With the equity markets booming, equity as an asset class has emerged a winner among ultra HNIs.
Close to 44% of ultra HNIs invest in equity in April-September 2017, shows ‘Top of the pyramid’ study by Kotak Wealth. 40% of ultra HNIs had invested in equities in FY 2016-17.
The report attributes this to the attractive performance of equity compared to other asset classes. “Despite the scepticism surrounding its near-term performance, equities remained the most-preferred asset class. A rising stock market has captured the attention and investments of ultra HNIs. With the equity markets offering better returns than debt markets, their money has moved to the capital markets from fixed income investments,” the report said.
The study also found that many ultra HNIs intend to increase their equity allocation. “With a high possibility of double-digit earnings growth over the next few years, aided by a low base and recovery in growth, 46% of ultra HNIs intend to increase their investment in equities in the coming years,” the report said.
The report also notes that the attractive returns from equity markets have taken away some of the sheen of debt and real estate.
Investment in the debt market in the first half of FY2018 was down at 16% from 17% in FY2017. Debt investment is likely to fall as 35% of ultra HNIs intend to stay steady in this asset class while 34% could decrease their investments. This is on the back of good performance by equities, claimed the report.
As for real estate investments, ultra HNIs have reduced their exposure to physical assets. 26% of ultra HNIs invested in real estate between April and September 2017 as against 32% in FY 2016-17. The report attributes this to demonetisation.
