Survey indicates allocation of equities in Indian portfolios to fall from 10.8% to 7.6% in 2023
Indian investors cited inflation (23%), an uncertain global economy (18%) and the threat of recession (16%) as their top concerns in managing their wealth and making changes to their investment strategies, given current economic challenges, according to a survey.
Rising inflation (34%), a recession (27%) and uncertain global economy (22%) are key worries for investors internationally too, according to Standard Chartered’s Wealth Expectancy Report 2022 which has examined the shifts in investor decisions for more than 15,000 emerging affluent, affluent and high net worth (HNW) investors in 14 markets, including India, along with the resulting movements in major asset classes.
Survey results show 66% of local investors are more actively managing their wealth and making changes to their investment strategies, given current economic challenges.
In the past year, local investors have made changes to their finances, such as spending less (28%) and making new decisions around their portfolios (26%), which will prompt shifts in major asset classes, said Standard Chartered.
To outpace inflation, 61% of global investors are looking to reduce their cash holdings, compared to 70% in India. Standard Chartered predicts that global cash allocations will fall from 26% in 2022 to 15% in 2023, indicated by investor responses.
Investors are reconsidering their holdings of equities as market volatility increases, although this asset class will remain an integral part of portfolios.
Of those currently invested in equities, there is an indication that the allocation of equities in Indian portfolios to fall from 10.8% to 7.6% in 2023 based on survey responses.
This year, gold continues to be of high interest for Indian investors, with 61% saying they have invested as a result of inflation, in addition to combat inflation in 2022, there is interest in value stocks at 60% and bonds at 59%.
Sustainable investments will continue to receive investor interest and capital, even though greenwashing concerns persist. More than half of global investors (52%) expect to increase their sustainable investments in 2023. According to the survey, 64% of investors in India will also do so.
The research reveals that 81% of local investors still believe that digital assets are an important part of any investment portfolio, despite multiple setbacks in the market this year.
Currently, 66% of global investors hold digital assets compared to 74% in India.
Looking ahead, 81% of local investors surveyed plan to increase their investments in digital assets in the coming year. This is in part because many said they have seen people make significant returns off digital assets (36%), and 33% consider them to be a good way to diversify their portfolios.
However, it is important to note this survey was conducted before the FTX crash and the events of the past few weeks may dampen this sentiment.
Helping investors make better decisions
While most global investors polled (62%) were primarily managing their own finances, with some variation across markets. Many investors in India (42%) use professional wealth managers.
On average, across the 14 markets, younger (18-35) investors (63%) are more likely to use a professional compared with 39% in the 55+ bracket. On average, investors taking advantage of professional advice were more likely to have diversified portfolios and higher holdings in sustainable investments.
“As inflation and geopolitical tensions drive uncertainty in the investment outlook, many investors have cited that complexities in preparing and changing investment strategies are making it harder for them to pursue new goals,” said Saurabh Jain, Head, Wealth Management in India, Standard Chartered Bank.
“At Standard Chartered, we are committed to helping clients realise their wealth goals by providing high quality investment insights, innovative products and secure digital platforms,” he said in a release on the survey on 21 Dec 2022.
‘‘There has been a clear shift in the way Indian investors are managing their wealth,” added Nitin Chengappa, Head, Affluent, Private Bank, NRI and Deposits in India, Standard Chartered Bank.
“They are making feasible alterations in their investments to tackle inflation and spread their asset portfolio. Investors are considering to lower their assets in cash and are opting for more sustainable investments.
“We expect this period of flux to continue till inflation and recession worries abate,” he said. fiinews.com
