolio can be allocated to riskier assets, that’s fine. But I think it should not be more than 10%. Before you invest, you should make sure that your financial goals, such as retirement and children’s education, are well secured.”

He also said that people will be better off making use of angel investment platforms while investing in startups.

He added that “as an individual, it is unlikely, in most cases, that the investor will be able to have a complete understanding of the startup, the entrepreneur and what they are doing. So it’s best to find a platform that can do the diligence.”

(Note to readers: Throughout this series, we try to highlight basic principles of personal finance, such as asset allocation, diversification, and rebalancing. We do not suggest replicating Shinghal’s asset allocation, as personal finance are specific to the individual and differ from person to person).