Amit Dassani of quant global wealth management discusses some of the product and portfolio management trends in India.

Date: June 2011

Tags: Wealth management, India

• From 2008 onwards India has been somewhat aloof in terms of global investing because of the country’s strong fundamentals
• India’s high-interest rate regime has led to demand for fixed income instruments
• At the lower end of the wealth segment, there is less sophistication when it comes to investors looking at portfolio construction and asset allocation from a risk perspective
• From 2008 onwards, discretionary-focused firms have not been doing as well, given that India’s portfolio management service regulations don’t allow for shorting

According to Amit Dassani in an interview, from 2008 onwards India has been somewhat aloof in terms of global investing because of the country’s strong fundamentals.

The demand from wealthy local clients, therefore, has been mainly India-led products, he explained.

More recently, however, there has been a trend towards clients asking for geographical diversification, specifically in relation to equities. Investors are looking at emerging markets in particular.

India also has a high-interest rate regime at the moment, added Dassani, with bank fixed deposits around 10% for a 12-month period. This in turn has led to demand for fixed income instruments, with a lot of products offered by asset management companies structured along this theme.

Another interesting trend, he said, relates to India being a large investor in gold, rather than just a consumer as it has been historically.

Trends in portfolio construction and diversification

At the lower end of the wealth segment, Dassani said there is less sophistication when it comes to investors looking at portfolio construction and asset allocation from a risk perspective.

The upper-end of the segment clearly looks for more sophisticated tools and techniques to reduce risk in their portfolio, he explained, and such services are becoming more widely offered by wealth management providers.

At quant, for example, Dassani said the firm looks to provide research and advice across asset classes. It looks to act as an asset allocator and make strategic calls based on the firm’s overall macro view, encapsulating equities, commodities, currencies and fixed income globally.

Discretionary portfolio management

According to Dassani, discretionary portfolio management has long been in India, and did well from around 2002 and 2003 on the back of the country’s strong economic and equities market growth.

From 2008 onwards, however, discretionary-focused firms have not been doing as well, given that India’s portfolio management service regulations don’t allow for shorting.

As a result, investors can only use futures or derivatives for hedging, which make it more difficult to protect capital, he explained.