Indian investors should diversify their portfolios and must have at least 35 per cent of financial assets in securities outside their home country. Global diversification protects the portfolio and boosts returns, said Ketul Sakhpara, co-founder and CIO of BayFort Capital.
Markets don’t move in perfect sync. When one region lags, another may lead. This helps reduce volatility and create a smoother long-term return parth, he said at a session hosted by Akshat Jain, founder of Seeco Wealth, to provide insights to investors on how they can add global stocks and private credits to diversify their portfolios.
Sakhpara said global investment options available to Ultra High Networth Individuals (UHNIs) through their global advisors are now available to High Networth Individuals (HNI) too. Innovation sector stocks, in which BayFort Capital focuses, are listed only globally. Global exposure helps capital diverse growth drivers, he said.
Take the example of China, the country’s GDP boomed from 2000s to 2020s, but their stock market has returned 1 per cent per annum. While India may continue to do well as a country, it is not necessary that the stock markets will consistently do well. It is important to add uncorrelated assets to the portfolio so that there is a balance. For example, India and the US indices have had a low correlation historically, he said.
The US is an attractive market to invest in as there is no tax on the investment for Indians. However, the investment does attract tax in India, he added.
Akshat Jain, Director, Seeco Wealth, a concierge-style wealth management firm, spoke on Private Credit opportunities in real estate. Post 2016, once the Real Estate Regulation Act came into force, the sector has formalised it’s funding needs. The working capital requirements have gone up because each RE project now needs to have its own vehicle, accounts, budgets and timelines. Banks/NBFCs are unable to fill that gap. This has opened up an arbitrage for individual investors to subscribe to debentures issued by developers, earning anywhere between 15-17 per cent in yields, he said.
These debentures are secure with a 2-3x cover due to multiple layers of collaterals, including mortgages, charge on receivables, escrow monitoring, pledges, post dated cheques, guarantees and shortfall undertakings. Seeco Wealth facilitates these debentures and advises clients allocating 10-20 per cent of their fixed income allocation to private credit, he said.