indian investment company like warren buffet’s

POSTED BY bharat shah ON February 10, 2011 8:47 pm COMMENTS (8)

is there any indian investment company, boasting investing following warren buffet’s investment philosophy? i understood , buffet seems against mutual fund investment, as their managers have to follow market trends for short term resuls to investors and also have to follow regulators’s rules for (over) diversification.

8 replies on this article “indian investment company like warren buffet’s”

  1. bharat shah says:

    @ramesh
    thank you for your really guiding comments. a little clarification: the gain in my portfolio i am talking is for from dt.010410 to today. i think, major indices are down by more than 1% and midcap index more than 5%. and so feel satisfied! am i again mistakening?

    1. Ramesh says:

      Oh!
      Though sensex is flat from 1st april till now, including today’s gains!!
      you are correct.

  2. Ramesh says:

    Thanks for providing a quite comprehensive info about MF.

    My thoughts:
    1. providing a cap of 10% in a particular stock for any MF is, in my opinion, is not bad considering the fact that MF is supposed to have a diversified portfolio.
    2. If you think you know a fund manager’s style to be to your own liking and have confirmed the “story” about the company, you can yourself buy that stock and get the overall exposure of that stock in your portfolio to be much more!! I try to do it that way. That way, you can get your own portfolio and leave out the management fees, but on additional cost of brokerage!
    3. YoY, the sensex has given about 10% return. So if you are trailing by 3-4% is not bad in my opinion!!
    4. Well, it is time to buy a lot. and I have always maintained that an international exposure is a must in this global / glocal economy. Templeton India Equity Income is probably the best equity fund with international flavor (nothing in relation to its attaining 5 star rating on valueresearch site).
    5. for a long term investor, short term corrections / bear markets are a boon for loading up a lot of shares/MF units. 🙂

    Thanks for the compliment also.
    Ramesh

  3. bharat shah says:

    @ramesh
    happy to receive your response indeed! but before going to reply, i bring to your kind notice some restrictions on mf investment into a company as under just for information:
    1. A mutual fund, under all its schemes taken together, will not own more than 10 percent of any company’s paid up capital carrying voting rights.
    2. A scheme may invest in another scheme under the same asset management company or any other mutual fund without charging any fees, provided that the aggregate inert-scheme investments made by all the schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5 percent of the net asset value of the mutual fund.
    3. A scheme shall not invest more than 15 percent of its NAV in debt instruments issued by a single issuer which are rated not below investment grade by an authorized credit rating agency. Such investment limit may be extended to 20 percent of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of Asset Management Company. This limit however, is not applicable for investments in government securities and money market instruments.

    4. A scheme shall not invest more than 10 percent of its NAV in unrated debt instruments issued by a single issuer and the total investment in such instruments shall not exceed 25 percent of the NAV of the scheme. All such investments shall be made with the prior approval of the Board of trustees and the board of Asset Management Company.
    5. A scheme shall not invest more than 10 percent of its NAV in the equity shares or equity related instruments of any one company. In sector specific funds, the investment in a single scrip shall not exceed the weightage of the scrip in the representative sectoral index/sub-index of any or 10 percent of the NAV of the scheme whichever is higher. This limit however, will not apply to index funds because in that case the exposure to a company’s stock would depend on the weightage of the stock in the benchmark index.
    let me first confess , i am still learning and no concrete strategy. i think, if you know the fund’s philosophy and it is suited you, there is enough diversification even for 1-2 mf schemes, as it consists of at least 10-15 stocks and 4-5 sectors. one should not be only after immediate /near term highest gain in nav, but better to have good businesses through selected mf for long period. still for my portfolio, i am reducing no. of funds. and your guess is right , as still i am holding both you mentioned, and off loaded reliance rse , and included templton india equity income and hdfc equity recently. i have also started asset allocation excercise.overall i am somewhat self satisfied by having still 6-7% gain in this financial yr. todate.
    however i like to have portfolio of well researched good shares bought at fair prices , limited in numbers, for long term , better than having equity mf portfolio, but selection is a problem., and so the query above.
    for 5 no. of funds recommended, as remembered, he asked for 5 funds.
    always like your views.

  4. bharat shah says:

    @ramesh
    frankly i don’t have exact knowledge of regulator’s restriction on individual company’s/sector’s holding for mf schemes, but have impression that there are some. as such , i think, some mf schemes , if i am not mistakening again, such as idfc premier equity and iciciprue focused blue chip are holding less than 20 companies’ shares. with my limited reading of warren buffet, i am of impression that he is against mf ,and over diversification for superior return. i may be wrong.

    1. Ramesh says:

      Overdiversification does not lead to superior return. I agree.

      Therefore, getting more than 3 Indian MF is also overdiversifcation. this was in regard to your other recommendation of 5-6 funds.
      what do you think? I think even 1 or 2 funds are more than enough. 🙂
      If you think this is correct, which 2 funds will you recommend – i think you will recommend qltef and idfc premier equity will be your choices. 😉
      Mine are templeton india equity income and reliance RSF.

      Ramesh

  5. Ramesh says:

    @Bharat,

    What are the regulator’s rules for (over)diversification, if any? I am not aware of any.

    There are a number of funds with about 25 stocks, which for me looks ideal for management.

    thanks.
    Ramesh

  6. Jagadees says:

    @ Bharat shah
    In listed space, i guess TATA investment corporation limited will qualify as holding company focussed on creating long term value creation. It invests in both quoted and unquoted securities, bonds etc.
    Do guys know any other company?

    Regards
    Jagadees

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