In
the ever-changing and cyclical world of finance, high-net-worth individuals
(HNWIs) are always looking for increasingly premium and sophisticated ways to
boost their returns on investment. To cater to this increasing need, the
majority of wealth management firms are changing gears to wage sophisticated
investment methods in India. By leveraging available market trends, data, and
analytics, such organisations offer personalised and bespoke investments that
guarantee optimal returns and effective risk management.
The Quest for Alternatives
As
HNWIs increasingly seek alternative investments to diversify their portfolios,
stocks and bonds still remain critical, but they typically don't compete with
alternatives vis-à-vis risk management and returns. Private equity, hedge
funds, and property are gaining momentum, particularly with Indian HNWIs.
In
2022, private equity investments in India totalled $65.1 billion, up more than
7% year over year. The increase mirrors additional demand for the asset class,
especially from technology, infrastructure, and digital transformation. Private
equity is a viable diversification plan for HNWIs that holds them together when
markets swing wildly.
With
better regulation, India has been an apt destination for alternative investments.
The rapidly growing economy can create private equity with superb returns and
tremendous opportunities. Wealth managers benefit from this trend by qualifying
customers to access private equity funds and co-investments on favoured terms.
The trend represents the changing landscape of investment schemes for people
who wish to create and safeguard their wealth.
Leveraging Technology for Investment
Decisions
Wealth
management is developing rapidly with technology, primarily with the advent of
artificial intelligence (AI) and machine learning. Both enhance the wealth
manager's capacity to browse vast data pools, resulting in more investment
opportunities and effective market forecasting. According to a PwC study, AI
may contribute to a 14% boost to the global GDP by 2030, making significant
transformations in the investment industry.
Wealth
managers who hire AI talent to support their research can offer their clients a
competitive advantage. AI will not replace human talent but will be an enabler
that complements research, streamlines risk analysis and supports data-driven
investment decisions. By combining talent and technology optimally, clients can
lead in the fast-changing world of finance.
ESG Investing: Investing Wealth on Values
Environment,
Social, and Governance (ESG) investing is gaining popularity among the
high-net-worth population, who prefer spending money that aligns with their
values. As sustainability awareness is
on the rise, more and more investors all around India want to invest
responsibly. In 2022, ESG investing received about ₹10,000 crores, fuelled by
new policies and rising demand. Most wealth management companies today provide
ESG-compliant investment opportunities, which appeal to investors wanting their
investments to perform well and generate returns. Ethical investing is becoming
necessary since such massive investments in ESG funds exist. Investors today
expect profits that are benefiting the society and the environment. By
integrating ESG considerations into our investment process, we assist clients
in accumulating wealth while upholding sustainability and long-term development
in a transformative world.
Emerging Market Opportunity Capitalization
With
a demographic dividend and an expanding economy, India presents high-net-worth
individuals (HNWIs) with the opportunity to invest in exciting sectors.
Investing in emerging economies presents monumental profits but comes with
similarly towering risks. Wealth management companies also want to recognise
growth areas in these markets while evaluating the risks accompanying them.
Growth sectors such as technology, healthcare, and renewable energy are the
most likely to drive growth in India. India's technology sector is expected to
double to $350 billion by 2025, for instance, which is encouraging wealth
managers to encourage HNWIs to invest in expanding sectors with their
knowledge.
Personalised Portfolio Management
Personalisation
will increase returns for HNWIs. Wealth management firms have increasingly
promoted a client-centric approach to portfolio management, where investment
strategy is tailored according to individualised goals, risk tolerance, and
time horizons. This holistic service comprises comprehensive financial planning
and ongoing portfolio review.
Personalised
engagement involves data analytics. By analysing customer data, wealth managers
can give customised advice and find opportunities aligned with a client's
objectives. Thus, the personalisation dynamic keeps investment strategies
somewhat agile and spontaneous according to market changes.
Conclusion
It
amalgamates advanced strategies, technological innovations, and personalised
services that maximise resources for high-net-worth investors. Wealth
management firms in India are better poised to meet these needs by using
alternative investments, artificial intelligence, and machine learning, as well
as making more of emerging market opportunities and thus creating very
personalised portfolio management. These strategies will become increasingly relevant
in the changing landscape of finances as they help match high-net-worth
individuals with their investment purposes and financial destiny.
The Writer is Mr. Krunal Mehta, the
Founder and CEO of Mehta
Wealth Ltd.