INSUBCONTINENT EXCLUSIVE:
MUMBAI: High net worth (HNI) investors are choosing simple products over complex and exotic instruments in a falling and volatile
market.
Mid-cap and small-cap portfolio management schemes (PMS), perpetual bonds, preference shares, and credit risk funds are clearly not
favoured by the rich now.
Instead, affluent investors are opting for simple and transparent products, such as liquid funds, index funds and
Mumbai-based distributor of financial products.
Investing in a liquid fund or a low duration fund, large cap and index funds, and staggering
their equity investments over the next 6-9 months are some of the suggestions from wealth managers to their HNI clients.
Over the past one
month, there has been a sharp fall in the stock market indices
The BSE MidCap and BSE SmallCap indices are down 21 per cent and 28 per cent from their peak levels in this calendar year.
Several mid-cap
stocks, such as DHFL, PC Jewellers, Yes Bank and Infibeam have lost anywhere between 25-50 per cent from their peaks.
Investors have also
had to face losses in debt funds due to the ILFS issue
The episode has led to some fund houses writing off 100 per cent in their investments in papers of ILFS, leading to losses of 5-7 per cent
for investors in such funds
Added to that, investors in duration funds have been hit as interest rates continue to head higher over the past one year, with the 10-year
plans, which invested in mid- and small-cap stocks, have taken a sharp hit as the maximum correction has happened in those stocks.
Moreover,
with liquidity drying up, it is difficult for investors to exit small and midcap stocks as selling them would only drag stock prices
lower.
In equities, investors are reducing allocation to mid-caps and opting to stagger their investment in large cap or index funds over
said Munish Randev, a Mumbai-based family office advisor.
