Silent transitions

My relationship manager at a private bank recently offered me a “metal card”; claiming it to be the most premium credit card available in India. I learnt that though globally the metal cards have been in vogue for two decades, these have become popular in India only in the past couple of years. Of course, I did not meet the eligibility criteria for the card, and also, I found it to be too ‘elite’ for my spending profile.

But this is not the point here. For the past many decades, I have been used to referring to the modern consumer credit ecosystem as ‘plastic money’. My wallet and table drawer are full with a variety of plastic cards- credit, loyalty, identity, membership, insurance, travel, etc. I considered myself privileged with so much “plastic” in my possession. Suddenly, one phone call from a 28-year-old bank executive shattered my ‘illusion’, and apprised me how underprivileged I am for being part of ‘plastic’ economy, when the elites have already moved to the stronger ‘metal’ one.

This episode also made me accept that plastic money is now becoming an integral part of the lower middle class Indian consumers, just like their peers in the western developed economies. Owning a credit card, H&M loyalty card, Metro Travel Card, Driving License, health insurance card, etc., is no longer a privilege.

To recover from this dis-illusionment experience, I tried to assess what other transitions in my life have gone mostly unnoticed. I discovered many things. Let me share some of the transitions in my investment portfolio which went largely unnoticed.

1.    My consumer sector allocation is now dominated by modern retail, telecom and ecommerce, instead of traditional FMCG.

2.    My industrial allocation is now predominantly deployed in the engineering design, manufacturing technology solutions and contract manufacturing companies.

3.    Fintech and non-lending businesses form a substantial part of the allocation to the financial sector. Even for the traditional financial businesses (Banks and NBFCs), a strong technology platform to deliver services has been the primary selection criteria for the tradition.

4.    My pharma portfolio is now dominated by healthcare solution providers (hospitals, health insurance, devices), contract research, API and domestic formulations. The traditional generic players and exporters are negligible.

5.    Value added product portfolio is my primary criteria for investing in commodities like cement, steel, industrial metals, agriculture produce & dairy etc.

6.    Import substitution gets substantially more importance in the selection process, as compared to the export potential.

7.    EPC companies (Infra builders) dominate the construction sector as compared to the asset owners.

8.    Top 100 companies are part of my passive portfolio only. The news of some company being included in MSCI indices (or exclusion) does not excite me any longer. I am spending more time discovering the companies that have the potential to migrate from the SME segment to the main board and from the smallcap to the midcap segment.