Over
the years, have you observed any discernible behavioural differences in the way
UHNI’s approach their investments/portfolios?
UHNIs are more diligent in allocating funds
and are more informed. Transparency in fees and charges is expected and
Investors are more cost-conscious. The investment decision-making process for
UHNI investors has become more sophisticated, and asset allocation is of prime
importance.
How
would you describe the attitude of the majority of UHNI’s towards
risk-taking?
Trends indicate a shift of portfolio
exposure towards alternative investments. Direct venture capital investments
and absolute return strategies among the most popular investments in UHNIs and
Family Offices. Calculated risk-taking and tactical allocations can be seen in
portfolios.
How
inclined/disinclined are UHNI’s towards plain vanilla products such as Mutual
Funds? Are they more inclined towards investing directly into stocks?
Core portfolio allocations consist of both
Mutual Funds and Direct Stock and Bond Investments. Both approaches go hand in
hand and are equally focussed in UHNI portfolios.
Broadly
speaking, how do UHNI’s approach their real estate investment portfolios? Do
they prefer to buy land or to invest through vehicles such as REITs?
Commercial properties and commercial asset
funds are popular. Direct investment depends on the ticket size of the
property. Land purchases are still done directly as it has a heavy home city
bias.
In
your observation, how inclined as UHNI’s towards making angel
investments/growth capital investments in start-ups/ VC investments? Do they
generally prefer to do these directly or through a fund?
Initially, these investments were done via
VC funds as direct access to such deals was limited. Over the last two years,
we have seen a surge in direct deals by Family Offices and UHNI investors. This
indicates that the Indian VC industry is maturing at a fast pace. The reason
behind this is first, investors do not want to shell out fund management
expenses and profit-sharing, secondly, they wish to be a part of the management
and decision making in these start-ups providing their network and expertise,
and thirdly, they might have synergies with the investee companies for their
running business and are looking at these companies as probable takeovers in
the future.
How
would you describe the attitude of most of your UHNI clients to philanthropic
endeavours? Do you believe that a specific vehicle to this effect, would be of
interest to UHNI’s?
UHNIs usually make philanthropic
contributions through their own charitable trust or foundations. They usually dedicate
efforts to a cause which may be personal in nature or related to their
profession/business which gives them a deep understanding of the issue and
makes them better equipped to tackle it.
What
product gaps need to be filled in the Indian market for UHNI’s, compared to
more evolved global markets such as the U.S & Europe?
Venture Capital/Private Equity investments
still a minuscule part of the overall portfolio. More sophisticated products on
the fixed income side are yet to enter India. Alternative investment exposures
would grow significantly in the coming years.
Do
you find resistance within the “old money” UHNI’s towards more complex
investment products such as structures? Are they generally more inclined
towards traditional avenues such as Bank Deposits?
The old money has also evolved with
changing trends and we see these investors opting for better tax-effective
avenues for investments. Though we still see higher exposure to bank fixed
deposits and bonds than structured products.
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