Personal Finance Trends of 2023
Explore how India's high earners are diversifying their portfolio into various alternative asset classes, propelled by regulatory support and technological advancements. Learn about the top five alternative assets redefining portfolio strategies for Indian investors. From AgeTech startups to fractional properties and the allure of art indices, uncover what's drawing the smart money.
December 21, 2023
In recent years, India's high-earning class has undergone a significant mindset shift towards alternative investment assets. This change is most noticeable among the wealthier segments of society, but there's also a noticeable trickle-down effect on lower-earning groups.
This trend is further evidenced by the evolving Indian investment technology landscape, which is characterised by its diversification and sophistication.
In this issue, we will explore 5 of the most popular alternative investment assets in India.
- Fractionally Owned Properties as an Asset Class
Fractional ownership is emerging as a popular investment class in India, offering access to luxury assets at reduced costs and shared risks, aligning with evolving investor preferences. The fact that SEBI is now getting interested in regulating this asset class has further built a case for partially owned assets as an investment option. Check out more about this asset class here.
- The Growing Interest of Indian HNIs in REITs
Real Estate Investment Trusts (REITs) are increasingly capturing the attention of Indian High Net-worth Individuals (HNIS), drawn by their capacity to offer a stable and diversified investment avenue. The ease of entering the real estate market, minus the direct hurdles of property ownership and management, is a major pull factor. The appeal of REITs lies not only in their potential for regular and predictable income but also in their lower risk profile and liquidity, making them a solid choice for those aiming to balance their investment portfolios. Additionally, the promise of capital growth alongside expert asset management is a key factor driving this trend. With the maturation of the Indian real estate market, REITs are emerging as a sophisticated and viable option for investors prioritising both stability and growth.
- AgeTech as a Startup Investment Theme
The global population aged over 60 was 1 billion people in 2019 and is expected to double to over 2 billion people by 2050. Globally, the majority of consumer spending and net worth are controlled by those over 60. This pool of people is increasingly tech-native and living longer (though not necessarily healthier). While sectors like SaaS, PropTech and AI remain hot bets for 2023, a swell in the rising 60+ population, presents an opportunity to invest in companies which offer products and services that improve the lives of older adults. Read more about the global AgeTech investment opportunity.
- Art Collection and Art Indices - A Futurist Asset Class for Indians
Recent trends in 2023 show a surge in Indian investors' interest in art indices and collections, particularly in contemporary and modern art. This growing fascination is evident in the increased participation in art auctions and galleries. Investors are attracted not only to the aesthetic value of art but also to its potential for significant appreciation in value. Art as an investment class offers a sophisticated approach to diversifying portfolios, taking advantage of the art market's low correlation with traditional financial markets and its resilience during economic downturns. This trend also reflects a blend of cultural richness and financial returns, making art indices and art collections an appealing option for Indian investors seeking novel and potentially lucrative investment opportunities.
- Sustainable and Green Investments
Driven by the global focus on environmental responsibility, 64% of Indian investors are expected to look for sustainable investments in 2023. This interest is part of a larger trend where green finance is gaining momentum as a tool for transitioning toward net zero emissions in India. The Indian government's push for renewable energy, coupled with private sector investments in green projects, has created significant opportunities for businesses and investors. India's commitment to sustainable development is evident in its ambitious goals to increase green energy capacity and decrease greenhouse gas emissions. With substantial natural resources and government initiatives supporting green energy, India presents a unique opportunity for sustainable and green investments.
The gradual growth of alternate assets illustrates a vital aspect of modern investment strategies: the importance of diversification. For Indian investors, this diversification is no longer just about spreading risks across different financial instruments but is increasingly about embracing unconventional and innovative asset classes in a quest to build wealth.
As SEBI introduces new regulations on alternative assets, it will make it easier for institutions to operate under clear guidelines, reducing financial ambiguity and risk. Consequently, the year 2023 will witness a wider range of alternative assets being offered to Indians across various income groups.
Disclaimer: The content of this blog is for informational purposes only and is not intended as financial or investment advice. Readers should conduct their research before making investment decisions.
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