Mumbai: Ever thought where the world's ultra-rich, the men and women that feature in glossy magazines and pink-dailies park their money?
There's no straight answer, but a recent research report - the Knight Frank report manages to do some unraveling on Ultra-high net worth individuals (UHNWIs).
A good number of UHNWIs parked their money in equities. Other prefered investment avenues were Bonds and real estate investments. The study observes, "In 2019, for Indian UHNWIs, equities remained the most preferred asset class in the portfolio with 29 per cent allocation, followed by 21 per cent allocation for bonds and 20 per cent into property investments. On the contrary, Asian UHNWIs preferred property investments with 28 per cent asset allocation, followed by 21 per cent in equities which is closely followed by 19 per cent allocation in bonds."
Equities may sound bizzare, after the recent marauding in Indian and global equities. Post the Coronavirus induced scare, the rampage on most indices lasted for a good week. In fact, the marauding lead to investor wealth destruction of Rs 12.90 lakh crores on the BSE. But equity investments are still preferred, says the study.
Surprisingly, 83 percent Indian UHNWIs were reportedly planning to increase or maintain their allocations in equities, followed by bonds (77 per cent) and quite ahead of property (51 per cent).
The study also noted that while 24 per cent of Asia Pacific's UHNWIs are looking to invest in commercial property domestically, 17 per cent are allocating capital to cross-border purchases in the coming year. Comparatively, 26 per cent of Indian UHNWIs are looking to invest in properties within the country while 15 per cent of them have plans to invest abroad.
Neil Brookes, Head of Capital Markets, Asia Pacific, Knight Frank, said: "Despite uncertainty in 2020 around the impact of COVID-19 (novel coronavirus), interest for assets remains high with significant capital chasing limited stock. While some private investors may delay their decisions due to the current climate, we expect secure assets that offer quality income streams to be in increasing demand."
The report further said that about 94 per cent of the money managers in India are expected to actively alter their clients' investment strategies to protect their wealth in 2020.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said: "Despite the underlying economic challenges, Indian UHNWIs are optimistic about their wealth creation prospects. A remarkable 73 per cent of them expect an increase in their wealth compared to 55 per cent of their global counterparts."
Other major findings from the study are as follows:
1. Upsurge in UHNWIs: Private equity as an investment class saw an upsurge in the allocation from 4% in 2018 to 7% in 2019. Nearly 85% of Indian UHNWIs are expected to increase or maintain their asset allocation in private equity investments.
2. Philanthrophy: As part of setting goals for giving back to the society, 66% of Indian UHNWIs citied increasing their philanthropic activities. Education (95%), Healthcare (89%) and Environment (82%) are the important focus areas for philanthropic activities for Indian ultra-wealthy.
3. What ails Wealth Creation/Preservation in India: The survey points to some factors that ails wealth creation. These factors (according to rank) are Global economic slowdown , Trade wars and other political tensions, Poor governance/corruption, Negative interest rates/bond returns, Exchange rates, Brexit, Regional armed conflict, Climate change
4. Great News for India: India’s UHNWI population to grow by 73% over the next five years,
5. Realty Investment Statistics: Indian real estate received private equity investment of $ 6.2 billion in 2019. 24% Indian UHNWIs planning to buy residential property in 2020.