The Emerging Investment Avenues

According to a study undertaken jointly by Merrill Lynch and Cap Gemini Ernst and Young, High Net worth Individuals [HNIs] or wealthy investors are proactive in portfolio management, risk management, consolidation financial assets and use of diversification strategies as actively as large institutions. HNIs are proactive in identifying new investment options and take inputs from professional advisors in volatile market conditions.

HNIs are dynamic in modifying their asset allocation and were among the first investors to move from equities to fixed income during 2001-2002 period of downturn in equity markets. They shifted back to equities when they identified favorable market trends.

Needs of wealthy investors

Wealthy investors being aware of the emerging investment opportunities use sophisticated investment strategies such as:-

• Leveraging on the professional advisors’ capability to analyse market trends and make appropriate investments

• Searching for innovative products to enhance value

• Diversifying across various types of assets

• Investing across emerging geographies

• Consolidating financial information and assets

Investment products and avenues

• Managed products: Managed product service is the most popular investment strategy adopted by wealthy investors globally

   

   

• Real Estate: Wealthy investors have found this asset class very attractive and have invested directly in real estate and indirectly through real estate investment trusts.

   

   

• Art and passion: Wealthy investors also have their investment in art, wine, antiques, and collectibles

   

   

• Precious Metals: Gold and other precious metals are attractive investment options to balance the asset allocation

   

   

• Commodities: Wealthy investors have turned to commodities to offset the lower returns from fixed income securities.

   

   

• Alternative investments: Hedge funds and Private equity investments such as venture funds are becoming increasingly popular with wealthy investors to reduce the investment risks related to stock market fluctuations. This is because these instruments have low correlation with equity asset class performance. Investment in non correlated assets, such as commodities helps to improve diversification of the portfolio amidst volatile market conditions.