Alternative investments catching up with HNIs

Our Bureau Mumbai | Updated on March 12, 2018 Published on December 14, 2011


Investors largely prefer fixed deposit, bonds equity

With an increasing number of people investing in alternative assets, the total assets in equity-linked debentures have risen by 21 per cent over last year figures, said a wealth report by Karvy Private Wealth. Equity linked debentures are a part of structured products in the alternate asset class.

The total assets in the equity-linked debentures are estimated to be about Rs 21,267 crore. The assets in the gold-linked debentures is approximately Rs 120 crore, said the report.

“These equity linked debentures are products which offer a combination of equity as well as debt components. They are less risky because an investor can almost always be sure of making some money,” said Mr Sunil Mishra, CEO, Karvy Private Wealth.

These products come with a tool-box where the risk, capital protection and other variants can be customised according to clients needs. However, these products may not be easily affordable to everyone due to their large minimum threshold (average investment size).

“These are complex products and are targeted towards astute investors. They have a minimum threshold of Rs 5 lakh. There is demand for these among High Networth Individuals (HNIs) and emerging HNIs.

HNI population in India rose by around 20.8 per cent in 2010 and their wealth is estimated to have grown by more than 11 per cent at $530 billion, the Karvy report said quoting World Wealth Report.

The wealth study also expects India's individual wealth to triple to Rs 249 lakh crore in FY-16 from Rs 86.5 lakh crore in FY-11. Household savings in financial assets areexpected to reach Rs 23.94 lakh crore in FY-16.

Asset-wise distribution of individual wealth is the highest in fixed deposits and bonds followed by investments in direct equity and in insurance. Fixed deposits are expected to continue to become the preferred investment class in the next couple of years. Alternative assets make up 0.34 per cent of the total wealth distribution, the report said.

As private companies become more evolved, there will be a rise in insurance investments, said the report. Insurance assets valued at Rs 15.25 lakh crore, currently make up 17.65 per cent of the total investments.

In the report, Karvy Private Wealth has only considered wealth held by “individuals.”


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Published on December 14, 2011
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