An improved outlook of returns from the Indian equity markets has prompted ultra high net-worth individuals (HNIs) to shift their investments towards equity markets from alternative assets like real estate. As per findings of Kotak Wealth Management, the asset allocation of ultra-HNIs towards equities increased to 45% in FY15 from 38% in the previous fiscal. The observations were part of the annual survey, ‘Top of the Pyramid’, by Kotak released on Tuesday.
On the other hand, the spending of ultra-HNIs on real estate was down to 25% in FY15 from 29% in FY14, the report observed. C Jayaram, joint managing director, Kotak Mahindra Bank, said the interest of ultra-HNIs in equities would continue to increase in the years to come. “Prospects of Indian markets seem to be upbeat, hence the allocations made towards equities would be higher compared to physical assets like real estate,” Jayaram said.
A detailed look showed that banking and infrastructure sectors have been the most preferred. The report stated that the first year of the new government has seen an upbeat investment environment —Indian equity markets have outperformed most other markets because of increased optimism and hope that the Indian economy will perform well. In line with this trend, ultra-HNIs are increasingly favouring equity investments.
“Increasing allocation of funds towards equity markets by ultra-HNIs shows they are optimistic about the future prospects of markets and economy,” said Murali Balaraman, Partner – Advisory Services, EY (India).