India is likely to become the second largest country in terms of HNI assets in the Asia Pacific region by 2020, says a wealth report recently released by the wealth management and private banking firm Julius Bär.
Indian HNIs have a combined wealth of over US$1.45 trillion as on March 2016. The report estimates that the assets of HNIs will grow by 60% cumulatively in the next four years and is likely to cross US$2.3 trillion by 2020.
HNIs are defined as those having investable assets of US$1million or more, excluding primary residence, collectibles, consumables and consumer durables.
The report has attributed this growth to strong GDP growth and favourable demographics. Atul Singh, Managing Director and CEO Julius Bär India says, “India emerged as a key driver in the Asia-Pacific’s growth story in 2016. Given India’s favourable macroeconomic conditions coupled with a prudent fiscal policy and supplemented by a pro-reform government, India will continue to be an attractive investment destination. Further, reform measures initiated by the government will likely enhance India’s long term growth potential in the years ahead.”
When asked about the investment pattern of HNIs, Singh said that equity has been gaining acceptance among HNIs. “There could be a number of reasons for the rising demand for equity among HNIs over other asset classes. One could be lackluster performance physical assets like real estate and gold. Also, HNIs have moved to equity as it has generated tax efficient returns for them.
Another trend that Singh has observed is growing popularity of AIFs among HNIs. He says that some structured products in AIF space guarantee capital protection along with appreciation which HNIs are finding attractive.
The report estimates that HNIs assets across the Asia Pacific region will grow to US $14.5 trillion in the next four years primarily driven by China and India.
