With equity markets heating up and prices of assets on an upswing, investors are finding themselves in a tricky situation. Mint Money spoke to Kalpana Morparia, chief executive, JPMorgan India; Renuka Ramnath, founder & MD, Multiples Alternate Asset Management; S. Naganath, president & CEO, DSP BlackRock Investment Managers; Nilesh Shah, deputy MD, ICICI Prudential Asset Management; Madhusudan Kela, head (equity investments), Reliance Capital Asset Management; and Prithvi Haldea, CMD, PRIME Database. Tamal Bandyopadhyay, deputy managing editor, Mint, moderated the discussion. Excerpts:
Bandyopadhyay: We have a $1.2-trillion economy, which is on an firm growth path. Structurally we can see the growth story for years to go. Sensex is (at a) 29-month high. In a situation like this, to manage money, can we throw it in realty, private equity, MFs and sit and watch it grow?
Nagnath: The allocation of equity by the investor has to be done in the context of his or her risk-return appetite... the investor often focuses on the return part, often ignoring the risk they take to achieve that return. Once you have those two numbers in your head, then the next step is the amount of money you are willing to commit to equity...
Haldea: People have said that investment in infrastructure will be the best story of the country, and you can make money, but we have any number of laggards in the infrastructure sector —whether it's real estate, power — people have lost money. You have to ultimately be competent and lucky to identify the right script at the right time..
Ramnath: I think that understanding of private equity by private wealth owners is rather limited. At one level there is a feeling that this product is not for me as an individual. At the other extreme, it's like in the first year that I invest, if I get some money back, then I will be very lucky. Both of these extreme positions are not good for both the wealth allocator.
Morparia: India prides itself as having one of the highest savings rate in the world, yet 35-40% of our savings are not in financial assets. Indians just love physical assets, particularly the yellow metal. That's one challenge as to how we get great savings to financial asset.
Kela: Where you are putting your money is extremely important...only then would you see high returns.