13 Mar 2015 19:54 IST

I sell positive experiences: CEO, ICICI Prudential

We have made the right calls. So we have a set of happy customers, says Nimesh Shah

Nimesh Shah is no stranger to Indian investors. The sprightly and energetic chief of India’s second-largest mutual fund house, ICICI Prudential, has spearheaded a strong performance by the fund house, leaving many investors richer in the process. It is perhaps his tireless energy that helped him turnaround the fund house after taking over the reins in 2007.

“We are very proud of the fact that 100 per cent of our equity AUM has beaten the benchmark,” says Shah with a mild hint of pride. “My dharma(duty) is to beat the benchmark.” The fund house took the right call to invest in equity in October 2013 when all the economic parameters in the country were drooping.

That decision has worked in favour of ICICI Prudential with most of its funds sporting healthy returns. “Because of that call, we have a large set of happy customers,” says Shah.

The fund house played the contrarian very effectively, spotting value even as other investors were scurrying away from Indian equity. “A sovereign fund asked me, how are you able to achieve this (ability to beat the benchmark) with all your funds?” I replied, we do the opposite of what you do and that is how we did it,” says he, tongue-in-cheek.

Managing assets worth over ₹1,30,000 crore is no mean task. It would give most sleepless nights. But Shah does not appear too fazed by this onerous task. Maintaining equanimity in every situation is the key, says he. He quotes generously from his favourite Hindi song to explain this attitude.

Barbadiyon ka shok manana fizul tha

Barbadiyon ka jashn manata chala gaya

Jo mil gaya usiko mukaddar samajh liya

Jo kho gaya main usko bhulata chala gaya

The translated version means: It is pointless to mourn disasters. I converted calamities into celebrations.

Whatever I got, I took as my destiny; what I did not get, I did not dwell on. The above lines, derived from the old Dev Anand song, “Main zindagi ka saath nibhata chala gaya” is his anthem of sorts. Every day, when he returns home after work, he inevitably tunes into this three-and-a-half-minute song.

On doing business in India

Nimesh Shah thinks that the most important factor in his favour is the fact that he has to do business in India at the current juncture. “I am lucky to do business in a country where the population growth is 2 per cent, where GDP growth is 6 per cent and inflation is around 6 per cent. So I have 12 per cent nominal growth rate. Is there any other country with such a growth rate? In which other country is the interest rate expected to move lower? Which other country can boast of an increase in toothpaste consumption every year?”

Given these growth numbers, Shah believes that the medium-term prospects for India will always be good. He has numbers to support this claim.

“Look at any five-year return for India for large-cap stocks; investors would have made reasonable money.

“Our Focus Blue-chip Fund has given return of 17 per cent over the last six years. But even one year back, the fund had delivered 11 to 13 per cent returns. Even in the period between 2008 and 2013, our large-cap funds have done very well.”

Pride in his products

Being customer-centric is another important focus area for Shah. “I do not sell funds, I sell positive experiences. Only then will I stay in business,” says Shah, getting this point across.

Giving the example of the Balanced Advantage fund, he explains how the products are geared to protect investor wealth.

“This fund acts in a manner that is contrary to what the retail investors do. Unfortunately, retail investors look at the last one or two year performance and invest. “Once the Sensex crosses 30,000, they will come in droves. If the market falls 3,000 points, they will be the first to exit.”

“When the market gets expensive, this fund gets into debt and when it is cheap, it moves into equity. For customers, the grief of losing ₹5 is much higher than the joy of making ₹40. This is a fund for the common man. We try to see that they do not make these mistakes.”

Does he believe that the slowing growth in countries such as Japan, China and Eurozone, is a threat to our economy? No, says Shah. “I consider it a great opportunity for the equity market. Where will Prudential, based in London, like to invest? Yes, US is a great option.

“But you will not put 100 per cent of your funds into one country. Now, India is receiving just a trickle of the global funds. As these countries slow down, even a small increase in our share can make a big difference.”

Shah’s investments

What does he do with his savings? It all goes into the funds of ICICI Prudential Mutual Fund. “It is about going with your convictions,” says he.

“The bonuses of all the fund managers of ICICI Prudential fund house are, in fact, partly paid as units in their funds. They can take it out only after three years.” It might be akin to putting all your eggs in one basket. But Shah does not agree. He thinks that there is sufficient diversification if money is distributed across various funds.

In his leisure time, Shah likes to play with his two kids aged 14 and 16. He loves to compete with them in sports, especially badminton.

His other favourite hobby is travelling to various parts of India. And what else does he do to de-stress? Prompt comes the reply, “I do not get stressed; I love my job. When people say they are very tired, I do not know what that means.”