ALTERNATE INVESTMENT Creating wealth
India’s path to wealth creation through innovation shines brightly with the rise of fintech pioneers, vibrant capital markets and visionary entrepreneurs. Steady increase in financial literacy, burgeoning middle class, rising income levels of predominantly young population and penetrative reach of the internet over last few years have encouraged investment participation in capital markets, more specifically through mutual funds and other financial products.
GIFT City (Gujarat International Finance Tec-City) showcases India’s stride forward in the direction of becoming prominent global investment destination, emphasising on harmonising regulations with other international centres and inviting prominent foreign investors to its shores. “Achieving alignment between various regulators in other investment destinations and IFSCA, the GIFT regulator is crucial for enhancing foreign investors’ trust and attraction towards the GIFT City,” says Abhishek Bansal, founder & chairman, Abans group, which manages assets over R2,500 crore, who praises the pivotal role of regulatory coherence by IFSCA (GIFT City regulator) in promoting investments through GIFT City. Bansal’s Abans Holdings Ltd, listed on both NSE & BSE, has been built brick by brick with a foresight that increasingly Indian investors will need the expertise of financial assets management companies to manage investments across various asset classes. “IFSCA’s approach has ensured the implementation of investor-friendly policies that align with global standards, fostering of confidence and interest among foreign investors in GIFT City,” adds Bansal.
In recent years, India’s AIF industry has experienced substantial growth. Investors, ranging from institutions to high-net-worth individuals, are increasingly attracted to alternative investments, seeking diversification beyond traditional assets.
According to Bansal, specialised funds concentrating on sectors such as technology and healthcare have become popular, providing targeted exposure and potentially lucrative returns. The sector has bolstered confidence through positive performance, successful exits, and attractive returns, thereby encouraging more investors to allocate funds to alternate investment opportunities.
Hedging paramount
Bansal emphasises the importance of utilising derivatives to hedge and mitigate a range of risks, including market volatility, currency fluctuations, and unexpected events. “At Abans, there is a significant focus on identifying and managing risks as a fundamental aspect of the wealth generation process through hedging strategies and mechanisms. This emphasis on derivatives is in line with a wealth generation approach that prioritises risk awareness, highlighting the central role of comprehending and addressing potential downsides in the endeavour to build and safeguard wealth for Abans’ clients,” explains Bansal, while talking about the evolution of Indian markets across asset classes has been profoundly influenced by technology, particularly through the advent of robo-advisory platforms. These platforms leverage cutting-edge algorithms to analyse data, identify patterns, and execute algorithmic trading strategies with remarkable accuracy, thus enhancing trading efficiency.
“Moreover, robo-advisors stand out in risk management with their sophisticated algorithms, offering round-the-clock market surveillance for enhanced monitoring,” Bansal remarks. “Furthermore, they can integrate behavioural analysis, providing a nuanced understanding of market dynamics. In essence, the utilisation of robo-advisory platforms not only enhances precision in trading strategies but also augments risk management capabilities, making them an enticing proposition for market participants in India”.
Meanwhile, over the next five years in India, he anticipates a transformative evolution in wealth creation characterised by several pivotal trends. Primarily, there will be a pronounced shift towards digital financial services, with an increasing dependence on fintech platforms for a wide array of financial activities spanning banking, investments, and financial planning. Another significant trend involves the growing significance of environmental, social and governance (ESG) criteria in investment decisions, reflecting investors’ broader commitment to sustainable and responsible investing practices, and aligning portfolios with ethical considerations.
“Regarding investment strategies, a surge in interest in alternative asset classes like private equity, venture capital, and real estate is expected, as investors seek diversification beyond traditional options to explore avenues with potentially higher returns,” Bansal feels. “Personalised financial planning is poised to take centrestage, responding to the escalating demand for customised solutions. By leveraging data analytics and artificial intelligence, financial planning will be tailored to individual needs, offering more precise and effective strategies”.
Finally, the collaborative landscape between traditional financial institutions and fintech companies is set to deepen, aiming to enhance services, streamline processes, and introduce innovative financial products. This collaboration will ultimately broaden access and deliver a more seamless, tech-driven wealth creation experience.