Emkay Wealth Management, the wealth management and advisory arm of Emkay Global Financial Services, said tapering of liquidity measures is a key challenge for the markets.
The advisory firm, which held a media webinar today on ‘Balancing Risks and Returns’ — discussion on asset allocation, current markets situation, likely risks and challenges in 2022 and the opportunity size for the wealth management industry, said it advocates its clients to build a balanced asset allocation and a diversified portfolio strategy. The performance of each asset class is based on both internal and external factors. Therefore, balanced asset allocation helps offset the underperformance in any of the asset classes over a period of time.
Dr Joseph K Thomas, Head of Research, Emkay Wealth Management, said: “There is no doubt that the rates globally will move up from current levels as inflation has already started moving up. So apart from rising inflation, tapering of liquidity measures are key challenges for the market apart from high valuation in some pockets of the Indian market. The reversal of liquidity may impact P/E expansion.”
“With a strong inclination towards equities, it is pertinent to have a diversified portfolio that will help offset losses of certain stocks due to them being cyclical, capex cycle oriented in nature,” Emkay Wealth said in a release.
The demographic trends in India reflect a steep growth in the number of individuals moving upwards from middle income to upper middle income or to upper-income groups. Therefore, the wealth management and advisory business presents a huge opportunity with assets under management of over $201 billion, it said and added: “The assets not under active wealth advisory are as high as $ 1.1 trillion. India is the second fastest-growing market for wealth management. The number of UHNIs with a wealth of $30 million or more, is expected to rise by 63 per cent over the next five years to 11,198 as per a research report.”
Bhavesh Sanghvi, CEO, Emkay Wealth Management, said, “Wealth management industry is mirroring the growth in the west, Emkay Wealth will look to double the size of its operations to cater to the growing demand for Wealth management services. We are bullish on the overseas investment opportunity. To tap this lucrative source to achieve a higher alpha, we encourage investors to allocate around 30% of their equity assets in overseas investments mainly through mutual fund schemes and ETFs which can be bought locally and through the LRS route.”