Individual wealth touches Rs 392 lakh cr, up 14%, Insurance investment at 3rd rank in FY2018: Report
Mutual Funds remained one of the biggest growth drivers of wealth in FY18 with a growth rate of 34.50 percent through both an increase in regular SIPs and lump sum investment.Individual wealth in direct equity zoomed 30.32 per cent to massive a Rs 48.97 crore in FY18, making the most preferred asset for holding individual wealth, overtaking fixed deposit and bonds which ended at Rs 42.09 lakh crore. Insurance, however, maintained its third rank, holding Rs 33.36 lakh crore of individual wealth.
The total wealth held by individuals in the country is expected to touch Rs 517.88 lakh crore by FY23, growing at an annual rate of 16.99 percent, according to a report.
Direct equity and mutual funds are expected to be the growth drivers of this northward trend, growing at a CAGR of 24.41 percent and 21.04 percent, respectively, over the next five years, the report named 'India Wealth Report 2018' by Karvy Private Wealth said.
The report added that individual wealth in direct equity zoomed 30.32 per cent to massive a Rs 48.97 crore in FY18, making the most preferred asset for holding individual wealth, overtaking fixed deposit and bonds which ended at Rs 42.09 lakh crore. Insurance, however, maintained its third rank, holding Rs 33.36 lakh crore of individual wealth.
Karvy Private Wealth chief executive officer Abhijit Bhave said the coming five to seven years are expected to be the time for equity as an asset class and investors can possibly treble their wealth in equities.
“Direct equity has emerged as the preferred asset class in FY18. The volatility in world markets and the Indian market has been noteworthy of late, but India still stands tall and has reclaimed ‘the world’s fastest growth large-developing economy’ tag from China. We foresee that the coming five to seven years will be the time for equity as an asset class and investors can possibly treble their wealth in equities.”
Individual wealth in the country grew by 14.02 percent year-on-year to touch Rs 392 lakh crore in FY18, according to the report.This was achieved by a 17.42 percent wealth growth in financial assets and a sober 9.24 percent wealth growth in physical assets.Direct equity captured the top spot where Indian individuals have their wealth overtaking fixed deposits.
"Owing to the positive performance in equities, the traditional bank deposits grew at much lesser single digit growth rates," it said.
Other notable assets which saw good growth include mutual funds and alternative investments.
Astute investors realised the power of alternate investments and the wealth held by individuals in alternative investments grew by 33.46 percent, the report said.
The HNIs or Ultra HNIs have also started moving assets towards alternative investment. Total individual wealth in alternative asset stood at Rs 1.24 lakh crore in FY18,” the report showed.
It further added that the share of investment in financial assets is on the rise and has increased to 60.22 per cent YoY and the proportion of physical asset has come down to 39.78 per cent in FY18 from 48 per cent in FY17.
“We project that till FY23, the total individual wealth in India will have a healthy growth rate of a CAGR of around 14-19 per cent,” Karvy Private Wealth said in a report.
The recent emerging market currency depreciation also saw a renewed interest in the international investments, which saw a jump of 25.83 percent for FY18, it added.
Among physical assets, real estate was the best performing asset class, growing at 10.35 percent over the previous year.
Being the home of the fourth largest population of millionaires in the Asia Pacific region, India was the fastest-growing major market globally in calendar year 2017, with a 20.4 percent high networth individual (HNI) population expansion and 21.6 percent HNI wealth growth, according to the report.
It said positive performance of the equity market in FY18 made it the most loved asset class for the UHNI/HNIs and direct equity now forms 20.7 percent of the total wealth pie of individual financial wealth in India.
Mutual Funds remained one of the biggest growth drivers of wealth in FY18 with a growth rate of 34.50 percent through both an increase in regular SIPs and lump sum investment, the report added.