Anand Rathi Wealth Ltd Management Discussions

Global Economy Global Growth

Over last one year, the global economy navigated a landscape marked by resilience amid challenges. According to the International Monetary Fund (IMF), global growth is projected at 3.3% in 2024, with an expected decline to 2.8% in 2025 and a modest recovery to 3% in 2026. The IMF has expressed concerns over the recent trade and protectionist policies that is likely to have significant impact on global growth. While the additional tariffs imposed by the US remain suspended briefly, the uncertain and volatile environment is fuelling risk to inflation and growth trajectory.

Table 1: Trends and Outlook of Global Growth in Real terms (in %)

Group of Countries/Country	2023	2024	2025	2026
World	3.3	3.3	2.8	3.0
Advanced Economies	1.7	1.8	1.4	1.5
Emerging Market	4.4	4.3	3.7	3.9
Brazil	3.2	3.4	2.0	2.0
China	5.2	5.0	4.0	4.0
EU	0.4	0.9	0.8	1.2
France	1.1	1.1	0.6	1.0
Germany	-0.3	-0.2	0.0	0.9
India	9.2	6.5	6.2	6.3
Indonesia	5.0	5.0	4.7	4.7
Japan	1.5	0.1	0.6	0.6
Mexico	3.3	1.5	-0.3	1.4
UK	0.3	1.1	1.1	1.4
US	2.9	2.8	1.8	1.7

Source: IMF

Advanced economies are expected to experience modest growth during this period - growth rates of 1.8% in 2024 and 1.4% in 2025, thus reflecting a decline on account of unprecedented tariff measures and countermeasures. The US implementing universal tariffs has been a major negative shock global growth. The IMF revised its US growth forecasts downwards, anticipating a 1.8% expansion in 2025 as against previous estimate of 2.7%. According to IMF, the swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity. The Federal Reserves monetary policies appeared to have steered the economy towards a "soft landing," balancing inflation control with sustained employment. The European Union faced a more subdued economic outlook, growth of 0.9% in 2024 and 0.8% in 2025 for the eurozone. Germany, Europes largest economy, confronted stagnation, with zero growth anticipated in 2025, after two years of negative growth in 2023 and 2024, attributed to ongoing challenges in its manufacturing sector. Conversely, Spain displayed resilience, with growth forecasts adjusted upward to 3.2% in 2024 and 2.5% in 2025. Japans economic performance remained modest. Japans growth in 2024 is projected growth to be 0.1% and recovering

to 0.6% in 2025, lower than earlier expectations. This revision reflects ongoing structural challenges and the lingering effects of supply disruptions.

Emerging markets presented a mixed picture. The IMF projected a slight slowdown in growth for these economies, from 4.3% in 2024 to 3.7% and 3.9% in 2025 and 2026 respectively. Chinas economic momentum showed signs of deceleration. The IMF revised Chinas growth forecast downward to 4.0% for 2025 and 2026, from 5.0% in 2024. This trend reflects challenges such as a sluggish property sector and subdued consumer confidence. India continued to be a beacon of robust growth among major economies. The IMF maintained its growth projections for India at 6.5% in 2024 and have slightly lowered to 6.2% and 6.3% in 2025 and 2026 respectively. This sustained expansion underscores Indias resilience and its pivotal role in driving global economic growth.

Inflation and Monetary Policy

The IMF projected global headline inflation to decline from an estimated 5.7% in 2024 to 4.3% in 2025 and further to 3.6% in 2026. This downward trend is attributed to lower core inflation resulting from tight monetary policies and softening labour markets. However, it has increased the estimates for advanced economies for 2025 to 2.5% from its previous projection of 2.1%. The universal tariffs imposed by the US has been a major factor for the change in inflation trajectory and the central bank decision making.

Table 2: Trends and Outlook of Global Average Retail Inflation (in %)

Group of Countries/Country	2023	2024	2025	2026
World	6.6	5.7	4.3	3.6
Advanced Economies	4.6	2.6	2.5	2.2
Emerging Market	8.1	7.7	5.5	4.6
Brazil	4.6	4.4	5.3	4.3
China	0.2	0.2	0.0	0.6
EU	5.4	2.4	2.1	1.9
France	5.7	2.3	1.3	1.6
Germany	6.0	2.5	2.1	1.9
India	5.4	4.6	4.2	4.1
Indonesia	3.7	2.3	1.7	2.5
Japan	3.3	2.7	2.3	1.7
Mexico	5.5	4.7	3.5	3.2
UK	7.3	2.5	3.1	2.2
US	4.1	3.0	3.0	2.5

Source: IMF.

Inflation in the U.S. has moderated, with the Personal Consumption Expenditures (PCE) price index rising 2.4% in March 2025, down from its peak of 7.2% in mid-2022. In response, the Federal Reserve reduced the benchmark interest rate by 100 basis points to 4.25%-4.5% in late 2024 and has since maintained this stance, awaiting greater clarity on the economic outlook before making further adjustments. The EU has experienced a

sharp disinflation process, with headline inflation falling from 5.4% in 2023 to a projected 2.4% in 2024. The European Central Bank (ECB) has responded by reducing interest rates, cutting the benchmark deposit rate to 2.5% amid concerns over trade uncertainties and subdued economic growth. Japans core inflation (excluding fresh food) reached 3.0% year-on-year by the end of 2024, the highest since August 2023. In response, the Bank of Japan (BOJ) raised the uncollateralised overnight call rate by 25 basis points to 0.5% in January 2025, marking its highest level since 2008. This move signifies a shift from the BOJs prolonged ultra-loose monetary policy as it approaches its 2% inflation target.

China faces risks of deflation, with inflation remaining low, indicating underlying economic challenges. In India inflation eased to 3.3% in March 2025, providing room for potential monetary policy adjustments to support further economic growth.

Equity Market

The MSCI World Index, which tracks large and mid-cap equities across 23 developed markets, posted strong gains in 2024, only to face increased volatility in early 2025 as investors reassessed the risks. The total global market capitalisation reached USD126 trillion at the end of 2024, before slightly declining to USD124 trillion by March 2025.

The S&P 500 surged by 23% in 2024, led by an AI-driven tech rally. The Magnificent Seven tech stocks (Nvidia, Microsoft, Apple, Alphabet, Amazon, Tesla and Meta) accounted for over half of the gains. Strong corporate earnings, declining inflation

and expectations of rate cuts by the US Federal Reserve. In early 2025, markets faced headwinds, with the S&P 500 dropping 4.6% YTD by March due to concerns about higher- for-longer interest rates and escalating trade tensions with China and Mexico. The US unemployment rate ticked up to 4.1% in February 2025, prompting concerns about an economic slowdown. Volatility in the market is expected to persist during the rest of 2025 as investors await significant policy changes by the new government and the Federal Reserves decisions on interest rate cuts.

European equity markets saw modest but positive returns, with the MSCI Europe Index showcasing a hike of 9%. The DAX index reached record highs in February, reflecting optimism around Germanys new fiscal policies, which include higher infrastructure and defence spending. A shift towards European stocks emerged in early 2025 as US markets weakened. Investors reduced cash allocations to the lowest in 15 years, seeking better valuations in Europe. European equities are expected to outperform US stocks in 2025 as fiscal expansion and supportive monetary policy drive renewed investor confidence.

Japan was one of the top-performing global equity markets in 2024, driven by corporate governance reforms aimed at increasing shareholder returns and a strong yen depreciation, which boosted export-driven industries. The Nikkei 225 Index maintained its gains in early 2025, as Japan continued structural economic reforms and capital market modernisation. Japan remains an attractive market in 2025, particularly for long-term investors looking for reforms-driven growth. Yet, by the end of March 2025, with 11% correction, Japan has reversed much of the gains of 2024.

Table 3: Return on Major Equity Indices, (in %)

Country	Index	2021	2022	2023	¦EE9 2025
China	Shanghai Shenzhen 300	-5.2	-21.6	-11.4	14.7 -1.2
France	CAC40	28.9	-9.5	16.5	-2.2 5.6
Germany	DAX	15.8	-12.3	20.3	18.8 11.3
Hong Kong	Hang Seng Composite	-15.6	-18.0	-13.8	16.3 14.7
India	NIFTY 50	24.1	4.3	20.0	8.8 -0.5
Japan	Nikkei 225	4.9	-9.4	28.2	19.2 -10.7
UK	FTSE100	14.3	0.9	3.8	5.7 5.0
US	NASDAQ Composite	21.4	-33.1	43.4	28.6 -10.4
US	S&P 500	26.9	-19.4	24.2	23.3 -4.6

Note: For 2025, return as at end March 2025 versus end December 2024. Source: CEIC Database.

Chinese equities exhibited volatility but ended 2024 with a 14.7% hike. This elevation was driven by government stimulus. The Hong Kong Stock Exchange rallied in late 2024, with Chinese tech stocks rebounding. Chinas measures aimed at stimulating the economy, including heightened infrastructure investment, supported the recovery. Chinas stock markets gained further in Q1 2025, as investor sentiment improved. Trade disputes with the US remained a key risk, but the technology and industrials sectors continued to grow. While Chinas stock market remains vulnerable to geopolitical risks, stimulus measures and a push for self-reliance in key industries could support further gains in 2025.

In 2024, Indias stock market was one of the best-performing globally, with market capitalisation crossing USD5.2 trillion, surpassing the UK and Latin America combined. A strong 80% increase in equity markets over five years was witnessed, driven by economic growth, digital transformation and retail investor participation. Despite the sharp correction, underperformance and large foreign portfolio capital outflow since late September 2024, Indias structural growth story remains intact and the domestic market is expected to continue outperforming in 2025.

Global Economic Outlook

The global economic outlook for 2025 and into 2026 presents a landscape of modest growth, declining inflation and persistent challenges. Global growth is projected at 3.3% for both 2025 and 2026 by the IMF, slightly below the historical average of 3.7% observed between 2000 and 2019. Similarly, the World Bank forecasts global growth to stabilise at 2.7% during the same period, consistent with the rate in 2024.

Global headline inflation is forecasted to decline to 4.2% in 2025 and further to 3.5% in 2026, converging back to target levels earlier in advanced economies than in emerging markets and developing economies. This downward trend is supported by easing commodity prices and the effects of previous monetary tightening measures.

The economic outlook is characterised by several risks:

• Policy Uncertainty: Elevated trade policy uncertainty could dampen investment and trade flows, particularly affecting economies with significant export sectors.

• Geopolitical Tensions: Persistent geopolitical conflicts, including recent tariff measures continue to pose significant risks to global economic stability, which can adversely affect investor confidence and economic growth prospects worldwide.

• Financial Stability: Rapid shifts in monetary policy, especially if inflationary pressures persist, could impact fiscal sustainability and financial stability across regions.

Equity Market Outlook

The US equity markets are expected to experience sustained growth, albeit at a moderated pace compared to previous years. There are projections that the S&P 500 will deliver a modest 7% return in 2025. This suggests that investors may benefit from diversifying their portfolios beyond traditional US equities. The bull run of the US market is expected to be driven by robust earnings growth and productivity improvements. However, these projections are subject to risks including policy uncertainties and potential inflationary pressures.

Emerging markets, particularly in Asia, present a mixed outlook. Chinas equity markets may face headwinds due to trade policy uncertainties and structural economic adjustments. Conversely,

Indias markets are expected to benefit from strong domestic demand and public investment, aligning with the countrys strong expected GDP growth.

There are, however, several risk factors:

• Geopolitical Tensions: Ongoing conflicts and geopolitical strains pose downside risks to global growth, potentially disrupting supply chains and financial markets.

• Monetary Policy Shifts: Unexpected changes in monetary policy, especially if inflationary pressures persist, could affect fiscal sustainability and financial stability across regions.

• Valuation Concerns: Elevated valuations in certain markets, particularly in US equities, may limit upside potential and increase vulnerability to market corrections.

Indian Economy GDP Growth

Indias economy has sustained its momentum of growth, defying global headwinds and domestic inflationary pressures. The latest revisions by the government, announced on February 28, 2025, have further cemented its status as the worlds fastest- growing major economy. Growth for the fiscal year 2023-24 has been revised upward to 9.2%, up from the previously estimated 8.2%, reflecting stronger-than-expected performance across key sectors, particularly manufacturing and services. For the fiscal year 2024-25, the government now projects GDP growth at an estimated 6.5%, slightly lower than earlier expectations but still robust by global standards.

Table 4: Trends in Indias Real GDP Growth, (in %)

Parameter	2022	2023	2024 IQ29
GDP	9.7	7.6	9.2 6.5
Private consumption	11.7	7.5	5.6 7.6
Government consumption	0.0	4.3	8.1 3.8
Investment	21.1	7.6	10.5 5.8
Exports	29.6	10.3	2.2 7.1
Imports	22.1	8.9	13.8 -1.1

Source: Government of India.

The latest estimates suggest that to meet the 6.5% growth target for the full fiscal year, the economy will need to expand by 7.6% in the final quarter (January to March 2025). While achieving this pace may seem ambitious, supportive government policies, a potential interest rate cut from the Reserve Bank of India (RBI) and a moderation in inflation could provide tailwinds. Still, risks remain-global demand remains tepid, geopolitical tensions persist and financial markets remain volatile. The RBI projects growth to remain stable at 6.5% for FY 2025-26.

Looking ahead, Indias growth trajectory remains the envy of most major economies. Yet, sustaining this momentum will require navigating a delicate balance-reviving private investment, addressing persistent structural challenges and ensuring that the benefits of growth percolate beyond urban centres. For now, the economy remains in a sweet spot: slowing, perhaps, but still outpacing its peers.

Inflation and Monetary Policy

The Reserve Bank of India (RBI) maintained a prudent approach, maintained a balance between controlling inflation and sustaining economic growth. Inflation eased to 3.6%, supported by stable food prices and timely monetary interventions.

The interplay between easing inflation and supportive monetary policy positions India favourably for sustained economic growth. However, challenges such as ensuring effective transmission of policy rates amidst liquidity constraints and external economic uncertainties persist. The RBIs proactive stance in balancing inflation control with growth support will be crucial in navigating the economy through these complexities.

Inflation over the years (in %)

Equity Market

Indias equity markets exhibited a dynamic performance throughout the majority of FY 2024-25, reflecting a blend of robust growth and subsequent corrections across various market capitalisations and sectors. In FY 2024-25, Indian equities demonstrated remarkable resilience and growth in the first nine months as the Nifty 50 surpassed 26,200 levels in September 2024.

Sector-wise, the Technology and Consumer Discretionary sectors were significant contributors to this growth. The Technology sector benefited from rising demand for IT services, while strong domestic sales of two-wheeler automobiles propelled the Consumer Discretionary sector. Additionally, the Health Care sector experienced robust growth due to strong performances in both domestic and global pharmaceutical markets.

The momentum shifted in late 2024 and early 2025, with Indian equities facing significant headwinds. As of February 2025, the Nifty 50 index had declined by approximately 13% from its peak in late September 2024, marking its longest losing streak since 1996. This downturn has been more pronounced in the mid-cap and small-cap segments. In 2025 (till 17 April 2025) the Nifty 50 index is up 0.9%. The Nifty Midcap 150 index has lost around 8.1% thus far in 2025, while the Nifty Small cap 250 index has slipped around 13%.

Several factors have contributed to this decline. Corporate earnings growth has slowed, with the October-December 2024 quarter exhibiting a sharp decline in profit growth for top companies. Weakening urban demand amidst high prices and modest income growth have further dampened investor sentiment. Additionally, foreign investors have withdrawn over USD25 billion from Indian equities since late September 2024, contributing to the downward pressure on stock prices.

In comparison to global peers, the Indian stock market has underperformed in early 2025. While indices like Chinas Shanghai Composite, Hong Kongs Hang Seng and South Koreas Kospi have recorded gains, the Nifty 50 and Sensex have experienced declines of approximately 4.3% year-to-date. This underperformance is attributed to high valuations, muted corporate earnings and global trade uncertainties. Despite the recent downturn, Indias long-term growth prospects remain bolstered by strong domestic fundamentals and a diversified industrial base.

The near-term outlook for Indias equity market remains cautious. Analysts anticipate that the market weakness may persist, given the ongoing trade wars, challenges in corporate earnings and foreign investment flows. However, Indias strong macroeconomic stability and structural growth outlook continue to offer a favourable long-term investment landscape. The countrys relatively balanced industry representation in its equity market reduces concentration risks, potentially providing resilience against sector-specific downturns.

Medium-term Equity Market Outlook

Indias equity markets are poised for a positive trajectory, underpinned by robust economic fundamentals, favourable valuations and renewed investor confidence. The Indian economy is projected to grow between an estimated 6.5% and 6.8% in the fiscal year 2024-25, with expectations of 6.7% to 7.0% growth in the subsequent year. This expansion is envisioned to bolster corporate earnings, with consensus forecasting a 12% to 15% growth over the next two fiscal years. Following recent market corrections, valuations have become increasingly compelling for investors. The Nifty 50 index has experienced a 13% decline from its September 2024 peak, bringing price- to-earnings (P/E) multiples closer to historical averages. As of early April 2025, the Nifty 50s P/E ratio stood near 18 times one- year forward earnings.

Domestic investment in Indian equities remains robust, with mutual funds receiving significant inflows. In March 2025, Foreign Portfolio Investors (FPIs) returned as net buyers, injecting USD2.65 billion during the last five sessions, indicating renewed confidence in the market. The Reserve Bank of India plans to double the investment limit for individual foreign investors in listed companies from 5% to 10%, aiming to attract additional foreign capital and enhance market liquidity. Considering Indias strong economic growth, favourable market valuations and increasing investor inflows, the equity market outlook appears positive. While projections vary, an annualised return exceeding 12% for the Nifty 50 index over the next couple of years appears increasingly plausible.

Performance and Outlook of the Indian Debt Market

Indias debt market is experiencing a phase of transformation, characterised by fiscal consolidation, strategic monetary policies and evolving investor sentiment. The government has set a fiscal deficit target of 4.4% of GDP for the fiscal year 2025-26, down from the revised 4.8% in the current year. This commitment to fiscal prudence is expected to reduce the central governments market borrowing, with gross market borrowings estimated at ?14.82 Lakhs Crores for FY 2025-26.

The Reserve Bank of India (RBI) has adopted an accommodative stance to stimulate economic growth. In February 2025, the RBI reduced the repo rate by 25 basis points to 6.25%, marking the first rate cut in nearly five years. Additionally, the RBI announced a USD10 billion three-year dollar/rupee swap auction to infuse approximately ?87,000 Crores into the banking system, aiming to address liquidity shortages and facilitate effective transmission of monetary policy.

These fiscal and monetary measures have contributed to a softening trend in bond yields. The 10-year government bond yield has declined to its lowest level in over three years, reflecting increased demand and investor confidence. Market participants anticipate further easing, with the overnight indexed swap markets pricing in more than 50 basis points of cumulative rate cuts over the next 12 months.

Implications of Softer Bond Yields for Equities

The softening of bond yields has several implications for the Indian equity market:

• Lower Cost of Capital: Reduced interest rates decrease borrowing costs for companies, potentially augmenting profitability and encouraging capital investments.

• Attractive Valuations: As bond yields decline, equity valuations become more appealing relative to fixed- income investments, potentially increasing the allocation towards equities.

• Enhanced Liquidity: Monetary easing and liquidity infusion by the RBI can lead to heightened market liquidity, supporting higher equity market participation and potentially augmenting stock prices.

The Indian debt markets current trajectory, marked by fiscal consolidation and accommodative monetary policies, is fostering a conducive environment for lower bond yields. This trend is likely to have positive spillover effects on the equity market, supporting corporate growth and enhancing investor sentiment.

Wealth Management Industry Global

The global wealth market has demonstrated significant growth and transformation in recent years, reflecting economic developments, technological advancements and shifting investment strategies. As of 2024, the total market capitalisation of all publicly traded companies worldwide reached approximately USD126 trillion, marking a notable increase from USD111 trillion in 2023. In the wealth management sector, Assets Under Management (AUM) are projected to reach USD168.20 trillion in 2025, underscoring the expanding scope of wealth management services globally.

The UBS Global Wealth Report 2024 indicates a recovery in global wealth, with a 4.2% increase in 2023 following a decline in 2022. This growth was observed across various regions, with Asia-Pacific experiencing rapid wealth accumulation. The number of individuals with net worths exceeding USD10 million increased by 4.4% in 2024, with North America leading this growth at 5.2%. The US remains home to the largest proportion of these individuals, accounting for 39% of the global aggregate.

Geographic disparities in financial wealth remain pronounced, indicating deep-rooted economic, structural and institutional differences among regions worldwide. Despite global wealth expanding steadily, distribution remains highly uneven, influencing economic opportunities, living standards and investment dynamics across geographies. According to the UBS Global Wealth Report 2024, North America continues to dominate global wealth holdings, accounting for approximately 32% of global household wealth, followed closely by Asia- Pacific (30%) and Europe (24%). Conversely, Latin America and Africa collectively represent less than 5% of global financial assets, highlighting stark disparities between developed and emerging regions.

In recent years, households across the world have been steadily augmenting their allocation to equities-both through direct market exposure and through collective investment vehicles such as mutual funds, Exchange-Traded Funds (ETFs) and pension-linked investment products. This trend, while not uniform across countries, is shaped by multiple converging forces: accommodative monetary policy during much of the past decade, the rising accessibility of financial markets through digital platforms, greater financial literacy and a heightened comprehension of equities as a critical long-term wealthbuilding instrument. At the same time, macroeconomic volatility and interest rate fluctuations have also influenced investor behaviour, resulting in both cyclicality and structural shifts in household portfolio composition.

India

The Indian wealth management industry has witnessed robust growth in recent years, underpinned by sustained economic expansion, rising financial awareness, strong capital market performance and the rapid formalisation of the economy. While still nascent compared to mature markets, Indias wealth management landscape is undergoing structural transformation, with a growing base of affluent individuals increasingly seeking professional advice, digital solutions and diversified financial products to manage and grow their wealth.

As of 2023, the Indian wealth management industry is estimated to manage assets of approximately ?35-40 trillion (USD425- 500 billion), according to multiple sources including the Association of Portfolio Managers in India (APMI), CRISIL and industry analyses by EY and BCG. This figure includes Assets Under Management (AUM) across private banking, Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs), but excludes mutual funds and insurance-based investments directly held by retail investors. If one includes individual wealth invested via mutual funds, direct equities and retirement schemes, the size of individual investable wealth in India exceeds ?100 trillion (USD1.2 trillion).

The industry caters to various segments, ranging from mass affluent individuals (financial assets of ?10 Lakhs to ?5 Crores), to High-Net-Worth Individuals (HNIs, ?5 - ?50 Crores) and UltraHigh-Net-Worth individuals (UHNWIs, above ?50 Crores). The HNWI population in India stood at over 800,000 in 2023, with wealth expected to grow at a CAGR of 12-15% over the next five years, according to Bain & Company and Capgeminis World Wealth Report 2023. The number of UHNWIs in India is also expanding rapidly, with Knight Frank projecting a 58% rise between 2023 and 2028-one of the fastest growth rates globally.

Several factors are fuelling the expansion of the wealth management industry in India:

• Macroeconomic and Demographic Tailwinds: Indias GDP has grown at an average rate of over 6% annually over the past decade, creating a sizable and upwardly mobile middle class. The working-age population is large and progressively adept with technology, driving demand for financial planning and wealth-building services.

• Capital Market Deepening: The Indian equity market has delivered superior returns over the long term. According to SEBI and AMFI, the mutual fund industrys AUM crossed ?65 trillion in FY 2024-25, with a significant portion driven by retail SIPs. Meanwhile, direct retail equity participation has soared, with over 150 million demat accounts. This expanding investor base is a key feeder into formal wealth management services.

• Regulatory and Infrastructure Reforms: Initiatives such as Aadhaar-based KYC, the rollout of the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC) and the rise of digital public infrastructure (like UPI) have increased formalisation and transparency, thereby aiding the growth of regulated financial advisory services.

• Digital Transformation: The adoption of technology across advisory platforms, robo-advisory models and client servicing has improved access, efficiency and scalability. Digital investment platforms have brought wealth management tools to the mass affluent and younger investors, altering the delivery model of wealth services.

The Indian wealth management landscape is being reshaped by several evolving trends:

a) Savings Behaviour of Indian Households

Household savings are key to Indias investment-driven growth, driving capital formation and economic stability. From FY 2014 to FY 2024, total household savings rose from ?22.9 Lakhs Crores to ?54.6 Lakhs Crores (CAGR: 9.3%), driven by rising incomes and formalisation. Gross financial savings grew faster-from ?11.9 Lakhs Crores to ?34.3 Lakhs Crores (CAGR: 11.5%). However, net financial savings plateaued, dipping to ?13.3 Lakhs Crores in 2023 before rebounding to ?15.5 Lakhs Crores in 2024, due to rising household liabilities, which surged from ?7.7 Lakhs Crores in 2020 to ?18.8 Lakhs Crores in 2024.

Table 5: Savings Pattern of Indian Household

	2014	2020	2023	2024
J Lakhs Crores
Total household savings	22.9	38.5	50.1	54.6
Gross financial savings	11.9	23.2	29.3	34.3
Liability	3.6	7.7	16.0	18.8
Net financial savings	8.3	15.5	13.3	15.5
Currency	1.0	2.8	2.4	1.2
Deposits	6.7	8.9	11.1	13.9
	2014	2020	2023	2024
Equity	0.0	0.3	0.3	0.3
Mutual Fund	0.1	0.6	1.8	2.4
Govt. security	0.1	0.0	0.1	0.1
Small savings	0.1	2.6	2.4	3.1
Insurance	2.0	3.4	5.5	5.9
PF, Pension Fund	1.8	4.5	6.3	7.2
Share in gross financial savings, (in %)
Liability	30.1	33.3	54.5	54.8
Net financial savings	69.9	66.7	48.4	45.2
Currency	8.4	12.2	8.1	3.4
Deposits	56.0	38.2	37.9	40.6
Equity	0.3	1.4	0.9	0.8
Mutual Fund	1.3	2.7	6.1	7.0
Govt. security	1.2	0.1	0.3	0.3
Small savings	0.7	11.3	8.2	9.0
Insurance	17.2	14.6	18.7	17.2
PF, Pension Fund	14.9	19.5	21.4	20.9

Source: Government of India.

With heightened exposure to market-linked instruments, Indian household savings are shifting from physical to financial assets. Liabilities now form 54.8% of net financial savings (up from 33.3% in 2020), reflecting higher consumer credit. Deposits share dropped from 56% in 2014 to 40.6% in 2024, despite absolute growth. Mutual funds surged from ?0.1 Lakhs Crores to ?2.4 Lakhs Crores, now over 7% of net savings, driven by digital platforms and SIPs (?26,000 Crores/month). Insurance and pension funds now form 40% of gross financial savings, highlighting the growing long-term security awareness. Currency and small savings have declined post-pandemic, as households favour higher-return instruments.

b) Change in Financial Portfolio of Indian Households

Between FY 2014 and December 2024, Indian household financial assets tripled from ?143 Lakhs Crores to ?463.8 Lakhs Crores, driven by ascending incomes and heightened financialisation. Bank deposits, though still dominant, saw their share fall from 38.8% to 32.9% as equities and mutual funds gained prominence. Direct equity holdings rose from ?5.7 Lakhs Crores to ?42.5 Lakhs Crores and mutual funds from ?4 Lakhs Crores to ?42.3 Lakhs Crores, backed by digital platforms, strong SIP inflows and growing financial literacy.

Table 6: Financial Portfolio of Indian households

FY	Financial assets Total	Currency	Deposits	Equity	Equity MF	MF Others	Govt Securities	Small Savings	Insurance	PF and Pension
					J Lakhs Crores
Mar-2014	143.0	12.5	55.4	5.7	1.8	2.2	1.4	22.9	21.1	20.1
Mar-2024	426.8	32.5	143.0	36.1	26.6	7.3	2.2	48.2	66.0	64.9
Dec-2024	463.8	32.9	152.8	42.5	30.1	12.2	2.3	51.1	70.4	69.6
	1.8	1.8	1.8	1.8	1.8	1.8	1.8	1.8	1.8	1.8
					Share (in %)
Mar-2014	100	8.7	38.8	4.0	1.3	1.5	0.9	16.0	14.7	14.1
Mar-2024	100	7.6	33.5	8.5	6.2	1.7	0.5	11.3	15.5	15.2
Dec-2024	100	7.1	32.9	9.2	6.5	2.6	0.5	11.0	15.2	15.0

Source: RBI, SEBI, AMFI, CGA and Anand Rathi Research.

Insurance and pension assets now form 30.2% of financial assets, up from 28.8% in 2014, boosted by schemes like PMJJBY and APY. Currency holdings and small savings experienced a downturn in share due to digitisation and low real returns. This portfolio shift has reinforced capital markets, encouraged long-term wealth creation and elevated the demand for financial advisory services. However, it also highlights the need for enhanced investor protection and financial literacy.

c) Increasing Number of Wealthy Individuals

Indias high-net-worth individual (HNWI) population, with assets of more than $10 million is estimated at 85,698 in CY 2024. Indias growing wealth is a sign of its strong and resilient economy. The country is seeing an increase in high-net-worth individuals, driven by a new wave of entrepreneurs, deeper global connections and the rise of emerging industries. The trend highlights Indias long-term growth potential and its increasing significance in global wealth creation.

d) Rise of the Mass Affluent Investors

Typically, salaried professionals, entrepreneurs and tech- sector employees-are driving demand for scalable yet personalised wealth services. These investors are digital natives, demand transparency and are often goal-oriented in their financial planning.

e) Portfolio Diversification

There is a rise in portfolio diversification beyond traditional domestic equities. Investors are allocating more to global equities, REITs, structured products and fixed-income alternatives. The popularity of AIFs and international mutual fund offerings is reflective of this trend.

f) Estate Planning

Succession and estate planning have emerged as core focal points. As Indias first generation of post-liberalisation entrepreneurs ages, demand for family offices, trusts and estate advisory is growing, especially among UHNWIs. Several banks and independent platforms have launched dedicated family office services in recent years.

g) Robo Advisors

Digital enablement and hybrid advisory models are rapidly redefining client engagement. Robo-advisory platforms are gaining momentum for standardised portfolios, while wealth-tech firms are integrating human advice with data- driven tools. Fintech players are partnering with traditional advisors to expand reach and product offerings.

h) Regulatory Changes

Compliance, governance and investor protection are receiving elevated regulatory emphasis. SEBI continues to strengthen norms around suitability assessments, disclosure requirements and segregation of advisory and distribution functions. The evolving regulatory framework is pushing the industry towards more professional, transparent and client-centric practices.

Outlook:

Despite its strong growth trajectory, the Indian wealth management industry faces several structural challenges. Nevertheless, the medium to long-term outlook remains highly favourable. With Indias household financial wealth projected to grow at over 10-12% annually, driven by rising incomes and deeper financialisation, the demand for professional wealth management services is expected to rise significantly. A young, technologically adept population, a broadening investment universe and a maturing regulatory landscape are likely to propel India towards becoming one of the largest and most dynamic wealth management markets globally in the coming decade.

Indian Mutual Fund Industry

Indias mutual fund industry stands at the cusp of a transformative growth phase. While it has already witnessed robust expansion over the last decade, the comparative analysis of mutual fund Assets Under Management (AUM) to GDP ratios across key global economies underscores a powerful narrative: Indias mutual fund sector remains massively underpenetrated and presents extraordinary headroom for growth.

As of 2024, Indias mutual fund AUM stands at approximately USD0.8 trillion (?65 trillion), while its nominal GDP is estimated at USD3.9 trillion, translating into an AUM-to-GDP ratio of just 20%. In contrast, mature economies such as Australia (147%), the US (133%) and Canada (88%) exhibit deep mutual fund penetration. Even among emerging peers, Brazil has an AUM-to- GDP ratio of 68% and South Africa stands at 51%, highlighting the untapped potential of Indias fund management ecosystem.

Indias current AUM-to-GDP ratio of 20% is a clear signal of underutilisation, especially when benchmarked against countries with similar or even smaller economies. For instance, Brazils 68% ratio or South Africas 51% demonstrates what is achievable in emerging market contexts. Mature markets like the US and Australia showcase ratios exceeding 100%, underscoring the role mutual funds play in long-term wealth accumulation and retirement security.

Table 7: Mutual Fund Penetration Across Major Countries (2024)

Country	MF AUM (USD Trillion)	Nominal GDP (USD Trillion)	AUM-to-GDP Share (in %)
Australia	2.6	1.8	146.8
US	38.8	29.2	133.2
Canada	2.0	2.2	88.3
France	2.6	3.2	81.9
UK	2.1	3.6	59.5
South Africa	0.2	0.4	50.9
Germany	2.7	4.7	57.9
Brazil	1.5	2.2	67.8
China	4.0	18.3	21.8
India	0.8	3.9	19.9

Source: Industry, Anand Rathi Research.

If India were to even approach a 50% AUM-to-GDP ratio in the coming decade, the industry would need to more than triple in size-reaching over USD1.8 trillion, or ?150 trillion. This is not merely aspirational; it is achievable, given the confluence of economic, demographic, technological and regulatory enablers.

The Indian mutual fund industry is entering a golden era. With a solid foundation, supportive policy ecosystem and strong investor momentum, mutual funds are well-positioned to become a dominant vehicle for household wealth creation. The continued rise of institutional investors-insurance, pension and provident funds-into equity markets further strengthens the markets long-term viability and depth.

Indias mutual fund story is not just about numbers; it is about democratising access to capital markets and empowering millions of households to participate meaningfully in the nations economic journey. The prospects are not only bright-they are transformative.

CORPORATE OVERVIEW OF ANAND RATHI WEALTH LIMITED

COMPANY AT A GLANCE

Established in 2002, Anand Rathi Wealth Limited (ARWL) is one of Indias leading wealth solution providers, offering objective-driven and data-backed wealth solutions to High Net- worth Individuals (HNIs) and Ultra High Net-worth Individuals (UHNIs). Initially starting as an AMFI-registered mutual fund distributor, ARWL has grown into a holistic wealth solution firm. We help clients grow their wealth over the long term with an uncomplicated investment approach. With operations in 18 cities across India and an international representative office in Dubai, ARWL ensures accessibility and convenience for its clients.

1) Private Wealth (PW) Business

Our flagship Private Wealth (PW) vertical is pivotal in our service offering, managing assets worth ?75,291 Crores as of March 31,2025. Our investment strategies are designed

to optimise returns while minimising risks. We prioritise long-term relationships, with core values of fearlessness, transparency and a commitment to delivering precise financial data in an uncomplicated manner. Beyond investment planning, we also provide risk management solutions to create a safety net against unforeseen financial challenges, estate planning services to ensure smooth wealth transfer to the next generation and tax management strategies to maximise tax efficiency.

As of the end of the FY 2024-25, our Private Wealth (PW) vertical supports 11,732 active client families, managed by 380 dedicated Relationship Managers. Notably, 59% of our clients have been with us for over three years, comprising 79% of our total PW AUM. This statistic underscores the enduring trust and satisfaction of our clients with our services.

Our in-depth market research has identified an underserved yet lucrative segment within the HNI category-individuals with a net worth between ?5 Crores and ? 50 Crores. These clients prioritise quality and value over cost. Our expertise and standardised yet flexible approach allows us to effectively scale value over time. In the fiscal year 2024-25 alone, we welcomed 1,821 net new family additions to our clientele, reflecting our sustained growth and commitment to excellence in wealth management.

Value Proposition -

Our experience indicates that clients prefer and trust a process-driven approach when it comes to managing their wealth and achieving their financial goals.

a) Define Objectives: Discussing various options to achieve the defined financial objectives. The objective is to ensure all assets are invested to strategically deliver 14% - 15% PA with half of the Nifty risk measured in terms of Beta. Our aspiration for clients

is to achieve high-quality strategic returns not only on the assets we directly manage but across their entire wealth spectrum.

Various Objectives:

• Wealth Creation - targeting a corpus of 2 times in about 5.5 years and 4 times in about 10.5 years which means 14% PA return that is surpassing 7.5% HNIs inflation.

• Tax Management - To limit the tax impact on the overall portfolio returns on an annualised basis at 18% with an assumption that surcharge will be 10%.

• Wealth Protection - Creating a liability free asset to safeguard against external risks, ensuring the protection of the clients families.

• Wealth Transmission - Establishing a precise estate plan to ensure near-zero transmission loss of wealth from one generation to the next.

b) Investment Strategy: The most popular return objective chosen by clients is 14%-15% returns (with risk measured in Beta of 0.6 with respect to Nifty) on balance sheet with the strategy chosen by most clients is of allocating 65% to Equity Mutual Funds (EMF), 35% to Structured Products (SP).

c) Implementation of Strategy: Implementing strategies that reflect the clients desired asset distribution and product choices.

d) Monitoring: Periodic monitoring and adjustment of the portfolio to ensure alignment with dynamic financial goals and market conditions.

Digital Business Verticals

In addition to the Private Wealth (PW) segment, ARWL has broadened its service offerings through two additional verticals:

1. Digital Wealth (DW):

This segment focusses on integrating fintech innovations to provide wealth solutions to the mass affluent sector, employing a phygital approach that combines the efficiency of digital tools with the personalised touch of human advisors.

2. Omni Financial Advisor (OFA):

OFA supports Mutual Fund Distributors (MFDs) with a robust technology platform that enables them to serve their clients more effectively and expand their operational capabilities.

COMPETITIVESTRENGTHSOFANAND RATH I WEALTH LIMITED

1. Targeted Focus on the Fast-Growing HNI Segment

• We focuses on HNIs with net worth between ?5 crore and ?50 crore, forming 53.3% of AUM. Although this segment is slower and more complex to scale, it offers long-term sustainability and higher value creation.

• UHNI clients with a net worth above ?50 crore account for 24.6% of our AUM.

• 22.1% of clients fall within the ?50 lakh to ?5 crore bracket and have not yet fully allocated their portfolios with us, indicating further growth potential.

• Our client proposition is driven by data-backed research and mathematical modeling to align precisely with wealth goals.

2. Objective-Driven Investment Strategy

• We follow a simplified, objective-led investment approach that eliminates subjectivity and enhances transparency.

• Our solutions focus on a well-researched mix of Mutual Funds and Structured Products tailored to client objectives.

• This strategy offers both liquidity and capital protection while aiming for long-term compounding.

• The strategy portfolio of 65% Equity Mutual Funds and 35% Structured Products grew 5.19 times in 11 years while assuming lower risk, with beta values of

0.55 (vs NIFTY50) and 0.58 (vs NSE500).

• The Jensens alpha of strategy portfolio is at 6.59% (vs Nifty 50) and 5.51% (vs NSE 500).

3. Holistic Value-Added Services

• ARWL offers comprehensive support beyond investment, including tax and estate planning services, designed to deepen long-term trust and client retention.

• Estate planning includes creation of Private Trusts and Wills, ensuring wealth protection and seamless transition across generations.

• Our tax team comprises 9 specialists, and the estate planning team includes 13 experienced lawyers.

• Our estate planning team has helped create over 5,226 WILLs and 994 Trusts since 2012

4. Experienced Leadership and Skilled Team

• Our leadership team brings deep domain expertise and a disciplined, data-driven mindset to private wealth.

• Led by our CEO and Joint CEO, the team is supported by 18 Unit Heads and 85 Team Leaders across regions.

• Relationship Managers (RMs) and Account Managers (AMs) are selected for strong academic and analytical credentials.

• Clients are served through a structured 6-point support system: RM, AM, Team Leader, Unit Head, Product Specialist, and Senior Leadership.

5. Robust Network of Relationship Managers

• ARWL emphasizes attracting and retaining high- performing Relationship Managers.

• RM base has grown 4X between 2015 and FY25, reflecting sustained expansion.

• 48% of RMs have been with the firm for over 5 years, and 11% for over a decade.

• RM attrition was just 0.56% in FY25-one of the lowest in the industry.

• Average RM tenure is 8.9 years, supporting continuity and trusted relationships.

• Weekly training programs ensure our RMs are well-prepared to guide clients through evolving market cycles.

6. Entrepreneurial Work Culture

• Our entrepreneurial environment encourages RMs to build their own book of business and collaborate across locations.

• The firm operates without geographical silos, enabling agility and teamwork.

• An uncapped incentive system fosters ownership, accountability, and high performance.

• Leadership holds weekly virtual meetings with RMs, AMs, and Product Specialists to stay aligned.

• Quarterly town halls led by our Chairman and Founder reinforce culture, transparency, and alignment with long-term goals.

7. Innovative Hiring Practices

• Our hiring model emphasizes quality and long-term potential over volume.

• We recruit Account Managers from top business schools and among Chartered Accountants who cleared in the first attempt or are rank holders.

• This ensures a pipeline of professionals capable of evolving into high-caliber Relationship Managers.

• The structured talent development framework supports continuous growth and capability-building.

8. Strong Research and Development Team

• Our research team publishes detailed notes this year on macroeconomic indicators, corporate profitability, equity trends, global events, and taxation.

• Several notes, such as equity outlooks and tax updates, were updated quarterly-resulting in 52 versions across the year.

• The Mutual Fund Research desk alone published 48 notes over the year.

• Our audit team conducted over 8,900 audits across asset classes including Mutual Funds, PMS, Direct Equity, Real Estate, and Insurance.

• The audited portfolio value was approximately ?29,600 crore.

• On average, 82% of external portfolios audited underperformed the Anand Rathi Model Portfolio, reinforcing the strength of our strategy.

• We conducted a unique Lost Folio Audit that helped clients recover ?50 crore worth of previously untracked or forgotten investments.

• Market research initiatives are regularly conducted to better understand client behavior, expectations, and emerging needs.

• Our product specialists conduct an average of 500 meetings every week to guide clients in making informed decisions.

9. Advanced Digital Capabilities

• A long-term technology roadmap is being developed to enhance user experience and advisor efficiency.

• Paperless transaction systems are already in place for demat account opening and mutual fund executions.

• Clients will soon be able to view and manage their entire portfolio with a single click across platforms.

• Our Digital Wealth (DW) and Omni Financial Advisor (OFA) platforms offer mobile-first, intuitive interfaces.

• These platforms also empower Independent Financial Advisors (IFAs), supporting wider reach and more personalized client engagement.

10. Process-Driven Approach Resulting in Long-Term

Relationships

• We believe that the strongest client relationships are built through referrals, not cold calling.

• As part of our long-term vision, we aim to eliminate cold calls and are already progressing towards this goal, with referrals being our primary client acquisition channel.

• We organize referral events that allow clients to invite members of their social circle to experience our offerings firsthand.

• Our acquisition process is well-defined, consistently followed by all Relationship Managers, and highly appreciated by clients.

• Internally, communication across teams is efficiently streamlined through dedicated WhatsApp groups, enabling quick collaboration and coordination.

Risk Management

As a prominent financial services firm, Anand Rathi Wealth Limited (ARWL) navigates a complex array of risks characteristic of the wealth management industry. These risks range from market and credit risks to operational and reputational challenges. Effective risk management is thus crucial not only for safeguarding client assets but also for ensuring the firms long-term operational integrity and success. ARWL is committed to a proactive risk management approach that encompasses the following key components.

Risk	Impact	Mitigation
Operational Risk	Operational breakdowns or breaches have the potential to detrimentally affect our Companys reputation and financial standing, potentially resulting in legal or regulatory sanctions.	Our Company enforces stringent internal controls, performs routine risk evaluations and allocates resources towards enhancing cybersecurity measures to mitigate fraud and cyber threats.
Regulatory Risk	Failure to adhere to regulations can lead to legal or regulatory penalties, tarnishing our Companys reputation and potentially resulting in the loss of clients or business opportunities.	Our Company remains updated with the latest regulatory modifications, ensuring adherence to all relevant compliances and fostering strong ties with regulatory bodies.
Human Capital Risk	The scarcity of qualified talent can hinder our Companys capacity to provide top-tier services to clients and can adversely affect our business performance.	Our Company dedicates resources to employee development through training programs, offers competitive compensation and benefits and nurtures a positive work environment.
Technology Risk	Technological malfunctions or security breaches have the potential to disrupt our Companys delivery service to clients, leading to financial losses and reputational damage.	Our Company prioritises investments in technology and cybersecurity measures, conducts frequent risk assessments and upholds business continuity plans.
Counterparty Risk	Our Company faces counterparty risk when engaging in transactions with other entities, including financial institutions or clients.	Our Company performs due diligence on counterparties, diversifies exposure and employs collateral and risk mitigation strategies.
Liquidity Risk	Insufficient funds may prevent our Company from fulfilling its obligations or seizing business opportunities.	Our Company sustains sufficient liquidity reserves, diversifies funding channels and closely monitors cash flow.

OTHER INITIATIVES AND ARRANGEMENTS AT ANAND RATHI WEALTH LIMITED

Robust Internal Management Controls

ARWL has established an independent internal management control department tailored to our Companys scale and scope. This department is dedicated to evaluating the effectiveness of all internal controls and procedures, ensuring adherence to regulatory and legal standards and reviewing findings from internal audits. By incorporating domain experts, ARWL has significantly enhanced the capabilities of its internal audit function. The Audit Committee of the Board of Directors consistently assesses the adequacy and effectiveness of internal controls and reviews audit outcomes, ensuring rigorous compliance and operational integrity.

Comprehensive ESG Framework

Recognising the critical importance of ESG considerations, ARWL has developed a robust framework to select companies aligned with its clients ethical standards and investment goals. This integration of ESG criteria into investment evaluations helps clients build diversified and sustainable portfolios, aiming for financial returns alongside positive societal and environmental impacts.

Environment: ARWL prioritises investments in companies committed to sustainable practices such as reducing carbon emissions, enhancing energy efficiency and preserving natural resources. Such companies are better positioned to comply with environmental regulations and mitigate associated risks.

Social: The firm focusses on companies with strong social practices, including promoting diversity and inclusion, maintaining fair labour practices and engaging in community development. These companies are often viewed as more ethical and responsible, enhancing their attractiveness to like- minded stakeholders.

Governance: ARWL values firms with exemplary governance practices, including board independence, transparent executive compensation and robust risk management. These firms are deemed more reliable and less likely to engage in controversial activities, supporting stable financial performance.

Employee-Centric Practices

ARWL places immense value on its human resources, recognising employees as central to its success. The firm is committed to fostering an enriching work environment that promotes growth and development. Sustained efforts to enhance the workplace atmosphere have earned ARWL the Great Place to Work accolade, highlighting its commitment to a positive and productive culture.

Learning and Development

ARWL invests in regular training for its Relationship Managers and Account Managers, with around three hours of training sessions each week. This commitment to professional development ensures that employees are well-equipped to excel in their roles and progress within our Company. The successful transition of 100 AMs to RMs over the past three years exemplifies the effectiveness of this approach.

Entrepreneurial and Incentive-Driven Environment

The firm encourages an entrepreneurial spirit among employees, offering uncapped incentives and empowering Relationship Managers to innovate and expand client engagements without geographical boundaries. This policy nurtures ownership and drives engagement across all levels of the organisation.

Cautionary Statement Regarding Forward-Looking Information

The Management Discussion and Analysis section contains forward-looking statements that involve risks and uncertainties. These include predictions about ARWLs objectives, strategies and expected performance. It is important to note that actual results may differ from these projections due to various factors such as increased competition, economic conditions affecting market dynamics, changes in government regulations, tax laws and other unforeseen challenges that could impact ARWLs operational and financial performance.