A recent Kotak Wealth Management report focussing on the country's ultra-high net worth individuals has found there is a trend of wealthy people increasingly emerging from smaller cities-18% of them were based in Bengaluru, Ahmedabad, Pune, and Ludhiana. Having said that, 56% of the UHNHs hailed from the four metro cities - Delhi, Mumbai, Chennai and Kolkata.
The report also found those people with net worth of Rs 25 crore-increased by 10% to around 1.6 lakh in 2017 with 60% of them under the age of 40 years, compared to 47% in the previous survey. According to Jaideep Hansraj, CEO, Kotak Wealth Management & Priority Banking, this is due to family inheritance. Over the next five years, the study sees the number of such households doubling to 3.30 lakh and their net worth ballooning to Rs 352 trillion from Rs 153 trillion in 2017.
The report titled 'Top of the Pyramid 2017' also sheds light on where India's Richie Rich brigade prefer to park their money. Actually, in the past year, they have been more disposed to spend their moolah. These younger UHNIs "are at the vanguard of changes in consumption patterns. A robust economy, soaring markets, and strong consumption have contributed to rising disposable incomes, reflected in higher allocation towards leisure and allied activities," said the report.
This was reportedly true for professionals than inheritors and entrepreneurs, an indication of fatter pay cheques in India Inc. Investment for personal wealth, spends on jewellery and the share of savings have all dipped while inflation and higher cost of living, especially fuel, seems to have affected allocations to expenses, which were higher this year at 22%.
Spends on philanthropy have also been on the rise in the past few years, up 7% since the previous study. Moreover, a majority of UHNIs interviewed considered philanthropy in their annual expenditure plan. About 80% of the respondents claimed that they are associated with charities that provide food for the poor. Education (72%) emerged as the second most popular cause supported by UHNIs in 2017.
Calling the events of the past fortnight in the equity markets "crazy", Hansraj said he expects a shift to debt market investments over equities. However, he added that there won't be a return to investing in physical assets like gold and real estate.
Moreover, an increasing number of the rich are adopting "ad-hocism" as their investing style-almost half of them were inclined to take a high-risk and opportunity-driven approach while only about one-third preferred a disciplined and systematic approach. A noticeable theme for 2018 appears to be investment in agriculture and infrastructure-linked sectors. The report added that 46% of UHNIs intend to increase their investment in equities in the coming years.
The survey, conducted by global consultancy EY across 12 cities, relied on data points on savings, GDP growth, investments in asset classes like mutual funds, realty, gold and equities, and bank deposit growth.
A major finding is that the pace at which the UHNI segment is growing has slowed considerably over the years. According to the report, the number of UHNHs in India increased at a compounded annual growth rate of 12% over the previous five years. But in the report for 2015, the segment had seen a CAGR of 22% per cent over the previous five years. The segment's collective net worth furthermore grew only 5% in the past year. That should make the envious common man feel a tad better.
With PTI inputs