Financial Daily from THE HINDU group of publications
Friday, Nov 25, 2005


Group Sites

Home Page - Investments
Markets - Financial Services

Structured investment products booming

Nilanjan Dey

A number of wealth advisors are known to be offering plans that actively involve derivatives.

Kolkata , Nov. 24

THE market for structured investment products, at times being offered with capital protection options, has started booming in India, thanks to a surge in demand.

Private wealth management firms are making the most of it, a trend that is reflected in the aggressive marketing policies used to service big-ticket customers.

Structured fund of funds (FoFs), Nifty-based trading portfolios and arbitrage funds are now part of the jargon used in high-end investment circles, courtesy products that are billed as different from those that simply provide diversification in tune with clients' risk-return profiles.

A number of wealth advisors are known to be offering plans that actively involve derivatives. They are also increasingly taking advantage of new-generation insurance products in various innovative ways.

In fact, unit-linked insurance is being positioned as a proxy to certain kinds of traditional investments. The idea is to safeguard an investor's capital and prevent it from being eroded. However, managers are rarely ready to offer capital guarantees in a formal way.

Wealth management activity under the aegis of private banks is particularly looking up, say sources, who addthat these entities are well placed to tap wealthy individuals who must also use normal banking services. PMS (portfolio management services), including the discretionary variety, is said to be gaining wider acceptance as well.

Banking groups which are complemented by securities broking outfits — among them are ICICI and Kotak Mahindra — are in an advantageous position, it is said. The latter's PMS, for instance, is spearheaded by Kotak Securities, which has come up with various options, each offering a distinct style.

For example, `Fortune Equity Portfolio' (which presents a "bottom up concentrated portfolio for long-term investors") is different from `Sigma Equity Portfolio' (which seeks to combine "large-cap stocks and bottom up ideas").

Elsewhere, a typical product may involve a trading portfolio focused on the Nifty. This may make use of futures and even index funds. Such a combination is expected to appeal to customers with at least a medium-term horizon.Real estate advisory is also finding a firm footing. Wealth managers, who maintain that the country's real estate market is already among the most high-yielding in the continent, are telling their clients that the sector will grow even more rapidly, at least over the next few years.

It is argued that returns from investment in miscellaneous activities (such as designing, development and sale of property) should therefore attract HNI money. In fact, a number of real estate funds are said to be in the process of being structured by various corporate groups.

What is the wealth manager's take-home? This, sources claim, varies quite a lot, depending on the product being sold and a few other factors. Even a simple PMS is a relatively costly proposition for the investor concerned; a customised investment solution involving not-so-ordinary products will be even more expensive.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

More Stories on : Investments | Financial Services

Stories in this Section
`Low' slides into Arabian Sea; north bracing for cold wave

RBI cell to monitor financial conglomerates
Structured investment products booming
Nokia gets $141-m BSNL network expansion deal
Indian cos in Afghan not to scale down operations
Most PSU cos yet to comply
Geodesic to acquire PicoPeta Simputers
Microsoft unveils retail strategy — Over 500 outlets to vend Windows-powered products
Some PSBs pitch for competition, not keen on fixing floor rates for loans
Good show! But little money coming into women's cricket
Why is the women's team unable to attract advertisers?

Close tab on equity markets
Retail investors to get 5% discount in ICICI Bank's public issue
Comply or face penalties — No extension of Clause 49 deadline, says SEBI chief

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line