Month: May 2023

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Global Funds Investment – Need to know things before investing!

May 30, 2023

What would be like to invest in your favourite international brands? Apple? Amazon? Or perhaps Netflix? You can do so by investing in Global Funds. 

But before you dive into global fund investments, let’s have a look at things which you should know about global funds solutions.

Global fund investments are also known as international funds, and they enable you to invest in foreign stocks. You can begin your global fund investments in any international company that is based somewhere other than your country. You can adjust your global fund investment portfolio for better returns and reduced risks with more options for investing in foreign funds, just like domestic mutual funds.

Before you begin, think about the following:

1. Determine the risk – 

It is crucial to evaluate the risks connected to global funds investments. Studying a fund’s track record or historical performance for at least five years is the best way to determine how well it has performed internationally. Hiring a financial advisor is a good idea, despite researching a fund’s track record and you still cannot decide on it.

2. Choose an extended investment horizon – 

Experts noticed a long-investment horizon, meaning investors who held on to their funds for a long duration experienced significant capital appreciation. By long duration, it can be for 7 to 10 years. So, until a fund’s track record shows significant returns in the short term, we recommend investing in this instrument for at least a few years.

3. Check the fund’s expense ratio of Global Funds Investments – 

A fund’s expense ratio is somewhat like that fund’s maintenance charge. It’s a percentage charged from investors for administrative management of the fund. The higher the expense ratio, the bigger the cut you must pay on your return. So, when you are planning to invest in a global fund, view and compare its expense ratio to see whether it justifies the fund’s performance. Otherwise, choose a global fund with a comparatively low expense ratio, as the money saved will only boost your long-term capital appreciation.

4. Check if the fund is diversified – 

Global funds investment solutions may be only one type of equity mutual funds, but this category can invest in diverse asset classes like stock, bonds, real estate, gold, etc. The more diversified a fund, the lower your risk exposure.

Conclusion

In addition to these 4 things, you must also figure out if the global fund investments are owned and managed by a reputed fund house or asset management company. Therefore, before investing, check how diversified the international fund is. You can do so by conducting a search online or by asking a financial expert. It is advisable to contact a financial advisor.

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Alternative Investment Funds – Gaining Popularity in India

May 29, 2023

While fixed deposits, stocks, and bonds are still good long-term investment options, many savvy investors are now opting for alternative investment funds (AIFs). These financial instruments have the potential to give high-returns by investing in various asset classes. AIFs have recently become extremely popular among the HNIs looking to diversify their portfolio and grow their assets.

India and Asia, as a whole, are poised for the next significant expansion of alternative investment products. According to a report by Anand Rathi, AIFs in India are expected to grow by 25% between 2022 and 2025. The industry and the market are currently geared toward an alternative investment funds paradigm shift.

According to a report, wealth managers offering AIF products as alternatives to high net worth individuals (HNIs), family offices, and insurance companies will drive overall investments through AIFs to grow at a 25% CAGR between 2022 and 2025.

What are Alternative Investment Funds?

AIFs are essentially pooled investments that also invest in futures, hedge funds, private equity, and venture capital. Although the Securities and Exchange Board of India (SEBI) only introduced AIFs in 2012, they have quickly grown in popularity among many investors. High-net-worth investors can access assets that might not be directly related to the stock market through alternate investment funds (AIFs). In addition, compared to mutual funds and bonds, it provides them with investment diversification and potentially higher returns.

Let’s discuss in detail different types of Alternative Investment Funds in India.

Category I

This category includes Category I AIFs that invest in SMEs, start-ups, and other small businesses with high growth potential. Additionally, the Indian government provides tax breaks for people who invest in this sector. Due to the fact that investments in Category I appear to have a multiplier effect on the economy in terms of wealth and job creation.

Venture Capital Funds (VCF): VCFs invest in start-ups with high valuations who, however, are momentarily lacking in funding for expansion. VCFs invest in high valuation ventures by pooling money from individual investors.

Infrastructure Funds (IF): These funds make investments in the construction of public facilities like roads, bridges, dams, and rail lines. Dividend income and capital gains are typically combined to form the returns from this type of AIF.

Social Venture Funds (SVFs): They invest in businesses with a strong social conscience. These businesses make money while resolving environmental and social problems.

Angel Funds: Venture capitalists form an angel fund, a type of VCF, to support start-up businesses or aid in their growth.

Category II

Funds for Private Equity (PE): You can invest in unlisted private companies through PE funds. This sub-category is chosen by people who want to diversify their financial portfolio and include a potentially high-risk AIF.

Fund of Funds: The Fund of Funds combines numerous AIFs into one.

Debt Fund: As its name implies, this type invests in debt securities of both publicly traded and privately held businesses.

Category III

Private Investment in Public Equity: These funds are pooled and specifically designated for investments in public equity. Private investment in public equity funds.

Hedge Fund: Hedge funds pool capital from both individual and institutional investors to make high-yield investments in domestic and foreign markets.

The traditional investment tools that investors are now exposed to include direct investments, mutual funds, unit-linked insurance plans, and portfolio management services. But the main purpose of these options is to trade securities. Investor demand for alternative investments remains unfulfilled.

Conclusion

Although investing in AIFs can be very profitable, there is a significant learning curve involved in doing so. Get financial advice from financial experts, if you want to invest in AIFs. Develop your investing skills while our team supports and grows your wealth with specialised wealth management solutions.

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Trends and factors that are influencing private wealth management in India

May 22, 2023

India’s wealth management industry is changing rapidly. The prosperous middle class is growing while the country’s high net individual population is estimated to grow by 75% from 3.5 lakhs in 2020 to 6.11 lakhs in 2025, according to a report. Ultra-high net worth individuals are expected to excel by 63% in the given period. India witnessed a record 14.2 million new demat accounts being activated in FY 21, the report signifies. 

Trends you should know about Private Wealth Management 

Exciting new opportunities are creating some positive transformation for wealth management solutions. If your business seeks to leverage these opportunities, then you need to know these trends:

  1. The makeup of investors is changing: The new generation of Millennial and Gen Z investors are always connected and prioritise using technology. They want to be able to communicate with financial advisors in real time via all available channels, including text messages and video chat. Additionally, they need constant access to investment options and portfolio information. This requires re-constructing the traditional investment ecosystems which are tailor-made to their demands.
  1. A hybrid future of wealth management services: The foundation of the wealth management solutions lies on personal relationships and human connections – and this will continue to be so. Customers still expect to be treated with compassion, honesty and understanding. However, they also look for experiences that are quicker, more practical, and smoother. The key enablers include digital technologies like robo-advisors and self-service investment portals. To increase productivity and respond to client demands more quickly, advisors will also adopt digital tools and process automation.
  1. Emergence of alternative asset classes: Millennials are very concerned about social and environment issues due to which ESG investing is becoming more popular. Young investors are shifting to non-traditional investments like passive investing, unlisted companies, private equity investing, etc. They actively seek out investment options that align with their environmental values.  
  1. Increasingly, advisory firms are subject to regulatory scrutiny. For example, the Securities and Exchange Board (SEBI) of India is paying more attention to advisory firms’ fee structures, data security and privacy procedures, adoption of AI/ML, use of crypto assets, and ESG (environmental, social, and governance) funds. Tax increases are also anticipated, which is a huge worry for investors. Advisory businesses will need to have a solid compliance program and system of controls in place in order to be proactive prepared.
  1. The “financialization of savings” is accelerating: Historically, physical assets like gold and real estate accounted for 95% of household wealth in India. However, investors are now favouring financial savings over tangible ones. They are more conscious that, in the face of rising inflation, an excessive concentration of wealth in non-financial assets might produce unfavourable returns. They can experience better returns and greater efficiency in terms of liquidity and contingency planning with a more balanced approach to portfolio creation.
  1. Financial planning is becoming more holistic: The newest investors are fusing monetary objectives with moral and non-material objectives. They are searching for more all-encompassing investment solutions that cover social welfare, impact investing, estate preparation, and retirement planning.
  1. Hyper-personalization is essential right now: A one-size-fits-all strategy is no longer effective with investors. They demand carefully chosen, specially tailored, and contextually relevant offerings. Whether it’s investment products, marketing emails, or call centre service, every customer touchpoint needs to be personalised to gain customer loyalty and trust.

Conclusion

India’s private wealth management industry is poised for significant growth, driven by shifting investor demographics, emerging alternative asset classes, and rising regulatory scrutiny. With the increasing affluence of the middle class and the growth of the high-net-worth individual population, wealth management firms must adapt to meet the evolving needs and expectations of investors. By embracing digital solutions, incorporating non-traditional investment opportunities, and providing more holistic and personalised services, private wealth management firms can capitalise on these exciting new opportunities and position themselves for success in the years to come.

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Things to know about the NPS calculator!

May 19, 2023

The National Pension System, or NPS, has emerged as an attractive and low-cost investment option for people who are searching or looking to create a corpus for their retirement.

This investment tool offers Indian citizens an additional deduction for tax savings of up to Rs 50,000 under subsection 80 CCD (1B), in addition to the chance to build a retirement fund by investing in four asset classes of their choice. This is beyond the Rs 1.5 lakh deduction investment allowed under section 80C. The power to invest and increase one’s retirement fund rests with the investor because investments are market-linked and dependent on the performance of asset classes and investment decisions made by the investor.

By enabling investors to select between debt and equity based on their risk tolerance, the NPS calculator provides an estimation of the anticipated retirement corpus. Thus, it serves as a valuable resource for making informed decisions about NPS investments.

Who can use the NPS calculator?

The NPS pension calculator can be used by all those eligible to invest in the NPS scheme. According to NPS rules and regulations, Indian citizens between the age of 18 and 60 are eligible to invest in the scheme, respectively. Individuals must, however, submit the necessary Know Your Customer (KYC) documents before investing in the plan.

National Pension Scheme Calculator – Features

The National Pension Scheme Calculator has several useful features-

  •  Anyone can use the NPS return calculator as its interface is very simple
  • The NPS pension calculator can help you to calculate the right amount of your pension.
  • It also highlights how much you invested, earned, and how much you will get at maturity.
  • The NPS pension calculator is available to anyone if he/she is eligible to invest in the National Pension Scheme

Steps to calculate the required monthly investment

NPS pension calculator offers an opportunity to find out the required investment amount to gain planned retirement savings. It can be very useful for the users who have already planned their goals or retirement amount and they would invest in an NPS scheme according to their goals. Here are the few steps, you can follow while using the National Pension Plan calculator:

Step 1 – Enter the goal amount – Put the goal amount in your mind that you want to collect for your retirement years.

Step 2 – Select growth rate or investment planning – Investors can achieve their goals based on their investment planning and risk profile. They can choose from aggressive, moderate, conservative, or custom risk profiles. Custom risk profile gives them an opportunity to predict their rate of return as per their future requirement.

Step 3 – Age – Put your age and other vital factors for the NPS to calculate your retirement amount!

 Conclusion

The NPS pension calculator computes the monthly investment required to attain the goal amount at maturity based on the information provided in the three steps. A pie chart offers a visual representation of the invested amount and interest earned during the investment period. The calculator also displays the money saved by the investor through NPS investments during the investment tenure. Additionally, users can perform scenario analysis by adjusting the goal amount for inflation using different inflation scenarios of 4%, 6%, and 8%. This feature empowers users to anticipate the impact of inflation on their retirement savings and modify their investments accordingly.

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How to Balance Your Mutual Fund Portfolio

May 17, 2023

Investment in various asset classes, such as debt and equity, is a crucial strategy in personal finance. If you build a portfolio that fits your risk tolerance and investment objectives, having the right asset allocation can help a lot.

You take into account a variety of factors when it comes to mutual funds solutions, such as your objectives and risk tolerance, when choosing the appropriate asset allocation for your portfolio. There are many mutual funds services in India, known as AMCs (Asset Management Companies), who can help you with  mutual funds solutions and portfolio rebalancing.

After completing this portfolio-building process, you anticipate easily achieving your objectives. But here’s the problem. Your allocation to various asset classes will drift over time even if you don’t make any active changes to your portfolio. As a result of the market value of each security in your portfolio earning a different return, the situation changes. Their weight in your portfolio changes as a result. 

What should you do to get past this difficulty? The solution, then, is portfolio rebalancing. Rebalancing your portfolio involves buying and selling portions of it in order to restore the original weights of the various asset classes.

Let’s understand how to do portfolio rebalancing in this blog!

What is Mutual Fund Portfolio Rebalancing?

When it comes to mutual funds solutions, portfolio rebalancing is the process of adjusting the weights of a portfolio of assets. To maintain the initial or intended level of asset allocations and risks, it entails routinely buying and selling assets in a portfolio.

You can specify the weight of each asset class in the initial state. Additionally, you can use rebalancing to change the weightings of each security or asset class to conform to a newly created asset allocation if your investment strategy or risk tolerance for risk changes.

Importance of Rebalancing your Mutual Fund portfolio?

You can implement any changes you make to your asset allocation strategy and stay on course by rebalancing your portfolio. A list of some benefits of rebalancing your portfolio is provided below, as far as mutual funds solutions are concerned:

1. Keep the original asset mix  – You can see how your portfolio’s asset mix changes over time. Therefore, over time, the risks and expected returns of your investments may not be suitable for you. You may fix this by rebalancing your portfolio.

2. Enhancing risk management – The risks associated with an asset could change over time. As a result, you might need to reevaluate your portfolio’s risks and, if necessary, change the asset mix. However, systematic portfolio rebalancing allows you to manage the amount of effort you expend.

3. Helpful in implementing new investment plan modifications – As you grow older and wiser, you might learn new skills. Most investors also become less risk-tolerant as they get older. If you regularly rebalance your portfolio, it will conform to your evolving investment style and plan.

4. Buying low and selling high – Rebalancing encourages investors to sell assets with higher returns and buy more of those with lower returns. Rebalancing is a good long-term strategy for managing market risks, despite the fact that it may seem contradictory.

Conclusion

It may seem daunting but rebalancing your portfolio is not confusing. You sell a portion of an asset class that has performed well to make room for a security with slightly mixed recent performance. An investor’s portfolio of stocks may be adjusted to meet their needs. You may also use the market’s condition as a guide for making modifications, but this has several drawbacks, most notably expenses. Therefore, before making an investment, all investors should do their research. They should take help from fund managers to provide them with mutual funds solutions.

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