The SME market is growing rapidly, strongly believes Kresha Gupta, fund manager of Chanakya Opportunities Fund, that prompted her to start a fund focussing on small and medium sized enterprises.
In an interview with MintGenie, she explains why she chose equity over a career in taxation or auditing after becoming a chartered accountant at the young age of 21.
Chanakya Opportunities Fund I, a SEBI Registered Category II Alternative Investment Fund, was recently in the news for launching a ₹100 crore sector-agnostic SME-focused fund.
The Ahmedabad-based entrepreneur also shares a few tips for young investors and explains why they should be optimistic about equity in the long run and throw fears to the wind.
Edited Excerpts:
Can you tell me why did you start a fund focusing on SMEs?
I started with managing portfolio for my family which is into the business of textiles. I realised that there is no alternative fund for SMEs (small and medium sized enterprises) while there are SME exchanges (at BSE and NSE).
And if you examine the data, you will realise that this market is continuously expanding. While the number of companies opting for listing with SME platforms used to be around 50 in a year, it is now expected to hit around 150 this year. So, all in all, this is an untapped market.
Do you not find it highly risky to invest only in small firms as their securities are prone to extreme volatility, and the available information about these firms is very limited?
There is a huge scope in SMEs as these firms will be the mid cap and large caps of future.
Obviously, it is risky to invest in them but their market is emerging fast, as the data suggests. But you should bear in mind that one has to be a high risk-taker when it comes to equity.
How much do you plan to raise for Chanakya Opportunities Fund?
We will raise a total of ₹100 crore and then there is a green shoe option of another ₹100 crore. The sponsor has already made a commitment of ₹15 crore and I will put another ₹5 crore over and above this.
Why did you opt to become a fund manager after qualifying as a chartered accountant?
While I was completing my CA, I had no idea that I would go into equities. Although I somewhat got interested in income tax, and even worked for Vodafone Idea Ltd for two years. But I realised that it was not meant for me.
Most youngsters are moving towards technology and fintech and young investors often invest in the new age assets like cryptos. Why, then, you being a 24-year-old have chosen the conventional path of equity?
I was not interested in technology. Equity makes my blood rush and I feel good tracking the market. Even being in a job (after my CA) did not excite me much.
And moreover, when you want money to get compounded, you will have to do it via investing. Even big industrialists invest in equity through their family offices. Equity will stay 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 whereas investors who can take risk and want to generate alpha should consider SMEs.
Another suggestion is that you should stay in the market despite volatility. Sensex started at 100 (as on 1 April 1979) and now it is over 61,000 despite the dot com bubble and other crashes.
Eventually, the market is positive, so investors should be sure about staying in the market.
