Private wealth soars by 10% in FY19

The individual wealth in India has swelled by 10% in the last fiscal backed by strong growth in financial assets.

The individual wealth in India has swelled by 10% in the last fiscal backed by strong growth in financial assets, a report said on Wednesday. However, compared to financial assets which grew by 10.96%, physical assets growth was at a slower pace of 7.59% and individual investors are making more investments in financial assets, Karvy Private Wealth, the wealth management arm of financial-services conglomerate Karvy Group said. Direct Equity, mutual funds, pension funds, alternative investments and international assets saw the most favorable return rate. “Direct Equity continues to hold the fort in terms of investment preference in India. This shows the belief of investors in the Indian equity markets notwithstanding the volatility it has been through,” Abhijit Bhave, Chief Executive Officer, Karvy Private Wealth, said in a statement. 

Further, Prime Minister Narendra Modi’s goal of making India a $5 trillion economy will also have a surge effect on the private wealth by 2024. “We expect the HNI population to touch 1 million over the next five year,” Abhijit Bhave added. For the last fiscal year, individual wealth soared up by 9.62% to Rs 430 lakh crore.

In financial assets, Direct Equity, Fixed Deposits, Insurance, Saving Accounts and Cash are the top five picks for investment allocation as they contributed to a total of 72.33% of financial assets. These assets have been last year’s best investment picks as well. In physical assets, Gold and Real Estate together covered 92.57%. According to the Karvy report, the total wealth held by individuals in physical form, in this fiscal year, stood at Rs 167 lakh crore.

Forecasting that the individual wealth will grow at a CAGR of 13.19% by FY24, the Karvy report added that the private wealth will almost double to Rs 799 lakh crore from the current wealth of Rs 430 lakh crore. Going further, “massive investment in Infrastructure and Green Energy, backed with a regulatory boost with tax reforms, aided by a huge young workforce, will accelerate the Indian economy towards the $5 trillion target once there is a pickup in consumption,” the report said, adding that both urban India and the semi-urban and rural Bharat will go together to witness this. 

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‘Individual wealth in India rises 10% to ₹430 lakh crore in FY19’

Major part of this growth came from financial assets: study

Even as global wealth saw a decline in 2018-19, individual wealth in India rose almost 10% to ₹430 lakh crore primarily on account of higher domestic participation in capital markets, mutual funds and a rise in gold prices.

According to a study by Karvy Private Wealth, individual investors continued moving their wealth from physical assets to financial assets as the proportion of financial assets rose from 57.25% to almost 61% in last five years with direct equity maintaining the top position among financial assets.

“Taking forward the acceleration of wealth growth over the last few years, individual wealth in India grew by 9.62% to reach ₹430 lakh crore in FY19,” Karvy said.

“A majority of this growth was achieved by an impressive 10.96% wealth growth in financial assets as compared to physical assets which grew by 7.59%. Direct equity continued to act as a major proponent of investor wealth as it moved up by 6.39%, retaining the top spot. Other notable assets which saw good growth include mutual funds, pension funds, alternative investments and international assets,” it added.

While the individual wealth in financial assets witnessed an increase of 10.96% and grew to ₹262 lakh crore in FY19, compared with ₹236 lakh crore in FY18, the top five destinations for investment allocation were direct equity, fixed deposits, insurance, saving accounts and cash with a total of 72.33% contribution in overall financial assets.

Meanwhile, the individual wealth in physical assets rose 7.59% in FY18 with gold and real estate together covering 92.57% of this segment. Total wealth held by individuals in physical form stood at ₹167 lakh crore in FY19.

Interestingly, the total individual wealth in India is estimated to have a healthy growth rate at a CAGR of 13.19% to reach almost ₹799 lakh crore by FY24. While allocation to financial assets is estimated to be 66.11%, allocation to physical assets will be 33.89%, as per the study.

“Massive investment in infrastructure and green energy, backed with a regulatory boost with tax reforms, aided by a huge young workforce, will accelerate the Indian economy towards the $5 trillion target once there is a pick-up in consumption. Urban India will go hand in hand with the semi-urban and rural Bharat to achieve this feat,” Karvy said.

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Alternative Investment Exposures Would Grow Significantly In Coming Years: Abhijit Bhave

In an exclusive interview with BW Businessworld, Abhijit Bhave, CEO, Karvy Private Wealth talks about UHNI investors and more

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. 

 Visit - http://www.businessworld.in/article/Alternative-Investment-Exposures-Would-Grow-Significantly-In-Coming-Years-Abhijit-Bhave/23-10-2019-178032/

Share of financial assets on the rise: Karvy Private Wealth

The benchmark equity index, Sensex, recorded gains of 17.08% in FY19, leading investors to raise their investments in Indian stocks.

According to the Karvy report, individual wealth in India is estimated to grow at a compounded annual growth rate of 13.19% over the next five years to reach a total of Rs 799 lakh crore.

Individual investors investing in the Indian markets continue to move their wealth from physical assets such as gold and real estate to financial assets like equities and mutual funds. The annual India Wealth Report done by Karvy Private Wealth shows that the proportion of investments in financial assets expanded to 61% in FY19, against 57.25% five years ago. The share of physical assets came down from 42.75% to 39.05% in the same period.

According to the report, individual wealth in India is estimated to grow at a compounded annual growth rate of 13.19% over the next five years to reach a total of Rs 799 lakh crore. Direct equity, mutual funds and alternative funds will be the top growth drivers for financial assets over the next five years.

Despite the current mood in the market, investment made directly into the equity markets was the top investment avenue compared to other financial assets. However, investments in equity markets in FY19 grew at a slower pace of 6.4% over the previous year. “Direct equity continues to hold the fort in terms of investment preference in India,” said Abhijit Bhave, CEO, Karvy Private Wealth. Other notable assets which saw good growth include mutual funds, pension funds and alternative investments, according to the report.

The benchmark equity index, Sensex, recorded gains of 17.08% in FY19, leading investors to raise their investments in Indian stocks. Mutual funds as an asset class also grew in popularity in FY19 with a net inflow of `92,693 crore across equity and debt funds, according to data from Amfi.

While equity investments saw the highest allocation of resources from individual investors, investments in pension funds, mutual funds and alternative investment funds (AIFs) witnessed the highest growth. AIFs saw a growth of 20.19% year-on-year (y-o-y) with investments amounting to Rs 1.4 lakh crore in FY19, while pension funds and mutual fund investments grew 21% and 17%, respectively, over the previous year.

The country’s high net worth individuals (HNIs) – which Karvy Private Wealth categorises as individuals having an investible surplus of `5 crore and above – have increased their investments in AIFs. Of the several categories of alternative funds, HNIs have invested the maximum in structured products like market-linked debentures (MLDs) and private equity funds, leading individual wealth in alternative assets grow by 20.19% in FY19.

“Private equity funds have turned to be a preferred investment class globally and some family offices have begun making direct private equity investments or co-investments along with these funds,” said Bhave. HNIs invested `36,266 crore in private equity funds, a y-o-y increase of 54.7%.

Visit - https://www.financialexpress.com/market/share-of-financial-assets-on-the-rise-karvy-private-wealth/1737784/

Individual wealth in India grows 9.62% in FY19:Report

The rise in wealth has marked higher domestic participation in the capital markets, mutual funds, making the trend a sustainable one, according to India Wealth Report 2019, published by Karvy Private Wealth.

Financialisation of household savings, a key to nation building, gathered pace in FY19 with individual wealth in financial assets rising double digit. The rise in wealth has marked higher domestic participation in the capital markets, mutual funds, making the trend a sustainable one, according to India Wealth Report 2019, published by Karvy Private Wealth.

Individual wealth in India grew by 9.62% in FY19 to Rs 430 lakh crore. The major growth rate of 10.96% was seen in financial assets as compared to physical assets, which grew by 7.59%, the report said.

“There has been a talk of increased financialisation of savings in the recent past. Evidence of this has been clearly seen in the last five years,” Karvy said. “The proportion of financial savings has gone up to 60.95% from 57.25% in last 5 years. “We expect a continued shift towards financial assets in India in near future as well.”

The report projected total individual wealth in India to grow 13.6% per annum to Rs 799 lakh crore by FY24, which is nearly twice the current wealth holdings by individuals with the share of financial assets growing to 66% of total assets.

In the last five years the HNI population in India has grown by 64.10% to reach 256,000 in 2018 from 156,000 in 2014 .The distribution of the individual wealth in India is mainly biased towards the metros with Mumbai and Delhi being home to over 70% of the ultra high net-worth Individuals population.

The individual wealth in financial assets witnessed an increase of 10.96% and grew to ₹262 lakh crore in FY19 as compared to ₹236 lakh crore in FY18. The top five avenues for investment were direct equity, fixed deposits, insurance, saving accounts and cash with a total of 72.33% contribution in overall financial assets, the report observed.

In FY19, investments in direct equity rose 6.39% despite volatility in market while bank deposits saw a stable growth of 8.85%. Mutual funds as an investment vehicle has gained traction which is evident from higher systematic investment plans (SIP) flows and an exponential increase in AUM size, which stood as a cushion for the capital markets. The data shows that there is a net inflow of Rs 392,693 crore in MFs through SIPs which is a 38% increase when compared to FY18.

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