Diversify your portfolio - invest in blue-chip netas

Jug Suraiya

The canny Indian market player is now increasingly investing in art. Indian artists like M F Husain and Akbar Padamsee have, of course, long been commanding record prices at international art auctions and have established themselves as tried-and-tested blue-chip portfolio additions for high net worth individuals (HNIs). But now the smaller investor can also play the art market through the mutual fund route: speciality MFs buy and sell works of art - both by well-known artists as well as promising newcomers - and at the end of a stipulated period declare dividends, which some analysts feel could well outperform more conventional scrips.

With the markets worldwide in a jittery mood, investors are looking at new ways of portfolio diversification. Gold has long been a favourite hedge against market volatility. Real estate is another old stand-by, and there are mutual funds which enable people to buy into baskets of assorted properties. But now new avenues of investment are being explored, including vintage wines and rare brands of scotch whisky, though in such cases there is always the temptation literally to liquidate one's portfolio.

Surprisingly enough, however, no one has yet thought of trading in the one commodity of which there is no dearth in this country: politics. Everyone in India (apart, perhaps, from politicians themselves) bemoans the fact that our politics and many, if not most, of our politicians are incorrigibly corrupt.

Everyone (and this includes politicians as well) admits that this corruption is probably inevitable given the necessity to fund party - and individual - coffers, particularly at election time. For obvious reasons, the repeated suggestion that political parties and independent candidates be funded by industrial and commercial corporations, there by bringing some amount of transparency into election expenditure which is a root cause of corrupt politics, has not worked.

Would you, as a corporate CEO, like your company to be seen to be taking political sides by funding a particular party or person? Suppose the rival candidate comes in and, out of an understandable sense of retributory pique, uses the powers of his office to make it impossible for you to do business in his constituency? What would you tell your - also understandably piqued -shareholders? That you only did it because you believe in honest politics? Get real.

However, such vengeful repercussions might be obviated if political parties and individual politicians were to list themselves on a new NSE: the Neta Stock Exchange. They could then raise legitimate funds from a legitimate market through the IPO route which would attract investments from a wide cross-section of financial institutions as well as individuals. This would help to dilute the equity of enmity: when a neta wins an election, he would not seek revenge on those who had funded his rival for the simple reason that those investors had also, through prudent portfolio management, invested in him, so punishing them would be tantamount to killing the goose that lays the golden eggs.

Like all other corporate entities listed on the other bourses, a politician listed on the Neta Stock Exchange would in order to raise money for election purposes have to make public his prospectus: i.e., how much profit he hoped to make for his investors (through the usual system of kickbacks from contractors, scams, etc) during his tenure of office. Individual investors and fund managers could then create balanced portfolios, based on expected returns on investment, P/E ratios, risk factors, etc.

True, politics (and politicians) would continue to be corrupt. But at least voters - who would also be investors - could now hope to get a share in the spoils through dividend payouts, which would, of course, be tax-free. And who knows? A Neta Stock Exchange might well eventually lead to that consummation often wished about our polity: a two-party system. The two parties, naturally, being the Bulls and the Bears.
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