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.
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