Direct equity is the most preferred financial asset class among Indian individuals

The Global HNI wealth grew by nearly 12% in 2014 to reach a total of USD164 trillion, out of which Asia accounted for USD47 trillion. India emerged as the key driver in FY15 with its HNI wealth increasing by 28% on the back of a robust GDP growth rate of 7.3%.

Dec 23, 2015 08:12 IST India Infoline News Service

KARVY Private Wealth, the Wealth management arm of the KARVY Group, a leading financial-services conglomerate, launched its 6th edition of India Wealth Report 2015 today. The India Wealth Report provides a comprehensive perspective of the Wealth held by individual in India, presents an in-depth analysis of the avenues of investments as well as the expected pattern of future investments. Based on extensive research, the report provides an annual “Wealth” update for all Indian individuals.
The Global HNI wealth grew by nearly 12% in 2014 to reach a total of USD164 trillion, out of which Asia accounted for USD47 trillion. India emerged as the key driver in FY15 with its HNI wealth increasing by 28% on the back of a robust GDP growth rate of 7.3%.
India has been considered as the ‘Next Big Emerging Economy’ with its GDP expected to outpace that of China for the next decade, due to the changing positive dynamics within India. One of the Key positive changes in FY15 has been the trend reversal of fresh investments of household savings getting channelized more in financial assets (54%) vis-a-vis physical assets (46%). For the FY14, the trend was completely opposite with physical assets accounting for 65% of fresh investments.
The total wealth held by individuals in India has grown by 8.9% to ` 280 lakh crores. Individual Wealth in Financial Assets grew by 19% while that in Physical Assets de-grew by 2.3%. The individual wealth in Financial Assets has increased from ` 134.7 lakh crore in FY14 to ` 160.5 lakh crore and is expected to double to Rs. 326 lakh crore in the next five years. The Physical Assets are expected to grow at a slower rate of 4.4% CAGR for the next 5 year.
Direct Equity has been the flavor of FY15 becoming the largest asset class of investments with a YoY growth of 29% (` 34,39,861 crore) overtaking fixed deposits and bonds. The upward trend in direct equity is forecasted to continue with a growth of 20% CAGR over the next 5 years.  Fixed deposit and bonds managed to be the second largest investment choice with a YoY growth of 13.10% (` 33,26,429 crore) and insurance retained the 3rd position with a YoY growth of 16.85% (`23,59,790 crore).
Physical assets saw subdued interest with the wealth held by individuals in physical assets reducing marginally in FY15, on account of reduction in prices of gold and precious metals and gems and also subdued activity in the real estate sector. The physical assets are expected to grow at a slower rate of 4.4% CAGR for the next 5 years to reach a level of Rs. 148 lakh crores.
In assets like debt and real estate, individual wealth in India is in line with the Global proportions. However, with faster growth in equities and slower growth in gold, the coming decade is likely to witness a trend reversal between equity and alternate assets leading to India broadly being in line with the Global proportions in all asset classes.
Speaking on the occasion, Mr. Abhijit Bhave, CEO, KARVY Private Wealth said, “The India Wealth Report is an annual initiative by Karvy Private Wealth, providing an extensive coverage on classification of individual wealth in various assets in India. The report also gives our forecasts for the future trends in the way individuals will invest their wealth.
Bhave further added “Our 2014 prediction that Direct Equity would become the single largest asset class contributing to individual wealth in India in the year ending March 2015 came true. This year our projection is that the individual wealth in financial assets will double over the next five years and mutual funds & alternative investments will top the table in terms of growth rates’. 

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