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By
Mr. Jaydeep Kashikar, Brainpoint Investment Centre Pvt Ltd, Mumbai
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Last October, at the end of one
investor meet, one of clients came up to me and said, "Jaydeep, in the
really long term, do not you think property gives much better returns than
equity?
My house that I bought in the late
1970s, is now up more than 200 times." I instinctively replied,
"Bas? Only 200x?"
We know all the numbers like the back
of our hands, but clients do not readily relate to them. We know that the
Sensex itself from 1979 to today has moved from 100 to 27,000 - which is 270x
in the same period that my client talked about a 200x appreciation.
She was startled with my remark, which I had
to then explain with facts and figures.
That conversation set me thinking
that for the next investor meet, we must tackle this issue of property vs
equity funds, in an effective manner.
We decided that the best way is to showcase
to our clients using their own experiences and their own data. We sent out an
email to all our clients asking them to share with us details of property
they had bought at least 10 years ago, to enable us to work out for them
their personalised comparative performance of property Vs equity funds.
Almost half our clients wrote back to
us with their property investment details. We worked out comparative
performance of their property vs performance of equity funds in the same
period (we took an average across all diversified equity funds, large cap funds
and mid cap funds).
In every single case, we were able to
demonstrate to them that equity funds would have vastly outperformed their
own property investments - which they believed were excellent investment
decisions.
On April 11, 2015, we hosted investor
meet, where the theme was property Vs equity mutual funds Vs gold. We put in
considerable effort to showcase hard data over various time periods and made
a detailed presentation.
I am appending the entire transcript
of the session that we conducted, to enable you to get a first hand feel of
not only the numbers but also the way we tried to explain to our clients.
When we came to the session where we
showcased real life property vs equity funds performance, based on actual
property experiences of our clients, the impact was immediate. When all our
clients understood that in not even a single instance, our clients' property
investments over a 10 year + horizon outperformed equity mutual funds, the
message was driven home clearly and strongly. We showcased similar numbers for
investment in gold Vs investment in equity funds, and the conclusions were
the same : equity muyual funds vastly outperformed gold.
Its less than a month since we did
this investor meet, but I already have 5 clients who have either sold their
properties or are in the process of doing so, with an intention to switch to
equity mutual funds.
You are welcome to go through the
detailed transcript of what transpired in this meet, and you are welcome to
pick up any ideas and data that you think can help you convince your clients
who are overweight in property investments, to re-allocate a portion to
equity funds.
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About the author
Mr. Jaydeep Kashikar is regarded as one of the smartest
advisors in the business across India, and is among the most successful IFAs in
India. He is a man of strong convictions, and has a great ability to transmit
his conviction effectively to his clients, and into client portfolios, which
enables him to deliver fantastic wealth creation to them. It is this skill that
has helped him succeed in an initiative that most advisors want to execute but
few are able to : he has actually managed to get every single one of the 200+
families that he advises, to appreciate that equity funds are a better
investment opportunity than property, and the manner in which he accomplished
this is so telling that his clients are now busy selling property investments
to re-allocate towards equity mutual funds.
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