Three factors Saurabh Mukherjea tracks to identify stocks to invest

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Edited excerpts from the interview: Life has taught me that investing goes through phases. There are times when making money seems easy, and you must stay grounded. And then there will be times when returns are elusive, where you shouldn't lose hope.

When things are going well, think about what could go wrong; when things are tough, focus on what could go right. Especially in a volatile market like India, this mindset is crucial to deliver stable long-term returns. The second thing I have learnt over the past two decades is to try to diversify across uncorrelated asset classes.

For example, the Indian and the US stock markets have very low market correlation. Over the past couple of years, we have diversified our investments, including our clients' portfolios, between India and our Global Compounders Portfolio to lock into this low correlation effectively. When diversifying, the goal isn't to lower returns.

Many in India invest in government bonds for diversification, but while they offer low correlation with the market, they also significantly reduce returns. Instead, diversifying with assets–such as American equities–that are equally attractive in terms of long-term returns but have a low correlation helps maintain strong returns while reducing risk and volatility. I have learned that true diversification within a country portfolio requires more than just spreading investments across sectors.