MONEY TODAY’s idea of a cover story on estate planning caught me unawares. What on earth could the stock markets with their “here and now” attitude offer serious thinkers on how to bequeath their wealth in the best possible way? Plenty, I thought, as I got around to making a list of investments that I’d like to “die for” and leave for my successors to enjoy.
But first, do appreciate that these investments must ideally never be touched by you, which implies that you park an appropriately small fraction of your wealth here. So if you are lucky enough, you will not have to dip into this part of your wealth during your lifetime. Get a fix on exactly how much you will put into this “immortal” portfolio, and remember that this depends on your investing style, age and level of prosperity. Here’s the portfolio that your grandchildren will remember you for:
• My top pick is India’s gift to the global investing community— Infosys Technologies. Narayana Murthy and Nandan Nilekani won’t be around, but the values that they have hard coded into Infy’s DNA are not likely to wither away in another 90 years. Growth, durability, values, sustainable business model, national pride— they’re all here.
• Like software services, there’s an ingredient in the physical world too that’s not likely to lose its sheen for another hundred years. And that is steel. Show me a management that’s more capable, competitive, ambitious and responsible than Tata Steel? Attitude and integrity obviate the need for metrics. Buy Tata Steel today; there’s no need to wait for a downturn in the steel cycle when you are investing for 50 years or more.
• People tell me that consumers are turning increasingly fickle with their favourite brands. But brand-loyal customers will fight fiercely for many years in several product categories to protect this important part of your immortal portfolio. Consider the quasi-monopoly enjoyed by brands like Gillette, Titan, Wills, Horlicks, Nescafe and Colgate, and extrapolate it into the future.
To be fair, the risks against brands are many. Bad managements, new inventions, nimble- footed competitors are only a few of them. But it looks to me like the owners of the above brands will survive, endure, and indeed prosper for another hundred years. If you are not sure about how to allocate weights to these brand leaders, you could opt for the largest listed brand omnibus in India: Hindustan Unilever.
It’s difficult to resist the temptation of projecting a quantitative analysis of the future of these companies. But it’s easy to see why this would be a meaningless exercise. You are just placing your bets on in these businesses, their successive managements and the brands in question to multiply your wealth over the next half a century or so.
(By Dipen Sheth, Head of Research, Wealth Management Advisory Services)
dipen@wealthmanager.ws
