Karvy bets on equity, debt for investments

Hyderabad: The Centre's target to reach $5 trillion economy has given an impetus to the equity market, which is expected to prosper in the next five years, making it a priority for larger investment allocation, says Wealth Management arm of Karvy Group.

Unveiling the 10th edition of India Wealth Report 2019, Karvy Private Wealth on Thursday said, the individual wealth in financial assets has witnessed an increase of 10.96 per cent in FY19, which grew to Rs 262 lakh crore as compared to Rs 236 lakh crore in FY18.

Besides, the top financial assets for parking investments were Direct Equity, followed by Fixed Deposits, Insurance, Saving Accounts and Cash, that being a total of 72.33 per cent contribution in the overall financial assets.

In this, Direct Equity witnessed an y-o-y growth of 6.39 per cent from Rs 48.97 lakh crore in FY 2018 to Rs 52.10 lakh crore in FY 2019. And, equity as an asset class is 18.89 per cent of the total investments, it said.

Abhijit Bhave, Chief Executive Officer, Karvy Private Wealth, said: "Karvy suggests investment allocation into firstly, equity as asset class, followed by debt, gold and real estate. The core investment being in equity and debt, and investment in Gold should not be more than 10 per cent of an individual's investment."

Bhave further said, "within equity, at least half of the investment should be generally allocated into large caps, but as they are already expensive, the next best option are mid-caps.

The mutual funds under mid-caps can make 30 per cent of investment, 10 per cent can go into small caps and sectors each, -- the sectors being banking, financial services and consumption.

Speaking about the investment pattern in Hyderabad, he said, "traditionally, Hyderabad sees larger share of investments going into real estate, which had come down recently with the downfall of real estate cycle. This investment has shifted to equity, fixed deposits and mutual funds."

According to the report, the growth rate of fixed deposits in the current account stood at 20.79 per cent, which was Rs 37,998 crore in June 2019 compared to Rs 31,458 crore in June 2018.

However, investments into mutual funds in the city saw a fall from Rs 52,076 crore in August 2018 to Rs 49,268 crore in August 2019, the y-o-y growth being -5.39 per cent.

Moreover, the Wealth Report showed a 21.94 per cent growth in composite price of real estate, from Rs 4,143 in FY 2018 to Rs 5,052 in FY 2019. "When people are moving into the city, it leads to restriction in space, which leads to increase in real estate prices.

This is the case with residential realty, which witnessed a surge in price. Similarly, the commercial realty rental yields have increased, Bhave said, adding that, however, real estate sector in Hyderabad will take 12 – 18 months to return to good growth rates, hence this fiscal, real estate will not be a booming sector.

However commercial assets, co-living and co-working spaces will see growth, he added.