|Saluja: Clearing the air
India has seen a rise in the number of super rich in the past few years. Ultra HNIs rose to more than a lakh in 2012-13 from 81,000 in the previous year, according to Crisil Research. However, the current economic slowdown has begun to impact their investment pattern. In an interview with Vivek Nair of The Telegraph, Rajesh Saluja, managing director and CEO of ASK Wealth Advisors, gives his perspective of where the big bucks of the high net worth individuals (HNIs) are flowing.
The depreciating rupee and the impact of the tapering of the Quantitative Easing (QE) programme in the US have battered the economy, which is facing a slowdown. How is all of this affecting the HNIs/ultra HNIs and their investments?
In the last 6-8 months, there has been a rise in investments in fixed income products such as debt funds, mutual funds and tax-free bonds. People have become risk averse.
However, fixed income products have now started giving negative returns on the back of the fear of the QE tapering, the RBI reducing outflows and the measures taken to check the rupee slide.
The last time I saw negative returns in fixed income was about 6-7 years ago.
Investors have become apprehensive about equities. With fixed income taking a hit, there is fear that no asset class is doing well. Investors believe real estate will be affected next.
Hence, all asset classes are looking weak and most of money is getting into fixed maturity plans and even liquid funds. People are remaining averse to investments.
What is ASK doing in such an environment
Our advise is on four asset classes — fixed income, equities, real estate and private equity. In all these, we have increased the risk management framework. For example, in fixed income, we are focusing on funds that carry the best rated paper.
What has been your strategy with regard to equities?
We are focusing more on large cap and quality businesses. Of 6,300 companies, we don’t go beyond the top 60 companies in terms of quality of earnings, size of opportunity and earnings growth visibility and not by market cap. We are also taking a contrarian call on many businesses in India whose balance-sheets are intact or strong. While they are not over-leveraged, their order books are down because of the external environment.
We are creating a portfolio of those stocks for large clients with a three to five-year horizon and that are directly or indirectly related to the infrastructure segment which has to grow.
What has been the proportion of allocations across these four assets?
The maximum is going to fixed income products. Around 60-65 per cent of the money will come in fixed income, 25 per cent in equities and the rest is between real estate NCDs and private equity. For the last five years, its largely been a fixed income market