The SME market is growing fast, is the belief Kresha Guptafund manager of Chanakya Opportunities Fund, which led her to start a fund that focuses on small and medium-sized enterprises.
In an interview with MintGenieshe explains why she chose stocks over a career in tax or auditing after becoming a chartered accountant at age 21.
Chanakya Opportunities Fund I, a SEBI registered Category II alternative investment fund, recently made headlines for launching a €100 crore sector independent SME focused fund.
The Ahmedabad-based entrepreneur also shares some tips for young investors, explaining why they should be optimistic about stocks in the long run and throw fears overboard.
Edited snippets:
Can you tell me why you started a fund that focuses on SMEs?
I started managing the portfolio for my family, which is in the textile business. I realized that there is no alternative fund for SMEs (SMEs) while there are SME exchanges (at BSE and NSE).
And if you look at the data, you will realize that this market is constantly expanding. Where the number of companies that opted for listing on SME platforms used to be around 50 per year, this year it is expected to be around 150. All in all, this is an untapped market.
Do you not think it is very risky to invest only in small companies, as their securities are subject to extreme volatility and the information available on these companies is very limited?
There is huge scope in SMBs as these companies will be the midcaps and largecaps of the future.
It is clear that investing in them is risky, but their market is rapidly emerging as the data suggests. But you have to keep in mind that you have to be a high risk taker when it comes to equity.
How much do you plan to raise for the Chanakya Opportunities Fund?
We collect in total €100 crore and then there is a green shoe option from another €100 crore. The sponsor has already made a commitment of €15 crore and I will post another one €5 crore on top of that.
Why did you choose to become a fund manager after qualifying as a Chartered Accountant?
When I was finishing my CA I had no idea I was going into stocks. Although I became somewhat interested in income tax, and even worked for Vodafone Idea Ltd for two years. But I realized it wasn’t for me.
Most young people are moving into technology and fintech and young investors often invest in new age assets such as cryptos. Why then, as a 24-year-old, did you choose the conventional path of fairness?
I was not interested in technology. Stocks make my blood beat faster and I feel good following the market. Even having a job (after my CA) didn’t really interest me.
And furthermore, if you want money to be compounded, you have to do it through investing. Even large industrialists invest in stocks through their family offices. Equity will remain forever.
What advice would you give to early investors?
Those who are early investors should not invest in SMEs. They can invest in blue chips and mid-caps, while investors who can take risks and want to generate alpha should consider SMEs.
Another suggestion is that you should stay in the market despite the volatility. Sensex started at 100 (as of April 1, 1979) and is now over 61,000 despite the dotcom bubble and other crashes.
Ultimately, the market is positive, so investors need to be sure to stay in the market.
These are some tips from ace investor Benjamin Graham.
