New-age digital investment platforms offer 9-11% fixed returns: Should you invest?

These fintech platforms are striving to bridge the gap between Fixed Deposits and Debt Funds, stocks and equity mutual funds.

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The pandemic induced high volatility in the market has compelled retail investors to diversify towards alternative investment options.

When it comes to investments, there isn’t a one-size-fits-all option. Depending on an individual’s financial goals and return expectations, the right investment option needs to be chosen. To fill the gap and to cater to such people, various fintech companies and digital investment platforms have been coming up with different options so that one can make a choice that suits them the best.

Digital investment platforms such as Wint Wealth, Scripbox, Wealthy, Clearfunds, Groww, Goalwise, Paytm Money, Zerodha Coin, etc. help investors invest in mutual funds as well as stocks, help manage portfolio periodically based on taxes and exit loads, offer goal-based investment approach, balance one’s equity portfolio, and help switch between funds, among others. Wint, for instance, is an alternate debt asset platform that democratizes fixed-income assets to retail investors.

Ajinkya Kulkarni, Co-founder of Wint Wealth, says, “These fintech platforms are striving to bridge the gap between Fixed Deposits and Debt Funds, stocks and equity mutual funds.”

In an exclusive interview with Priyadarshini Maji, he explains how these digital investment platforms offer high net-worth as well as retail investors asset-backed fixed income products, enabling them to earn higher returns as compared to fixed deposits.

How do digital investment platforms work?

Most of these platforms provide a comprehensive set of tools to help one make, manage and track investments. Wint Wealth, for instance, provides access to alternate financial assets which were available for HNIs and UHNI by lowering the minimum ticket size and leveraging technology to spread awareness and education about these assets. In the present setting, it is a platform that is providing a Covered Bond structure by working with NBFCs.

Additionally, complete asset-related information is mentioned on the website for studying. Having complete transparency helps investors make an informed decision. If they still have any questions, they can then reach out to the education team for further clarification. Once they feel confident and would like to proceed with investing, they can go ahead with payment after completing their KYC, the units of which will reflect in their Demat account within two working days.

How are these digital investment platforms filling the gap in the market, specifically for retail investors?

They provide diversification avenues for retail investors by providing access to investment products. Wint Wealth comes with the option for investment as low as Rs 10,000 and creating awareness regarding these less-explored investment products. Covered Bond Structure, for instance, a less explored product is available on the platform, falls under the high-risk category with risk mitigants in place.

What makes these digital investment platforms an ideal option for new-age retail investors looking at alternate investment options?

The pandemic induced high volatility in the market has compelled retail investors to diversify towards alternative investment options. New-age retail investors will find these platforms a true innovator as it brings products that yield high returns with high risks with risk mitigants in place by offering 9-11 per cent fixed returns.

Another factor that makes this a bankable investment avenue is that it offers instruments such as Covered Bonds that in the long term prevent events like the 2008 crisis. New-age or not, the investor who understands all the risks involved with these assets should only consider them for their portfolio, if you think it’s not for you yet then wait it out till you are convinced otherwise.

What is Wint Wheel’s bankruptcy-protected bond?

The Covered Bond structure is a dual recourse Bankruptcy remote instrument. Simply put, here an NBFC raises debt from the Wint Wealth platform and, in exchange, issues bond units. Alongside there is a third entity created named SPV, which will hold Vehicle loans given as collateral by the NBFC and are 1.2x the value of capital raised by it.

So in case, NBFC goes bankrupt, the trustee managing the SPV will utilize the pool of loans in the SPV to recover the money for retail investors. So there are two recourses, the first one is on NBFC and the second on the pool of loans.

What are the risks involved – what criteria should investors keep in mind when investing in Wint products?

Each instrument has its own set of risks, therefore our priority is to establish transparent communication with investors through all mediums. Our aim has never been to ‘sell’ these products, rather provide complete information along with the associated risks, thereby enabling the investors to make an informed investment decision.

Given the current high volatility in the market, is this a good time for retail investors to enter this segment?

When it comes to portfolio diversification, asset allocation is the primary decision to be made. For instance, one should not allocate northwards of 30 per cent of their portfolio in Wint Wealth assets. One should limit it to 10-15 per cent of their overall portfolio, starting with just 2-3 per cent, and gradually increase with the increase in confidence and comfort. Every investment should be made after understanding the product and assessing their finances, based on their risk appetite.

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First published on: 19-06-2021 at 11:10 IST