Shiv Chanani's Guide to Building a Long-Term Winning Portfolio
Shiv Chanani, a seasoned investment expert, shares insights on building a long-term portfolio, focusing on midcaps, smallcaps, and the consumption theme. He addresses market valuations and global tariff uncertainties, providing a strategic approach for investors.
MidcapsSmallcapsConsumptionValuationLongterm InvestingReal Estate MumbaiJul 24, 2025
India’s demographic strength and its status as a high-growth economy provide the necessary conditions for these themes to deliver substantial returns to long-term investors. The country’s young population and growing middle class are driving demand for consumer goods and services, making the consumption theme particularly attractive.
On the issue of global tariff disruptions, Chanani points out that India’s relatively small share in global exports works in its favor. This limited exposure shields the country from major shocks that tariffs might bring. While some sectors could be marginally impacted, Chanani does not foresee a significantly adverse outcome. With ongoing global tariff negotiations progressing gradually, India is likely to reach favorable terms, similar to other major economies.
Addressing concerns about high valuations in Indian markets, Chanani draws a comparison with Mumbai real estate, which is often seen as expensive yet always in demand. He argues that instead of looking at simple valuation metrics like price-to-earnings in isolation, investors should consider them alongside return on equity and capital efficiency. More importantly, India offers liquidity and the ability for investors to not only earn on paper but also exit with real profits. This confidence is a major reason why India justifies its valuation premium.
When asked about the cash position of their funds, Chanani reveals that they are currently holding about 4-5% in cash, varying by fund. This cash level is maintained within predefined internal limits, based on market outlook and sentiment. The approach is not static; it’s a reflection of the fund house’s dynamic risk management strategy, ensuring that they remain both flexible and responsive to market developments.
Chanani emphasizes that for any investor, the first step should be understanding their investment objective and time horizon. Particularly in midcap, smallcap, or theme-based investing, a minimum time horizon of three to five years is essential, with five years being preferable. This duration allows businesses to scale and smooth out short-term economic cycles. His firm looks for companies with strong and sustainable earnings growth, capable management, and attractive valuations—key traits for building a robust long-term portfolio.
In conclusion, Chanani’s insights provide a strategic framework for investors looking to build a long-term portfolio. By focusing on midcaps, smallcaps, and the consumption theme, and maintaining a disciplined approach to valuation and risk management, investors can position themselves for success in the dynamic Indian market.
Frequently Asked Questions
What are midcaps and smallcaps?
Midcaps and smallcaps are companies with medium and small market capitalizations, respectively. They are often more dynamic and have higher growth potential compared to large-cap companies.
Why is the consumption theme important for long-term investing?
The consumption theme is important because India’s growing middle class is driving demand for consumer goods and services, making it a significant long-term investment opportunity.
How does India’s limited exposure to global tariffs benefit the market?
India’s limited exposure to global tariffs means that the country is somewhat shielded from major economic shocks, making it a more stable investment environment.
What is the significance of maintaining a cash position in a portfolio?
Maintaining a cash position allows investors to be flexible and responsive to market developments, ensuring they can take advantage of investment opportunities as they arise.
What are the key traits for building a robust long-term portfolio?
Key traits for building a robust long-term portfolio include strong and sustainable earnings growth, capable management, and attractive valuations.
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