HNIs contribute about 58% to India’s GDP. Approximately 30% of the Indian HNI population are based in metro cities of Mumbai and Delhi. It’s a known fact that for decades, HNIs have relied on a mix of debt and equity investments for building their wealth. But of late, there has been a drastic shift towards Alternative Investment Funds (AIFs). What has led to this change in trend? Given the fallout of the pandemic, ever-increasing volatility in the market, and rising interest rate scenario, HNIs are left with no option but to realign their portfolio as per the perceived risk. Commercial real estate has emerged as one of the strongest investment preferences among HNIs. Other investment avenues where the HNIs are putting their money are private equities, hedge funds, and derivatives contracts. As AIFs have a low correlation with other traditional asset classes, they help HNI investors alleviate volatility, diversify their portfolio, mitigate risks, and benefit from high rate of return prospects.
No matter how diverse your investment sources are, the underlying principle remains the same – participate across different asset classes to yield different returns. Heed to your wealth manager’s guidance and also keep in mind your investment goals and cash flow requirements.