Samosa, Sushi, Or Dal-Chawal: Radhika Gupta's Take On Portfolio Allocation

Imagine entering a restaurant filled with an array of enticing dishes. Sushi, with its exotic flair, promises adventure; samosas, comforting and familiar, evoke nostalgia; and then there's dal-chawal, the reliable staple that offers both nourishment and satisfaction. Just as we navigate menu choices, we must also make thoughtful decisions about our investment portfolios. Should you chase the allure of exotic options or stick with the dependable choices that have historically provided steady growth?

In the context of investing, dal-chawal represents the foundation of a well-diversified portfolio—investments that are stable and reliable. This core can consist of large-cap mutual funds, the Public Provident Fund (PPF), or government bonds, which provide steady returns with minimal risk.

Edelweiss MF's MD & CEO Radhika Gupta emphasises the significance of having a solid core in your portfolio: "I think 70-80 percent of your portfolio should be like dal chawal. And you can replace chawal with roti, but a bulk of what we eat is grains, sabzi, and dal. All this pickle and chutney stuff is great, but it should only be a small part of your portfolio."

She adds, "When I make dal chawal, it’s not about whether it's passive or active funds—it’s a philosophy. Dal chawal is what should be core to your portfolio. It’s stuff that is not seasonal, easy to digest, time-tested, and can last over time." This philosophy resonates with findings from a 2024 study by the Securities and Exchange Board of India (SEBI), which revealed that 65% of retail investors in India prefer stable, long-term investments over high-risk speculative assets. A strong core portfolio allows investors to navigate market fluctuations while ensuring long-term growth.

Samosas could symbolise mid-risk, mid-reward investments—those that add zest to your portfolio without overwhelming it. These could include mid-cap stocks, sector-specific mutual funds, or balanced advantage funds, which offer higher potential returns compared to large-cap stocks but come with greater risk.

Gupta notes, "There are so many parallels you can draw between food and investments. Actually, there are so many parallels between life and money in general. Good investing practices and good life practices are broadly kind of the same." This insightful analogy frames how our approach to investing should mirror the care we take in choosing our meals.

For Indian investors, the samosa strategy might involve allocating 20-30% of your portfolio to funds targeting high-growth sectors like technology or renewable energy. While these sectors are poised for growth, caution is necessary, as sectoral volatility can pose challenges. According to a CRISIL report in 2024, mid-cap mutual funds in India generated returns of over 18% on average but with significantly higher volatility compared to large-cap funds.

Sushi—flashy, exotic, and undeniably tempting—represents high-risk, speculative assets such as cryptocurrencies or niche thematic funds. These investments can yield impressive returns but are also vulnerable to significant fluctuations. Gupta warns, "Exotic investments, like alternatives or PMS, can be tempting, but they should be left as exotics. You don’t want to overindulge in them, just like you don’t want to eat sushi every day. They should only be added if they bring real value to your portfolio."

Furthermore, she cautions against the common misconceptions surrounding New Fund Offers (NFOs): "It is our job to launch NFOs because we have categories and a business to build. But it's your job as a consumer to decide when to buy in, just like you decide when, where, and how much to eat at a restaurant. The worst reason to buy an NFO is the ₹10 NAV — it's a myth. There is no ₹10 magic!"

For Indian investors, cryptocurrencies have gained immense popularity, evidenced by a 2024 Global Crypto Adoption Index, which ranked India first in cryptocurrency adoption despite ongoing regulatory uncertainties. While some investors have realised significant gains, the Reserve Bank of India (RBI) has repeatedly warned about the speculative nature of these assets. In 2022, Indian investors collectively lost over ₹1,500 crore due to cryptocurrency volatility.

The temptation to chase sushi-like investments due to FOMO (fear of missing out) is prevalent, but without a solid understanding of these markets, the risks can easily overshadow the rewards. A SEBI study from 2024 found that nearly 75% of retail investors in high-risk assets like cryptocurrencies and NFTs did not fully understand the risks involved.

The key to a successful investment portfolio—like crafting the perfect meal—is balance. Overindulgence in dal-chawal can lead to missed growth opportunities, especially for younger investors with time on their side. Conversely, too much sushi can result in significant losses during market downturns.

A 2024 survey by Morningstar India revealed that diversified portfolios with a 60-70% allocation to stable investments (like large-cap stocks and debt funds) and 20-30% in growth-oriented assets (like mid-cap funds or sector-specific funds) outperformed more concentrated portfolios by 5-7% over a five-year period. This underscores the effectiveness of a balanced approach.

Ultimately, building wealth resembles creating a well-balanced meal. Dal-chawal—the reliable, stable investments—should form the foundation of your portfolio. Adding a few samosas—growth assets with moderate risk—can provide excitement, while sushi—exotic investments—should be enjoyed sparingly, with a full understanding of the risks involved.

As Gupta aptly puts it, "Ultimately, we all love a good bowl of dal chawal. My favorite is jeera rice and pure ghee, and I’m very particular about the tadka. And when you’re sick, that’s the best thing to eat."