No less than 1,900 systematic investment plans (SIPs). Investments in 97% of all equity mutual funds, barring three asset management companies. Ninety dividends a month, averaging three a day. This is the investment strategy of 75-year-old Harubhai Sanghavi. Outrageous and contrary to all investment precepts? Yes. But the Mumbai-based septuagenarian thinks otherwise.
“It started with an investment in State Bank of India Magnum Multiplier in 1992-93. I was involved with my family business of seamless pipes and had no idea about mutual funds,” recalls Sanghavi. That was then. Today, he doesn't miss a single advertisement of a new fund offer (NFO) or the re-opening of a close-ended scheme. As soon as companies make an announcement, Sanghavi gets to work, deciding how to allocate dividends from previous NFOs in the dividend option of the new fund.
He never uses the dividends for personal use as his family meets his expenses. “I have created a chicken farm. The chickens lay eggs that hatch into chickens that lay more eggs. I am not interested in redemptions,” explains Sanghavi. Such rotational investments will soon force him to request for the 40th passbook from his bank.
In each NFO , he invests anywhere between Rs 500 and Rs 1,000 in the name of his children, their spouses
and grandchildren. What is the metric for evaluating a fund? Their net asset value (NAV). Financial advisers will immediately trash the idea, after all, NAVs have no impact on net returns. But Sanghavi is unfazed: “I choose NFOs because the unit value is Rs 10. If the NAV drops below `10 after the NFO, then I continue with the SIP for another six months,” he says.
Isn’t he concerned about investing in a fund with no performance history or deteriorating value? “Mutual fund offer documents state that past performance is no guarantee for the future. Moreover, I have not incurred any loss till now. I get units at Rs 10-10.50 and sometimes at Rs 7-8 during the initial months. Then I let investments grow,” he says.
Sanghavi proves his point with facts: “During the market crash in 2008, I purchased some schemes whose NAVs were as low as Rs 2-3 and about 25% lower. Today, they have grown by about four times.”
The humungous paperwork doesn’t deter him either. Initially, Sanghavi used a broker but since entry loads were scrapped, he deals with the fund houses directly. Helping him track his investments is a special spreadsheet prepared by his granddaughter.
“She has used icons of the 37 asset management companies. I click on them and all the SIPs open up on my computer screen,” he says. Wary of electronic records, he also keeps print outs of all investments since 2004-05 in a thick ledger.
Sanghavi has upturned the idea that age shrinks risk appetite. He is only focused on generating better returns than FDs, debt or liquid funds. The only thing about dividends that upsets him is the distribution of surplus. “Why do fund houses preserve maximum surplus and give out meager dividends. If the NAV rises from Rs 10 to Rs 23, they offer 1 paisa or 20 paise as dividends. Why not more? They must define the formula to calculate dividends,” he says. But that won't stop Sanghavi from collecting more of them
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