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Sunday, April 28, 2019

How well do politicians manage their Wealth?

How well do politicians manage their Wealth? 

Do they invest in real estate, stocks or fixed deposits? How much is their net worth? Here’s a look at the investing and wealth management skills of eight candidates contesting the 2019 Lok Sabha elections. by Riju Mehta  

On the face of it, there’s little in common between gearing up for an election and grappling with a financial portfolio. 

Yet, in case of both power and wealth, it’s not the ease with which you acquire, but the deftness deployed to manage them, that determines how long you can sustain these.  While it’s easy to spot a winner or loser in an election, doing the same in the financial scape is not. 

Has the political candidate diversified well or has he stashed away all his wealth in real estate? Is there a stack of fixed deposits lining his portfolio or is there a good balance of equity and debt? Is he holding too much cash and are the liabilities overwhelmingly large? Wealth management is usually a private affair laid bare by politicians only before the elections, when they file their affidavits and give a break-up of their assets and liabilities. It’s also a good chance to assess their financial acumen.  

ET Wealth looked at the affidavits of eight candidates from different political parties—Bharatiya Janata Party (BJP), Indian National Congress (INC), Dravida Munnetra Kazhagam (DMK) and J&K Peoples Democratic Party (PDP) —and analysed their money skills. 

Rahul Gandhi

The Congress President displays a clear skew towards real estate and equity, with a high 63.4% of the portfolio in property. Of the 33% in equity, nearly 32%, or ₹5.19 crore, is in mutual funds, a financially sound move. Prudence is also visible in holding only a minuscule 0.7% in cash and 0.1% in gold and jewellery, making most of the money work for him. Gandhi’s net worth, at ₹15.16 crore, is on the lower side compared with the portfolios of other candidates listed here. Another surprise is that the major portion of debt of ₹39.8 lakh is being held in the PPF account. The net worth of ₹15.16 crore takes into account his liabilities of ₹72.01 lakh. Overall, a savvy investor.

Hema Malini

The dream girl of yesteryear has a nightmarishly skewed portfolio. With a net worth ₹108.59 crore, it has a humongous 88.4%, or nearly ₹101 crore, stashed away in real estate. 

Equity, on the other hand, gets the least exposure at 0.2%. While debt should be higher at her age, it forms a small part of the portfolio (lack of break-up makes it difficult to calculate the exact amount). The liabilities are also high at ₹5.75 crore. The portfolio could easily do with a greater diversification.

Shashi Tharoor

The Congress candidate’s linguistic flair is matched well by his love for liquidity. A high 15.8% of the portfolio is held as cash, a distinctly bad decision. The good news is that a high 36.8% is in equity in the form of mutual funds. This is also one of the highest equity exposures among the listed candidates. 

However, the 2.8% allocation to realty, among the lowest, could be increased, as could the debt exposure, which is in the form of fixed deposits and bonds.

Nakul Nath

Son of Congress leader Kamal Nath, Nakul has one of the bulkiest portfolios, with a net worth of ₹656.8 crore. Being a beneficiary in a trust that owns shares in various companies, his allocation to equity is very high. 

The portfolio also includes real estate at 6.3%, while cash is a low 1.4%. The portfolio demands a greater diversification, with higher allocation to debt and real estate. The good thing is that he doesn’t need a contingency corpus, given the colossal size of his assets.

Jayaprada Nahata

Another contestant with a penchant for real estate and cash, Jayaprada Nahata has almost 67% of her portfolio in the former. The cash holding of ₹56.24 lakh can earn her better returns if invested in mutual funds. 

The equity exposure of 3.1% is entirely made up of stocks, while the debt allocation is extremely low at 0.1%. The former actor also has huge liabilities of ₹1.7 crore. Word of advice: reduce realty exposure and invest the high cash component.

Kanimozhi Karunanidhi

Daughter of the former Tamil Nadu chief minister M. Karunanidhi, Kanimozhi displays the worst skew towards debt among the eight contestants here. 

 As high as 50.8% of her portfolio, or nearly ₹15 crore, has been locked up only in fixed deposits. She also has one of the highest liabilities at ₹1.92 crore. The remaining portfolio is distributed among real estate at 29.6%, while equity is a low 6.8%, all in the form of stocks. 

The cash holding of ₹1.18 crore can easily be put to better use by investing in mutual funds and the liabilities can be brought down. The net worth is reasonable at ₹28.15 crore.

Mehbooba Mufti

The PDP President and former chief minister of Jammu & Kashmir has the most sparse portfolio as well as lowest net worth among the candidates listed here. Of this, nearly 62% is in real estate and the rest in cash. Neither is a good move, considering that a high amount is idling in bank, while there is no exposure to either equity or debt. 

The good news: no liabilities. The portfolio is screaming for diversification, even though managing it is currently a breeze!

Baijayant Panda

The Odisha veteran has a high net worth of ₹47.7 crore, and one of the most balanced portfolios among the given set of politicians. He also has the highest equity exposure of 56.8%, with a manageable mix of 11 stocks and nine mutual funds. 

Real estate at 26.2% qualifies for a good allocation too, while the entire debt of ₹6.79 crore is in the form of fixed deposits. Cash and gold are at desirably meagre levels of 0.6% and 0.1%, respectively. Possibly the best portfolio!
How well do politicians manage their Wealth? Reviewed by Investment Guru on April 28, 2019 Rating: 5 How well do politicians manage their Wealth?  Do they invest in real estate, stocks or fixed deposits? How much is their net worth? Here’...

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