The wealthy non-resident Indians are looking at a variety of asset classes in India including equities, leveraging bonds, and real estate, according to Axis Bank’s Satheesh Krishnamurthy.
“Good investment is something that they [NRIs] really like and if you look at the returns of the Indian equity markets over the last four or five years, it’s been clearly the top quartile, even if you compare with other markets globally,” Krishnamurthy, executive vice president and head-private, premium banking and third-party products at Axis Bank Ltd., told BQ Prime’s Niraj Shah in the special series ‘Where Do Millionaires Invest?’.
NRIs are also interested in taking leveraged positions against deposits and bonds that they have already invested, he said.
“If they put $100 in a bond, what percentage of that can be leveraged further is something they are always very inquisitive about,” Krishnamurthy said. “And as you leverage more times, and if you do it intelligently, it increases your alpha,” he said, adding but it also carries the downside risk of “severe capital erosion” if the leverage turns negative.
Real estate, is the other asset classes that interests NRIs especially commercial real estate investments in India and real estate investment trusts.
Krishnamurthy underscored that as India’s gross domestic product continues to grow, more commercial establishments are being set up whose rental flows “tend to be predictable.”
“Rental receipts are very clear over a 10-year timeframe. They would like to be part of that wealth creation opportunity as well,” he said.
Interest of NRIs have expanded to global assets. They are looking to create a corpus outside India that would also help in diversifying the currency risk, Krishnamurthy said.
“A lot of them are also interested in owning global assets, whether it is Nasdaq listed stocks and there are funds of funds again, which offer similar products to tap into that opportunity,” he said.
Some NRIs, according to Krishnamurthy, are interested in investing in real estate outside India, for the purpose of self-use or even for gains from value appreciation.
“So, as Indians find and build businesses which are present globally. They want to have assets in those markets as well,” he said.
Watch the full conversation here: