“When HNIs or ultra HNIs approach wealth management companies to manage their wealth, they are very conservative about their investments and a big chunk of them have capital preservation on top of their minds as they have enough to spend for their regular needs. They look for decent returns and have a longer time horizon. In our view, a major part of their income minus all expenses should go into equity investments,” Kaizad Hozdar, Investment Advisor of TrustPlutus, told ET Markets.
Unlike investors from the middle income group, they may not have regular liquidity requirements from their investments, Hozdar said. He is bullish on the India story and domestic stock markets. Even by conservative estimates of the IMF (International Monetary Fund), India is expected to grow at 6% as compared to China, which is seen to grow at 4% this calendar year. Money follows where growth is and India is placed strongly, he argued. Hozdar said Indian equities have been the best asset class for a very long time, globally.
“A like to like comparison shows that S&P 500 has given absolute returns of 44-45% in the last three years while Nasdaq has given 40%; French market has given 50%, German has given 33% and Japanese markets have given 43-45% returns. Meanwhile, India has given 85% returns during this period,” the TrustPlutus expert pointed out, adding that India stands tall as the world’s 5th largest economy.
He underlined the strength of domestic investors, who took care of the domestic markets even when foreign institutional investors (FIIs) were pulling out their money.
An advocate of passive investing, Gurmeet Singh Chawla, Director, mastertrust, recommends SIPs (Systematic Investment Plans) as an option for investment in equities. “For retail investors, SIPs and ETFs might be a good alternative for near-term needs of liquidity but for long-term goals, equity can be a good option,” he said.
While the uncertainty around financial markets does pose a risk to growth, investors can certainly benefit by thinking long term, Abhishek Dev, Chief Executive Officer and Co-Founder of Epsilon Money Mart, said.Here are Hozdar’s top 5 tips to set up equity portfolio:
Allocate a bigger chunk towards equity investments and stay invested for a long horizon of 5-10 years. Talks of Indian equities being overvalued while returns being overlooked are doing the rounds.
A flexi-cap approach is recommended. Investors should make a 50-50 allocation in large-caps and mid-caps. Mid-caps have given higher returns than their large-cap peers over a longer term.
In small-caps, one has to be very niche and stock-specific. In the last 5 years, Nifty Smallcap 100 has given 5.5% CAGR returns as against 12.5% returns by Nifty Midcap and 11.5% by Nifty50.
Sector / Themes
FMCG: Hozdar is bullish on consumption stocks. India’s demographics is the best in the world. Moreover, as more people come into the middle class, the chances of them consuming branded goods go up. So this segment is going to do well for a very long time. Nifty FMCG is already at a new high.
Auto: This sector has been through a very tough time over the last many years. It peaked out in 2019. Then Covid happened followed by chip shortage, incremental cost because of metal prices. Then government regulations on things like safety have added to the cost of the vehicles. Prices of 2Ws, CVs and PVs have gone up significantly.
There is no froth in this space left now. New cycle of demand will ultimately help the sector. It is a space to be in for the next two years.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
