The Indian investment landscape brings forth opportunities for various investor categories with diverse risk appetites & financial goals.

Here’s a blog that delves into alternative investment avenues for High-Net-Worth Individuals (HNIs).

Portfolio Management Services (PMS)

PMS offer tailored professional services to manage portfolios aimed to achieve specific investment goals.

SEBI-registered portfolio managers can offer the service by entering an agreement to manage portfolios on clients’ behalf.

PMS portfolios are customized to align with specific factors like risk appetite, goals, & time horizons of investors with a minimum ticket size of Rs 50 lakh.

Alternative Investment Funds (AIFs)

AIFs are privately pooled funds incorporated in India that collect money from investors, Indian or foreign, for investing in asset classes like private equity, real estate, hedge funds, etc., as stated in the investment policy.

AIFs are also regulated by SEBI but are different from Mutual Funds (MFs).

AIFs cater to HNI investors and have distinct investment strategies with a minimum ticket size of Rs 1 crore.

Market Linked Debentures (MLDs)

MLDs are a type of debt instrument whose returns are not fixed.

Rather, returns are linked to the performance of underlying assets such as bonds, equity, benchmark indices, etc.

They come with a fixed maturity period, typically between 12 to 60 months.

MLDs act like zero coupon bonds that pay interest and principal on maturity.

Real Estate Investment Trusts (REITs)

REITs are investment vehicles that allow indirect participation in income-generating real estate assets.

These assets encompass commercial properties like offices, shopping centres, warehouses, or a blend of property types.

REITs pool funds from multiple investors to invest in real estate assets.

They distribute a significant portion of their rental income and capital gains earned by the sale of assets as dividends. This provides a source of regular income to investors.

REITs also provide an opportunity for capital appreciation with the rise in the price of the units, like Mutual Funds, and can be traded on stock exchanges.

Infrastructure Investment Trusts (InvITs)

InvITs are investment tools that enable investors to invest in infrastructure projects.

The cash flows generated are distributed as dividends among investors.

The projects typically include roads, power transmission lines, ports, or other operational infrastructure projects that generate steady cash flows.

Their framework is similar to REITs and can be traded on stock exchanges.

International Investment through LRS

The Liberalized Remittance Scheme is a regulation by RBI through which Indian residents can invest in overseas financial markets, purchase properties overseas, or make other permissible foreign investments.

The scheme enables investors to diversify their investments and build a corpus of offshore assets as per SEBI & RBI guidelines.

The yearly limit set by RBI for investment through LRS is USD 2,50,000 per financial year.

Conclusion

As the investment horizon evolves, exploring these investment avenues beyond the traditional ones remains an integral part of the investment journey.

A diversified and resilient portfolio can pave the way for wealth creation & financial security.

However, it is crucial for investors to thoroughly analyze various investment products or consult a financial advisor rather than falling prey to emotions like Fear of Missing Out (FOMO).