The Hindu Business Line : Banks eyeing alternative asset classes

Guided by prudence
Investment in these asset classes requires a review of client's age, personal ability to take risk and most importantly, client's interest.

Mumbai , Aug. 25

The works of M.F. Hussain, Jatin Das or Anjolie Ela Menon are sought after by art lovers not only for their aesthethic value but also as an asset. Art galleries are involved in art valuations, i.e. mapping the pricing history of an artist or research on art.

Art is now being treated as an investment and high net worth individuals are prompting banks to look at alternative asset classes, such as art or real estate, for investment as a part of wealth management products.

Diversified portfolio

But why are individuals looking at alternative investments rather than the usual investments in equity-related products?

"Investments in alternative asset classes give clients a diversified portfolio across a variety of asset classes," said ABN-Amro Bank's Ms Sutapa Banerjee, Senior Vice-President, Head-Private Banking, India.

Yes Bank is expected to launch a wealth management service that will offer investment in real estate, art and jewellery. It expects to kick-start the real estate service during this fiscal.

"The bank is planning tie-ups with real estate consultant agencies. The service will largely cater to non-resident Indians seeking opportunities to invest in real estate in the country," said Mr Ajay Mahajan, President, Financial Markets and Financial Institutions, Yes Bank.

Tie-ups with galleries

In the art segment, Yes Bank plans to tie-up with art galleries. "Contemporary Indian art will be our focus. We will be hiring specialists in the field for advisory," Mr Mahajan said.

"High networth individuals in India are increasingly looking at contemporary Indian art as a good investment," he added.

"With the advent of private art funds and galleries, art is becoming an emerging asset class," said Ms Banerjee.

"ABN Amro advises clients on investment in art. However, the execution depends on the client in conjunction with experts in the field," she said.

"It is difficult to generalise. The majority of clients begin with an investment of around 4-5 per cent of their portfolio," she said. ABN Amro targets customers with Rs 2-2.5 crore threshold for investment.

According to the banks, some clients also invest in these asset classes to minimise risk because they are looking at protecting their capital.

Investment in these asset classes requires a review of client's age, personal ability to take risk and most importantly, client's interest.

"What percentage of assets would be allocated to alternative assets would depend on the client's interest and ability to take risk," Ms Banerjee said.

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