HNIs want to diversify; create an offshore portfolio: Citi's Sameer Kaul

Younger clients are more aware and keen to invest into new age technologies such as Artificial Intelligence (AI) and machine learning, he says

The steady rise global equity markets over the years has been a big draw for investors. SAMEER KAUL, managing director and head of Citi Private Bank, India tells Puneet Wadhwa that there is a significant increase in the number of families who wish to diversify their portfolio. Some families have children studying abroad and are considering purchasing property there, he says. Edited excerpts:

Every bank and brokerage has a private banking proposition. What differentiates you?

Our bankers’ focus on our clients’ individual needs and offers a suite of mutual funds, fixed income, structured products and alternative investments. We do not manufacture our own products in India, and so our clients see value in the open architecture that we provide. Investors can also take advantage of the Liberalised Remittance Scheme (LRS) route.

Over the last few years, avenues such as art, wines etc have emerged as investment options. Are the well-heeled in India looking that them?

Art as an asset class in India is still very nascent and while it is not as prevalent as in developed markets like United States and Europe, it is growing. The investment into art is a long-term play and relies on the discretion of the individual. We have an Art Finance program outside of India where we provide a line of credit against approved art work to help create liquidity for clients against their long term assets.

How are investors hedging their investments?

Our clients are largely onshore and are not impacted by the movement in the Indian currency in terms of their onshore portfolio. The currency depreciation increases the interest level of clients to build an offshore investment portfolio through the LRS route. We are seeing a significant increase in the number of families who wish to diversify their portfolio and want to participate in global markets by using their LRS funds to create an offshore investment portfolio. Some of these families have children studying outside of India and are considering purchasing property outside of the country as well.

Are investing patterns changing?

Younger clients are more aware and keen to invest into new age technologies such as Artificial Intelligence (AI) and machine learning. They are also keen to participate – in part or whole – into ventures that are in the consumer technology space and do not mind the option of buying into an operating asset.

There has been a steady increase in the assets under management (AUM’s) of family offices in India. Where are they investing? 

Family offices, depending upon their sizes, are either buying operating assets or investing into stressed assets. Almost everyone else is invested into a portfolio of publicly held equities and fixed income instruments. We see family offices, in particular, buying into financial services and consumer/B2B technology space.

While the structure of most of the family offices is designed to facilitate investment discussions, a growing number of family offices are starting to look beyond public markets as new business opportunities present themselves to investors in India.

What are the trends in the wealth management space in India in terms of distribution? 

Distribution models are either open architecture or a mix of captive and third party. We believe strongly that open architecture is the best solution for clients. While clients in India, especially in the ultra HNI space, want to deal directly with each asset manager, we do see an eventual reversal in this trend in line with our global experience with open architecture making a strong comeback. There is an apparent conflict of interest when wealth managers suggest investment solutions where the money is being managed by their own asset management divisions and it is imperative for clients to evaluate each idea keeping in mind their asset allocation, risk appetite and expectation in terms of return.