Saurabh Mukherjea, the founder of Marcellus Investment Managers, has taken a decisive step to shield his wealth from domestic volatility. In a move that mirrors the advice he provides to his clients, Saurabh Mukherjea has moved half his personal portfolio out of India, maintaining a strict 50-50 split between Indian and global investments for the past three years.
For a prominent figure in Indian asset management, the shift is more than a simple hedge; it is a signal. Four years ago, Mukherjea held 70% of his personal wealth within India. The decision to reduce that exposure stems from a combination of stretched domestic valuations and a growing concern over the structural health of the Indian consumer.
This pivot reflects a broader strategic realignment at Marcellus. Even as the firm continues to seek growth within the subcontinent, it is increasingly steering investors toward global diversification, leveraging platforms like GIFT City to make overseas investments more tax-efficient and cost-effective.
The stress points of the Indian middle class
The impetus for this shift began roughly two years ago during the research for the book Breakpoint. Mukherjea and his team identified a troubling trend: the Indian middle class, long considered the engine of the nation’s growth, is under severe stress. According to the firm’s findings, real wage growth has remained stalled for five to six years, and job creation has failed to maintain pace with the workforce.
Adding to this fragility is the rise of speculative trading. Mukherjea points to a staggering trend where retail investors are losing an estimated $10 billion to $11 billion annually in futures and options (F&O) trading. This erosion of household savings, coupled with stagnant wages, suggests that domestic consumption—the bedrock of many Indian equity portfolios—is heading for a meaningful slowdown.
This analysis led Marcellus to quietly reposition its flagship Consistent Compounder portfolio (CCP). The firm has gradually reduced its weight in consumption-linked stocks and lending companies, shifting those resources into businesses that do not rely on the local consumer’s wallet.
A strategic pivot toward exports and ‘China-plus-one’
Rather than betting on the internal Indian market, Mukherjea is now prioritizing export-oriented businesses. This strategy is designed to capitalize on the “China-plus-one” shift, as global supply chains diversify away from China to mitigate geopolitical risks.
The firm has increased its exposure to manufacturers and supply chain partners, specifically naming Divi’s Laboratories as a key example of this approach. By focusing on companies that earn in foreign currency, Marcellus is positioning its portfolios to benefit from a weaker rupee and expanding free trade agreements.
Mukherjea has been explicit about his playbook for the near term: if the markets experience a relief rally, he intends to utilize that liquidity to further reduce domestic consumption exposure and accelerate the move into manufactured goods exporters. This pivot is not limited to flagship funds; it is similarly playing out across the firm’s small and midcap portfolios.
Asset Allocation Shift: Personal Portfolio
| Timeline | Indian Assets | Global Assets | Primary Driver |
|---|---|---|---|
| Four Years Ago | 70% | 30% | High domestic growth confidence |
| Current (Last 3 Years) | 50% | 50% | Valuation stress & consumption concerns |
The ‘Mystery Position’ and banking risks
While the move toward exports is a long-term structural bet, Mukherjea is also preparing for a more immediate downturn in the banking sector. He revealed that Marcellus is currently building a position in companies that stand to benefit from a rise in non-performing assets (NPAs) within the Indian banking system.
While many market participants are hopeful that asset quality will remain stable, Marcellus is actively positioning for a deterioration in bank balance sheets. Mukherjea declined to name the specific stocks in this “mystery position,” stating that the accumulation phase is still ongoing and details will be disclosed in the coming weeks.
This cautious stance on banks aligns with a broader trend among Marcellus clients. The firm has seen steady inflows into its GIFT City global offering, which now stands at approximately ₹600 crore. Conversely, domestic products faced outflows for three consecutive years, though these have stabilized recently as investors move away from heavy bets on PSU companies, road builders, and power infrastructure—sectors vulnerable to tightening government finances and rising oil prices heading into FY27.
What this means for the average investor
The transition in Mukherjea’s personal and professional portfolios suggests a shift in the “India story.” For years, the narrative was centered on the rise of the domestic consumer. Now, the focus is shifting toward India’s role as a global manufacturing hub.
For those heavily concentrated in domestic lending and consumption stocks, the move to a 50-50 split serves as a cautionary signal. It suggests that while the Indian market remains viable—Mukherjea notes he has enough faith to keep half his money there—the risks of over-concentration are now outweighing the rewards of a purely domestic strategy.
Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. Investing in securities involves risks. Please consult with a licensed financial advisor before making any investment decisions.
The next major indicator for this strategy will be the upcoming disclosure of Marcellus’s NPA-related positions, which will provide a clearer picture of where the firm expects the most significant banking vulnerabilities to emerge.
Do you believe the Indian middle class is under stress, or is the growth story still intact? Share your thoughts in the comments below.
