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It’s Time to Find the Right Strategy for Alternative Investment Funds

August 24, 2023

People enjoy collecting timepieces, so if you’ve been looking for a wristwatch to show off or that complements your fashion sense, you’re not alone. It must match your sense of style, whether it’s a smart watch or a limited-edition vintage mechanical watch. There are a few things to think about if a mechanical watch is your choice. Smooth hand movement; no need for software updates or recharges, like with smart watches. Some people adore the ticking sound of a mechanical watch.

AIFs are an interesting investment option for those investors, mostly HNIs, who aspire to receive high returns and are willing to take high risks. Investors can conduct thorough market research and invest in a category of AIF based on their financial goals and risk appetite. And when it comes to finding the right strategy for your AIFs, what should you look at first and what do you think about next, then, before investing in an AIF? Let’s talk about it in this blog.

What should you think about before making an AIF investment?

Begin by reviewing the investment strategy. Have you already been exposed to the proposed strategy through your current equity and debt portfolios? To prevent any overlap with your conventional investments, it is advisable to avoid strategies that are similar when allocating funds to “alternative assets”.

If it goes through the first filter, then dig deeper. You tend to look for a brand when finalising a wrist watch. You read, watch influencer videos, or do research about it. A 50-year-old brand or a comparatively new brand – who would you choose? Most people will go for a vintage brand for its record and experience. A track record and experience are critical.

Look for a skilled and specialised team to manage AIFs

When it comes to managing your alternative investment funds, particularly in India, it requires specialised skills, and the talent therefore resides in key individuals within the investment management teams. Look for team consistency and cohesion, as well as teams’ commercial alignment with the performance outcome of the fund. This is critical as these products tend to have long lock-in periods, and you want the management team to be there to achieve targeted outcomes.

Then, there are other factors like the vintage of funds and matters relating to related party transactions, etc., all of which need to be checked out. This is the reason why market regulator SEBI has rightfully put in a minimum requirement of ₹1 crore in commitment amount, which may be raised further.

While some of the distributors of AIFs do some diligence, there is much to be learned by the ecosystem as it evolves. Although investors must do as much research as possible, it may be better to rely on the advice of a qualified investment advisor who has a deep understanding of these products and also has rich data to evaluate performance. SEBI has also mandated performance records to be disclosed, but it is at a nascent stage of refinement, and hence the requirement for a deep dive by knowledgeable persons is necessary.

The last look: Conclusion

Prior to making an investment, investors should carefully consider the alternative investment funds option and conduct adequate due diligence on the platform. You should also avoid making decisions based solely on the interest rate that an alternative investment offers. Instead of concentrating your investment in one alternative investment fund, you should diversify it across a number of asset classes and begin investing in alternative investment funds in India. Review the investment strategy to determine if you are gaining access to genuinely unique assets that are not already included in your portfolio and cannot be easily achieved independently. Depend on an expert advisor and ensure to ask appropriate questions, while also seeking input from the advisor.

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Alternative Investment Funds – A good, diverse weather condition for your portfolio!

August 9, 2023

India is well-known for diverse culture as well as weather. We witness majorly four seasons in a calendar year when it starts with winter, followed by summer, monsoon, and post monsoon. How would you plan for the rainy season? Buy an umbrella, water-proof footwear, and good coverings for your electronic devices, or would you also look for some alternatives? Similarly, the same can be said for both the winter and summer seasons, respectively.

The Indian climate has something to offer for everyone. Diverse weather conditions can be beneficial in various ways. People tend to enjoy every weather, many crops can be produced depending on the weather, a great destination for tourist attraction, good for economic growth, and many others. 

Diversification helps in growth and mitigating the risk. You must have heard the phrase, ‘Don’t put all your eggs in one basket.’ While in investment, when you keep money for future needs or emergencies, it is crucial to focus on investment opportunities that can yield attractive returns.

How alternative investment funds diversify your portfolio, lower volatility and enhance returns?  

Since alternative investment funds frequently behave differently from conventional equity and bond investments, including them in a portfolio may help to reduce volatility, provide greater diversification, and boost returns.

  • Lower volatility

The alternative investment funds may potentially lower the overall risk of a portfolio because they rely less on general market trends and more on the strength of each individual investment.

  • Diversification

Alternatives investment funds can be a significant way to diversify your portfolio with low correlation to traditional asset classes.

  • Boost returns

Alternatives give investors access to a wider range of investments and investment strategies, which can improve a portfolio’s risk and return profile and increase total return.

Why are Alternative Investment Funds getting popular in India?

Asset managers invest in unlisted companies or private equity situations, which are essentially growth capital for businesses that aren’t quite ready to enter the public markets, through alternative investment funds. While a significant portion of their capital is already invested in the listed market, it gives them the chance to diversify their portfolio while also giving investors the chance to invest in the private market through these kinds of products.

There are many opportunities in alternative investment funds which includes investing in farmlands, agricultural products, artworks, etc. In the coming times, people will get an opportunity to consume products/services and invest and earn from what they use in their everyday lives.

Conclusion

Alternative Investment Funds can be a good option for investors whose risk appetite is high and who are willing to receive high returns over a period of time. Prior to making any investments in Alternative Investment Funds (AIFs), it is highly recommended to engage in comprehensive market research. By doing so, investors can make informed decisions and strategically allocate their funds with the objective of attaining their financial goals.

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How Does the National Pension System (NPS) Benefits You – Simple Explanation

August 3, 2023

When you start a business or switch to a new career, what would you look at? ‘What would I get in return? How will it be beneficial?’ The answer is simple: ‘benefit’. Remember those days when we would choose a college and a course to pursue?

The scenario of investing is no different. Whether you invest a small amount or a huge amount, you tend to look for benefits. What would you look for when you invest in NPS? The main thing that comes to mind is – benefits. The earning potential of NPS is higher as compared to other fixed-income schemes.

There are many benefits of NPS. We will discuss some of them in this blog.

National Pension System (NPS)

Returns/Interest
The National Pension System (also known as National Pension Scheme) benefits the investor as it offers returns that are relatively higher than other tax-saving investments like PPF, although it may not offer guaranteed high-returns.

Risk Analysis
Currently, the National Pension System’s equity exposure is capped between 75% and 50%. The cap for government workers is set at 50%. The equity portion will decrease by 2.5% annually in the range specified starting in the year the investor turns 50. However, the cap is set at 50% for investors 60 years of age and older. As a result, the risk-return relationship is stabilised in the interest of investors, protecting the corpus to some extent from the volatility of the equity market.

Flexibility
This is another National Pension System benefit as it gives investors the power to choose their fund manager from a pool of 7.

Liquidity
After 60 years, the remaining 40% may be invested in any annuity plan, while the remaining 60% may be withdrawn. After paying for three full years, you can also withdraw up to 25% of the money for any emergency needs.

Diversification
Risk is reduced through diversification because NPS gives you the option to select from a small number of asset classes, including equity, corporate bonds, government securities, and alternative funds.

Benefits from Taxation
The NPS programme allows for a tax benefit of up to two lakhs. The NPS scheme has three provisions that govern the tax benefits. 80CCD (1), 80CCD (1B), and 80CCD (2) are the three. Every person will be given a tax-free lump sum withdrawal at retirement, up to 60% of the total.

Low Cost
One can invest as little as ₹1000 in the NPS scheme each fiscal year. The minimum contribution needed to open an account is ₹500.

Conclusion

Every investment you make today has to have a purpose. While investing in the National Pension System (also known as National Pension Scheme), you tend to look at its benefits while achieving your financial goals.

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Private Wealth Management Strategies for Budding Entrepreneurs

August 2, 2023

During childhood, one fondly recalls the cherished tradition of receiving pocket money from our parents and planning accordingly how to spend it. That was wealth management for us!

A fixed amount for a swing ride, a portion for candies, going to a fair, and no outing would be complete without an ice cream – we allocated everything accordingly. You were solely responsible for how you would spend the pocket money; whether it was your decision to buy something expensive in a single attempt while collecting money for months or something you used to spend on a daily basis, that totally depended on you. And if you lost your money when it slipped out of your pocket, then you need to be prepared for risks when it comes to managing your money.

A similar scenario is implied here, if you start a business and become an entrepreneur. You need to strategize your wealth and manage it effectively. You should look for the cash flows available to you and keep an eye on additional risk factors when you look for a comprehensive wealth management solution. If you are a budding entrepreneur, how will you plan your private wealth management, or what strategies can you adapt? In this blog, we will delve into the various strategies that aspiring entrepreneurs can adopt to pave their path to success. 

Strategies you can look for in Private Wealth Management

  • Strategy 1 – Evaluation

A thorough evaluation of your risk profile should be the first step in private wealth management. Your investment portfolio should be created with additional risk factors in mind, such as potential business losses, liabilities, or the failure of the company. Young business owners may experience irregular cash flows because they frequently reinvest the profits they make from their operations. As a result, they may need to make sporadic withdrawals from their investment portfolio to maintain their operations.

  • Strategy 2 – Emergency Funds

You were not used to keeping all your money in your pocket, there was always some amount of money you kept hidden somewhere, whether it was in a piggy bank or in a place only you would know. A young businessman should have enough money in his bank account to cover living expenses for two to three years while the company is still in the planning stages. In this situation, a proper backup plan should be carefully established as part of wealth management. This plan should be able to support emergencies, regular living expenses, and predetermined cash flows.

  • Strategy 3 – Seek Professional Help

When you were confused about something, to whom would you look for answers in your childhood? Parents, of course, because you used to think that they knew better than you. The decision to use a wealth manager depends on your financial situation and goals, as well as your financial expertise.

  • Strategy 4 – Set Priorities

In the past, we might not have spent all our money on a single commodity. We used to spend some and save some to buy more. A similar strategy is implied here. Your private wealth management strategy needs to be clear so that you won’t have to worry about achieving your financial objectives in the future and taking the company to the next level.

  • Strategy 5 – Good Credit Score

If you would not waste your pocket money, then you would win the trust of your parents, and you could ask for money when you needed it most. While strategizing your private wealth management, pay your debts and credit card bills on time. A healthy credit score means you will be able to negotiate favourable terms on your loan.

Conclusion

Managing your wealth is important while setting up your business. Strategize and choose a method to manage your private wealth that is based on your goals and objectives. By adopting a proactive approach, you can ensure a well-rounded and informed decision-making process in your pursuit of optimal private wealth management.

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The Ultimate Guide to Filling Your Kart with Mutual Fund Solutions

July 27, 2023

“What is your favourite colour or any other option you are looking for?”

You must have been familiar with this question while you went shopping. Whether you are looking to buy a new laptop or a new pair of jeans, you consider so many factors before buying them. There is always a bucket list; it may not be on paper, but you know the purpose before buying a particular commodity.

You finalise your purpose for buying a particular item, and secondly, you may look for the quality to avoid damages that may occur in the future. Will it give you long-term value for your money? Are there any discounts? Will you get it online or offline? If it is an electronic device, what would be its performance? You tend to look at these factors.

When choosing a mutual fund to invest in, you tend to look at similar factors. Like when you choose a fund on the basis of your goals, you will analyse the risk, your investment strategy, and a few others.

Let’s discuss them briefly, one by one.

  • Purpose: As mentioned above, when finalising a particular item to buy, you’ll look for the purpose or utilisation of the product. The same goes with selecting mutual fund services. Decide the purpose of your investment; it may be for education, marriage, buying a car, or going on vacation. Plan your investment in mutual fund solutions as per your goals and return expectations. It may also be for wealth creation and tax savings.
  • Risk Criteria: Risk comes from not knowing what you are getting into. There is always some element of risk involved when you buy a product. Whether it’s quality, physical damage with time, performance, or performance, you may suffer a loss. Investing in mutual fund solutions draws a parallel line. The investor should evaluate the investment risk before selecting a mutual fund. He or she must also determine whether the risk is manageable.
  • Investment Strategy: How would you use the product? Every product comes with a guideline, but we tend to ignore it. In mutual fund services, the majority of investors overlook the importance of investing strategy when determining how to choose the best mutual fund. However, it plays a critical role in your investment portfolio’s success. The term “investment approach” can also be used to describe an investment strategy. The fund houses use this method to decide on all of their investments.
  • Performance: Just as the performance of a product can be measured by its sales, customer reviews, and market demand, the performance of a mutual fund service can be evaluated by its returns, expense ratio, and investment strategy. Both require careful analysis and research to make informed decisions and maximise success.
  • Taxes: When you get the final bill, you will see the tax implications at the end. It happens the same with mutual fund services; according to the Income Tax Act, any profits (returns) that you, as the investor, make from your investment are taxable. The returns on equity fund units are taxed according to the holding period when they are redeemed.

Conclusion

Smart buyers analyse everything. It is not about spending your money to buy a product; it is mainly about getting the right product. You check online for reviews, customer feedback, advice, etc. While investing in mutual funds, do your research, prioritise your goals, investment horizon, and strategy, and consult a mutual fund service advisor.

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Global Fund Investments: A Chance to Write Your Growth Story

July 12, 2023

If you are planning a trip to Italy, what would be your itinerary? You would look for the perfect time to visit as per your preferences, depending on your unique interests and desired destination.

While investing in global fund investments, your investment horizon and risk profile are equally important, which involve choosing the right combination of asset classes and analysing your goals. It is advisable for any investor to remember two crucial factors: diversification and asset allocation. A balanced risk-reward ratio can be achieved by investing in a variety of asset classes and diversifying your portfolio.

At first glance, global fund investments and foreign trips may appear to be unrelated topics. When you look closer, an intriguing correlation between the two becomes apparent. You tend to search online, watch videos, follow a few social media channels, discover major tourist attractions, etc. to get the idea of that place you are travelling. 

While investing in global funds you need to gain valuable insights into the interconnectedness of the global economy and discover how your financial decisions can impact your financial goals in the long-term. Expanding into international markets can be a challenging endeavour. 

Discover the essential steps to take before investing. Investing in international funds requires crucial steps:

  • Research – Without it, you may be putting your investments at risk. Before entering a new market, it’s crucial to gain a deep understanding of its unique characteristics. Take the time to analyse prevailing trends, market dynamics, and consumer psychology to ensure success. By conducting a thorough analysis, you can determine the equities and funds that are poised for future success and allocate your funds accordingly.
  • Invest – Most people who wander around the world start with their own country. The same scenario applies to global fund investments. Once people have invested in well-performing mutual funds in India, only then they will prefer investing in international funds.

You need a passport along with a visa and tickets to board foreign flight. But, fortunately this is not the case with global funds. Investing in global funds and asset classes is just as easy as investing in domestic funds. You have the option to invest directly through an asset management company (AMC), an investment advisor, or through user-friendly online investment platforms.

Now, when investing in global funds, you need to consider the tax implications

  • Taxation – You can experience the same tax implications on international funds as you would on debt funds and maximise your returns by holding your funds for over three years. And this is not all, you can also enjoy the benefits of long-term categorization and a tax rate of only 20% post-indexation. You can unlock the power of indexation factors that consider the inflation rate during the holding period and seamlessly adjust the acquisition cost to get potentially maximum returns.

Conclusion

When you book tickets, people recommend taking advice from a trip advisor. The same implies in global fund investments: take help or guidance from a fund manager before you board a flight to international funds.

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The Synergies of an Ideal Cricket Coach and an Efficient Wealth Manager

July 7, 2023

The Cricket World Cup is just around the corner, and every team is willing to outperform other teams with end-to-end planning, strategy, and team performance. Cricket is played by only 11 players on the field, but a coach guides and nurtures the talented players behind the scenes. A competent wealth manager or advisor is no different. He provides guidance and expertise to individuals who are willing to achieve financial goals. There are some synergies between cricket coaching and wealth management as both require long-term planning, teamwork, and rational approach.

The Game Plans

A proficient cricket coach develops a plan of action while keeping in mind the strengths and weaknesses of each player. On the other hand, a wealth manager finalises a financial strategy based on your goals, risk tolerance, and investment horizon of the investor. It’s part of his wealth management solutions and expertise. Winning a single match in a big tournament won’t win you the trophy in the end; similarly, a wealth manager crafts a plan that increases the success potential in the near future. He doesn’t have a plan for one or two days or even weeks, he tends to plan for long-term goals of every investor.

An expert cricket coach knows the ins and outs of a player, whether he is a batsman, a bowler, or an all-rounder. He, along with the captain, finalises the team’s batting order, bowling preferences, and fielding positions throughout the game. Similarly, in wealth management services, wealth advisors figure out how to allocate investment classes such as stocks, bonds, real estate, etc. to create a diversified team.

Teamwork  

Cricket, or any other sport such as football, hockey, or even wrestling, is a team sport. Players need to abide by the plan and the coach and player(s) dedicate themselves to a common goal. He encourages effective communication and teamwork and helps players work on their strengths.

Parallelly, wealth managers closely work with their clients to make informed decisions. They take advantage of years of experience and expertise when it comes to guiding clients towards success. This is an effective pillar of a wealth management solution. A wealth manager looks for trends, economic indicators, and the client’s goals.

Long-Term Vision: Building Sustainable Success

A cricket coach’s priorities go beyond immediate success. They develop a pipeline for future success, develop young talent, and instil discipline. Similar to this, wealth managers and advisors take a holistic approach, considering long-term goals like retirement planning, wealth preservation, and to generate wealth, in addition to managing short-term financial needs.

Final Overs: The Verdict

Both wealth management services and cricket coaching place a strong emphasis on the virtues of perseverance, discipline, and patience. Just as a wealth manager or advisor helps clients navigate market fluctuations and financial challenges, a coach assists players in overcoming setbacks and learning from mistakes. By encouraging a long-term vision and imparting important lessons along the way, both professionals work to create sustainable success. 

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