US securities: A smart diversification option for HNIs
Wednesday, 30/05/2012
http://timesofindia.indiatimes.com/nri/us-canada-news/US-securities-A-smart-diversification-option-for-HNIs/articleshow/13662460.cms
Indian markets, across all asset classes today are extremely volatile. The BSE Sensex is already at sub 16000 levels while inflation continues to erode real returns. Gold and real estate are at fairly high valuations and the rupee threatens to touch the 60 per dollar mark.
"For High Networth Investors (HNIs) with a liquid networth of $ 1 million, investing opportunities in India are limited, both, because of the volatility as well as the lack of depth in the Indian market. They seek diversification and today, that can come from investing in global markets," says PV Subramanyam, a chartered accountant and financial domain trainer.
At such times, the US securities market is an attractive option for such investors. Tom Sowanick, a former Merrill Lynch CIO who is now Co-President of Omnivest Group LLC, an investment advisory firm based in Princeton, New Jersey explains, "There are 3 good reasons why an Indian investor should look at the US securities market today. First, he will get a higher real return because of lower inflation in the US. Second, he will be investing in a stable currency. Let me give you an example. Ever since the financial crisis of 2008, the BSE Sensex has fallen over 60% while the S&P Index has lost about 55%. But at the same time, the dollar has appreciated by over 30% as compared to the rupee. So while an investor would seemingly have lost equally had he invested in both indices, he would have lost a lot more on the Sensex due to the currency risk. The third reason is to diversify political and economic risk."
Raj Sharma, a private wealth advisor at Merrill Lynch Wealth Management in Boston agrees, "There is enormous wealth being created in India today but HNIs continue to seek asset class diversification. According to the MSCI ACWI, Indian listed equities constitute just 2% of the world Sent from BlackBerry® on Airtel.
