Equities & bonds remain preferred investment assets for Indian ultra-wealthy, Asians prefer property investments

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Equities & bonds remain preferred investment assets for Indian ultra-wealthy, Asians prefer property investments: Knight Frank Wealth Report 2020

72% increase in equity investment allocation by Indian ultra-wealthy in 2019

Mumbai, March 5, 2020: According to the Attitudes Survey, part of Knight Frank’s Wealth Report 2020, despite global headwinds, equity investments remained the most attractive asset class for Indian ultra-high-net-worth individuals (UHNWIs). 83% of Indian ultra-high-net-worth­-individuals (UHNWIs) in India are planning to increase or maintain their allocations in equities, followed by bonds (77%) and ahead of property (51%).

ASSET ALLOCATION

In 2019, for Indian UHNWIs, equities remained the most preferred asset class in the portfolio with 29% allocation, followed by 21% allocation for bonds and 20% into property investments. On the contrary, Asian UHNWIs preferred property investments with 28% asset allocation, followed by 21% in equities which is closely followed by 19% allocation in bonds. Whilst 24% of Asia Pacific’s UHNWIs are looking to invest in commercial property domestically, 17% are allocating capital to cross-border purchases in the coming year. Comparatively, 26% of Indian UHNWIs are looking to invest in properties within the country while 15% of them have plans to invest abroad.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.

PERCENTAGE PROPORTION OF THE AVERAGE UHNWI INVESTMENT PORTFOLIO INVESTED IN EACH ASSET CLASS

Asset Class India Asia Average

(Excl Indian subcontinent)

Global Average
Property as investment 20 28 27
Equities 29 21 23
Bonds/Fixed Income 21 19 17
Private Equity 7 7 8
Cash/Currencies 7 14 11
Cryptocurrencies 1 1 1
Gold/Precious Metals 7 3 3
Collectables 4 3 5
Others 4 4 6
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                                                                                                       Source: The Wealth Report 2020 Attitudes Survey

Neil Brookes, Head of Capital Markets, Asia Pacific, Knight Frank said, “Despite uncertainty in 2020 around the impact of COVID-19, 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.”

 PHILANTHROPY: 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.

WEALTH CREATION

About 94% of the money managers in India are expected to actively alter their clients’ investment strategies to protect their wealth in 2020.

Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, “Despite the underlying economic challenges, Indian UHNWIs are optimistic about their wealth creation prospects. A remarkable 73% of them expect an increase in their wealth compared to 55% of their global counterparts.”

 Knight Frank’s Wealth Report 2020 reveals that respondents in India ranked global economic slowdown, followed by trade wars, other political tensions and poor governance/corruption as the main concerns that are affecting UNHWIs ability to create or preserve their wealth in the year ahead.

ISSUES IMPACTING INDIAN UHNWIS WEALTH CREATION/PRESERVATION

Greatest Impact Issues
1 Global economic slowdown
2 Trade wars and other political tensions
3 Poor governance/corruption
4 Negative interest rates/bond returns
5 Exchange rates
6 Brexit
7 Regional armed conflict
8 Climate change

Source: Knight Frank – The Wealth Report 2020

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