Before investing, it is vital to know the fundamentals. The first-time investors can explore different investing tools and apps that are available on Internet. However, as the investing corpus grows in size and investment pattern turns complex, it is recommended to seek professional help from investment advisors who have witnessed a number of market cycles, suggests Sreepriya NS, Director and COO of Entrust Family Office, in an interview with MintGenie.
She also tells us how it is different to deal with high net-worth individuals (HNIs) and non-resident Indians (NRIs). She tells us about the right way to invest in equity and fixed income instruments, particularly during volatile markets.
She also asserts that the current year is expected to deliver muted returns, although she is bullish about the long-term returns of Indian markets.
Edited Excerpts:
How does a wealth management firm like yours handle the investments of high net-worth individuals (HNIs)?
We start from the basics and then do asset allocation. We review the asset allocation every year or when major event takes place in the clients’ side.
The process is regular and rigorous, and there is no formula or algorithm. We just keep reviewing. We also address the taxation requirement of our clients and make sure they get optimum return after keeping taxation in mind.
What is the difference between doing wealth management for HNIs and regular investors?
The principles of investing are same but the approach is different since the portfolio is large and quite diversified. Larger the portfolio, the more one can move around the asset class and diversify. There could be a better alpha in the portfolio because of this.
Is this the right time to invest in fixed income instruments?
Yes, one can lock in the investment in a high yielding bonds at this stage. Investors can earn somewhere around 7.9 or 8 percent by investing in fixed income instruments.
In fact, in view of the latest amendment around debt mutual funds, some investors made their investment in debt instruments in advance (before March 31) to become eligible for indexation benefits.
Do you think the move to remove indexation benefits from investment in debt mutual funds was a right one?
The new rule could incentivise some investors to opt for vanilla FD (fixed deposit) investment that can fetch them 7.5 percent return. However, FDs carry a penalty for early withdrawal which debt funds do not have.
Which are the sectors one should invest into?
We are sector agnostic. We recommend to invest in sectors wherever opportunities exist. We make sure not to get overweight in any particular sector. The percentage of allocation is sacrosanct.
What is your view on investing in cryptocurrencies?
We stay away from investments that are yet not regulated.
During a volatile market, which all financial instruments one can invest into?
It all depends on the investor's risk profile and their asset allocation. There are RBI bonds where investor can invest. They offer 7.5 percent to 7.65 percent return. Then, one can also invest into sovereign gold bonds that are also 100 percent secure. Investors can also explore floating rate bonds.
Would you recommend a young first-time investor to make his own portfolio or seek expert's guidance?
There are numerous tools and apps that can help you curate your own portfolio. Young investors can use them. If there is more complexity, then one can seek guidance of investment advisors particularly, the ones that have seen two to three investment cycles.
