The Massachusetts Institute of Technology (MIT), home to several noble laureates, is adopting a unique and contrarian approach towards its India investments.
The university, ranked number two in the global higher education index and registered as a foreign portfolio investor(FPI) in India, is investing in companies which are smaller in size and where few other foreign funds are willing to invest.
MIT is also holding on to its bets irrespective of market movement, data compiled by Moneycontrol from stock exchange filings show. This is in a stark contrast to foreign funds which largely stick to the top 50 or 100 companies for investing.
MIT owns stakes in at least 30 Indian companies and its India portfolio is worth around Rs 8,100 crore (approximately $1 billion), data compiled by Moneycontrol shows.
A bulk of these stocks were purchased between 2017 to 2022 and the holdings have remained mostly unchanged.
For instance, the company has a 9.86 percent stake in building materials company Everest Industries. Everest has a market cap of about Rs 1,400 crore and FPI holding in the company is 10.49 percent, which means other FPIs (excluding MIT) own just 0.63 percent.
Similarly, MIT owns 6.7 percent in Calcom Vision, a Noida-based company that provides professional lighting solutions. The company has a market cap of just Rs 165 crore and other FPIs excluding MIT hold 0.73 percent, Moneycontrol data shows.
Similarly, MIT owns 6.93 percent stake in Antony Waste Handling Cell where rest of the FPIs put together own 4.4 percent.
All leading universities in the US are recipients of endowments or donations from various benefactors. MIT invests these endowments in two pools and returns on the investment are used to provide scholarships, maintenance of the university among other expenditures, according to its 2023 annual report.
There are about 11 universities registered in India as FPIs, NSDL data shows. These include Cornell University, University of Cambridge, Duke University and University of Notre Dame.
The Indian portfolio of MIT throws up two broad investments trends: companies fitting in the area of sustainability and emerging stocks in technology.
Thane-based Antony Waste Handling Cell, for instance, specialises in waste management, while Calcom is into professional LEDs, considered greener alternatives for lighting.
MIT also owns a 3.22 percent stake in Fairchem Organics, which works on procuring waste from vegetable oil refineries and recycle it into valuable chemical products.
Another key trend in MIT’s India investments is in companies in the emerging technologies sector. MIT’s most valuable India stake is in KPIT Technologies, which focuses on developing solutions for self-driven cars.
MIT owns 3.11 percent stake in the company valued at Rs 1,126 crore at close on November 18. The university also owns 4.14 percent in Delhi- based Newgen Technologies which works in artificial intelligence. It also picked up a 1.26 percent stake in online ticketing firm Yatra Online.
Market participants say foreign universities and endowments generally prefer safer investment opportunities such as fixed income and index buying in equities. However, MIT adopts a different approach.
“MIT’s investment policy is based on the primary goal of generating high real rates of return without exceptional volatility,” MIT’s 2023 annual report said. To generate high real rates of return, the investment policy favours equity investments over fixed income instruments and is heavily weighted toward less efficient markets.
“MIT primarily invests through external fund managers, allowing the Institute to access the best investment talent globally,” the report said. By identifying a wide variety of top-tier investment managers with specific competencies, MIT can construct a broadly diversified portfolio while accessing deep sector expertise, it said.
The total value of MIT’s global investments stood at $24 billion as of June 30, the university said in an October 11 press release.
According to the MIT Investment Management Company (MITIMC), the entity that invests on behalf of MIT, the university prefers to work with emerging fund managers who have unique ideas.
According to its website, 64 percent of fund managers it picked had less than a three-year track record and 41 percent of them managed less than $25 million in assets.
In contrast, other universities have chosen to work with global behemoths to manage their India portfolios.
Cornell University and University of Texas have opted for Boston-based Acadian Asset Management, which manages assets worth over $100 billion globally.
Similarly, The Regents of The University of California has hired State Street Global Advisors who manage assets worth $4.1 trillion.
California University has hired Dimension Fund Advisors, who manage over $500 billion worth of assets, for one specific fund, data from NSDL shows.
MIT does not disclose its specific investments or name fund managers who partner it.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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