Cut exposure to crowded midcap trades, buy more largecaps: 360 ONE's Raghav Iyengar

Economic Times

4 days ago

Raghav Iyengar of 360 ONE Asset suggests tactical adjustments for investors. He recommends reducing midcap exposure and increasing investment in high-quality largecaps. HNIs and UHNIs are showing interest in REITs and InvITs for stable income. Family offices are exploring private credit and structured debt. Investors are diversifying into global markets and real assets.
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Edited excerpts:
As we step into the second half of 2025, what's your macro view on the markets? Nifty seems to be stuck in a range for the last 2 months.
What is the kind of interest that you are seeing from HNIs and UHNIs in investing in REITs and InvITs?
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What are the dominant wealth themes for H2 2025? Are you advising a shift in asset allocation?
For HNIs and UHNIs, is this a time to go risk-on or adopt a more defensive, cash-heavy stance?
Are Indian family offices showing greater appetite for private credit and structured debt? What's driving this demand?
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With public market valuations stretched in pockets, are alternatives like AIFs and unlisted equity becoming the go-to bet?
What's your house view on global diversification — is 'Buy US tech' still the evergreen idea or are clients looking at other geographies?
Have you seen growing interest in gold, real assets or commodities as hedges in client portfolios?
What are the biggest mistakes ultra-wealthy investors are making right now, and what would you caution them against?
While not advising clients to make a wholesale shift towards gold and silver, Raghav Iyengar , CEO, 360 ONE Asset, said his team is advocating tactical tweaks, including reducing overexposure to crowded trades in midcaps and increasing allocation to high-quality large caps.In this chat with ETMarkets, he also explains that a balanced barbell strategy is working well, combining core equity holdings with defensive assets like short-duration debt or REITs for HNI investors.Indeed, the Nifty has been consolidating, reflecting a market that's digesting past gains and looking for fresh triggers. Our macro view is cautiously constructive. While India's structural story remains intact with strong domestic demand, policy continuity, and capex revival, markets are in check due to global factors such as the trajectory of US interest rates, China's uneven recovery, and geopolitical tensions. We expect this range-bound movement to continue in the near term, but this could be an opportunity to accumulate quality names selectively. Markets often pause before the next leg up, and this could well be that phase.Interest has certainly picked up. HNIs and UHNIs are seeking predictable cash flows, and REITs and InvITs offer precisely that; yields that are relatively attractive compared to traditional fixed income. There is a growing appreciation for these vehicles as core components of a diversified income-oriented portfolio, especially as these products mature and gain transparency. Additionally, the tax clarity and regulatory stability around them have added to investor comfort.We are not advisors but manufacturers, and our focus includes income generation in a high-rate environment and diversification across multiple asset classes.Commodities, particularly gold and silver, are re-emerging as important portfolio components, not just as hedges but as tactical plays amid global macro uncertainty and continued central bank accumulation of bullion. Investors add exposure through ETFs, sovereign gold bonds, or commodity-linked structures.While we're not advising a wholesale shift, we are advocating tactical tweaks, including reducing overexposure to crowded trades in midcaps and increasing allocation to high-quality largecaps It depends on the time horizon and risk appetite. That said, we are advising clients not to stay excessively defensive. A balanced barbell strategy is working well, combining core equity holdings with defensive assets like short-duration debt or REITs. Cash as a strategic buffer is important, but sitting on cash in a structurally bullish market like India's can be a drag. Selectively going risk-on, especially in global equities or beaten-down domestic themes, could add value.Yes, and quite significantly. Private credit offers an appealing risk-adjusted return profile, particularly in an environment where traditional fixed income yields are plateauing. Family offices are increasingly sophisticated. They value predictable cash flows, bespoke structures, and capital preservation. Demand is being driven by tighter bank lending norms, higher spreads, and a desire to diversify away from public markets. Structured debt is also seen as a hedge against public market volatility.Absolutely. Alternatives are no longer peripheral; they are becoming core to many sophisticated portfolios. AIFs, especially Category II and III, are attracting strong flows due to their ability to capture alpha in niche strategies from pre-IPO to credit and special situations. Unlisted equity, too, is drawing interest as investors seek to participate in India's private market growth story. However, selectivity, manager quality, and governance remain paramount.While US tech remains a cornerstone, clients are becoming more nuanced. The "buy everything tech" trade is evolving. There's growing interest in Japan, select parts of Europe, and Southeast Asia, especially for clients looking for valuation comfort and sectoral diversification. We continue to recommend global diversification not just geographically but also across asset classes, including global credit, thematic ETFs, and global REITs, to hedge against domestic concentration risk.Yes. Gold remains a strategic allocation in many portfolios, especially with central banks globally holding steady or pivoting dovishly. Real assets, particularly through REITs and global infrastructure funds, are being used both as inflation hedges and yield enhancers. Commodities as a tactical allocation are less prevalent among traditional UHNI portfolios but are finding their place via structured products or thematic exposure within AIFs and PMS platforms.Ultra-wealthy investors often have access to the best advisors, cutting-edge research, and a wide array of investment opportunities. But even at the top, certain blind spots persist. For some, it is overconcentration, either in a single asset class, theme, or geography and driven by recent past performance. Another is the chase for yield without fully understanding the embedded risks in structured products or private credit. We also see a tendency to delay decision-making in volatile times, which leads to missed opportunities. Our advice: Stay diversified, focus on long-term compounding, and avoid binary investment calls. Strategic patience often outperforms tactical brilliance.