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Economic Times
15-05-2025
- Business
- Economic Times
NRI Talk: From Art to Angel Deals: NRIs are broadening their investment canvas, Sachin Sawrikar decodes
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Remove Ads In an evolving global landscape where financial opportunities span geographies and asset classes, Non-Resident Indians ( NRIs ) are redefining what it means to invest in India and drawn to real estate and fixed deposits, today's NRIs are diversifying into everything from mutual funds and GIFT City investments to private equity, tech startups, and even fine ties to India remain strong, but a new wave of affluent and informed NRIs is steering toward a more strategic, globally aware investment this edition of ETMarkets NRI Talk, Sachin Sawrikar , Founder and Managing Partner at Artha Bharat, unpacks the shifts in NRI investment behavior—from the surge in remittances and tax arbitrage benefits in zero-tax jurisdictions, to the growing appetite for innovation-driven sectors and alternative it's capital preservation or long-term value creation, NRIs are expanding their portfolios with greater purpose, caution, and confidence. Edited Excerpts –A) NRIs have consistently played a pivotal role in India's economic development, with their financial contributions delivering significant macroeconomic 2023, India received an estimated $125 billion in remittances, reaffirming its position as the world's largest inflows act as a critical buffer against the country's persistent merchandise trade deficit, bolstering foreign exchange reserves and supporting current account growing appeal to NRIs as a long-term investment destination is underpinned by its resilient economic fundamentals, ambitious structural and regulatory reforms, and a dynamic, fast-expanding startup factors not only create diverse investment avenues but also signal long-term economic stability and innovation the enduring emotional and cultural ties that many NRIs maintain with India blends financial intent with a deep-rooted personal financial affluence among NRIs grows, many increasingly diversify their investments across geographies, guided by their country of residence and global market United States, as the world's largest economy, continues to be a preferred destination—particularly for investments in equity markets and technology startups. Other favored destinations include the UAE, Singapore, and the United Kingdom, each offering distinct strategic of the key factors driving NRI investment in markets like the U.S., U.K., and Singapore is the presence of stable legal systems and favorable tax regimes, which provide clarity, protection, and long-term financial planning jurisdictions also offer robust infrastructure for establishing family offices, making them attractive for wealth preservation and intergenerational planning.A) NRIs investing in mutual funds from countries that have a Double Taxation Avoidance Agreement (DTAA) with India benefit from tax exemptions, as the agreement typically stipulates that capital gains taxes are to be paid in the country of residence, rather than in a result, such investors are generally not liable for taxes on the sale of mutual funds in India. For countries like Singapore, UAE, and Mauritius, where capital gains are not taxed, NRIs can enjoy the benefit of zero tax on mutual fund it's important to note that this benefit applies specifically to mutual funds and not stocks. This distinction arises because mutual funds are structured as trusts, which fall outside the scope of capital gains taxation under most DTAAs.A) NRIs often make substantial investments in real estate, as many plan to return to India and seek property to reside in. This is especially true for Gulf-based NRIs, who do not have access to citizenship or residency rights in their host Real Estate Investment Trusts (REITs) and fractional ownership options have emerged as potential alternatives, they have not gained significant traction among NRIs. This is largely due to the relatively low yields offered by these investment India, REITs face an additional challenge: the rental yields in the real estate market are generally low, making them less attractive to India is one of the few countries where there is a negative spread—the cost of borrowing is higher than the rental yields from disparity further diminishes the appeal of REITs, as the returns from these investments do not adequately compensate for the cost of financing.A) Some of the issues that need to be addressed when making investment in India, are:Many NRIs invest in rupee-denominated deposits in India, often attracted by the tax-free nature of interest income. However, these deposits offer low net returns when considering currency depreciation. The weakening of the Indian Rupee (INR) over time can significantly reduce the actual returns in the NRI's home currency, making these investments less attractive in the long often have concentrated portfolios, primarily invested in real estate or equity and mostly within a single country (India). This lack of diversification exposes them to higher risks. It is crucial for NRIs to broaden their investments across different asset classes, sectors, and geographies to minimize risk and maximize NRIs depend on advisors, agents, or friends for investment advice without verifying their credentials or track record. This lack of due diligence can lead to fraudulent schemes or poor investment decisions. Numerous cases have surfaced in the media where NRIs have been duped by untrustworthy individuals promising high returns or offering dubious investment real estate and other assets in India without proper estate planning can lead to complex, time-consuming legal issues for NRIs and their families. The transfer of assets, especially property, can become a sticky process involving prolonged legal proceedings. NRIs should ensure they have a clear will, trusts, and an understanding of inheritance laws in India to avoid complications for their heirs.A) It's challenging to generalize about all NRIs, given the diversity in backgrounds, financial goals, and experiences. However, there are some common attributes that many NRIs tend to share when it comes to are more general trends rather than rules, but they provide insights into the typical NRI investment mindsetMany NRIs come from humble backgrounds and, as a result, tend to be more risk-averse when it comes to investments. They generally prefer low-risk, stable options like real estate and fixed deposits to ensure capital preservation. This conservative approach stems from their desire for financial security and a sense of stability, both for themselves and their holds strong emotional appeal for many NRIs. There's a deep-rooted cultural connection, and many of them view India as a future homecoming destination, which makes it a preferred investment locale. Moreover, most NRIs are more familiar with the Indian market and its dynamics, which gives them a comfort level when investing in Indian stocks, mutual funds, real estate, and other assets. The familiarity and trust they have with Indian systems make India a natural choice for their efficiency is a major concern for NRIs, particularly those from countries like the Gulf, where there are no personal income taxes. These NRIs tend to prefer tax-free investment options or low-tax structures, such as exempted income from real estate or tax-free government bonds. They are also keen on Double Taxation Avoidance Agreements (DTAAs) that help minimize tax liabilities between their home country and India. This focus on tax optimization plays a significant role in shaping their investment choices.A) NRIs continue to show a strong inclination toward specific sectors and asset classes in India, driven by a blend of emotional ties, perceived stability, and the country's economic potential. Below are three of the most preferred investment avenues among NRIs:1. Real EstateReal estate remains a cornerstone of NRI investment portfolios due to its tangible nature, perceived stability, and potential for long-term capital appreciation. Many NRIs view it as a future residence if they plan to return to India, while also benefitting from rental income in the interim.2. Mutual FundsSystematic Investment Plans (SIPs) in Indian mutual funds are increasingly popular among NRIs, particularly due to the country's robust economic growth and the higher return potential from mid- and small-cap NRI portfolios mature, there's growing awareness of the need for global diversification. Investing through funds in GIFT City allows NRIs to access international markets such as the U.S., U.K., and other developed economies, while still operating under a jurisdiction they understand and benefiting from favorable tax treatment.3. Fixed DepositsNRE fixed deposits remain a traditional favorite due to their tax-free interest, capital safety, and the perception that funds are safer in Indian banks. However, with persistent INR depreciation, the real return on rupee deposits has diminished over should consider USD-denominated deposits in GIFT City, which combine the security of fixed income with currency risk mitigation. These deposits offer an opportunity to retain earnings in hard currency while still leveraging India's regulatory clarity and tax NRIs continue to prefer traditional investment options like real estate, mutual funds, and fixed deposits, platforms like GIFT City are opening new doors for globally diversified, tax-efficient investments—all within a framework that NRIs are comfortable navigating. This evolution marks a shift from emotional investing to a more strategic and globally aware approach to wealth management.A) NRIs tend to gravitate toward sectors where they see strong long-term potential, global relevance, and a certain degree of familiarity. The following sectors consistently rank high on their investment radar:1. Information Technology (IT & Tech Services)A large number of NRIs, particularly from the US and UK, have backgrounds in tech and are familiar with the sector's dynamics. India's position as a global hub for IT services, with strong players in software development, cloud services, cybersecurity, and outsourcing, makes it a natural investment destination.2. Healthcare & PharmaceuticalsIndia is now firmly established as a global supplier of pharmaceutical products and active pharmaceutical ingredients (APIs).The sector benefits from both rising domestic demand and robust export growth, especially post-COVID.3. Private Equity & Startups (Tech-Focused)Increasingly, affluent NRIs are participating in angel investing or private equity deals, especially in sectors they understand—tech, fintech, edtech, and healthtech. These sectors offer high growth potential and align well with global innovation trends.4. Real Estate (Residential & Commercial)Real estate remains a tangible, long-term asset that offers both emotional security and income potential. Residential property is often acquired for personal use or as a future retirement home, particularly for Gulf-based NRIs. Commercial property is favored for its rental income generation and potential capital appreciation in high-growth urban sectors combine familiarity, global relevance, and sustainable growth, aligning well with the typical NRI investor's mindset—long-term, moderately conservative, and value-driven.A) There is growing interest among affluent NRIs in non-traditional assets, particularly art, which is increasingly seen as a potential store of value and cultural investment. Indian contemporary and modern art, in particular, is gaining traction due to its emotional resonance, aesthetic appeal, and global luxury cars and high-end watches are being actively acquired, they are still viewed primarily as lifestyle or personal indulgences, rather than as structured, long-term investments. The collectible value of these items is acknowledged but not yet fully integrated into wealth planning strategies by most NRIs.A key constraint in this space is the specialised knowledge required to invest in such assets. Understanding authenticity, provenance, valuation, and appreciation trends involves a steep learning awareness and expertise improve, these alternative investments may gradually become a more significant part of sophisticated NRI portfolios, especially among those seeking diversification beyond traditional financial and real estate assets.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
15-05-2025
- Business
- Time of India
NRI Talk: From Art to Angel Deals: NRIs are broadening their investment canvas, Sachin Sawrikar decodes
In an evolving global landscape where financial opportunities span geographies and asset classes, Non-Resident Indians ( NRIs ) are redefining what it means to invest in India and beyond. Traditionally drawn to real estate and fixed deposits, today's NRIs are diversifying into everything from mutual funds and GIFT City investments to private equity, tech startups, and even fine art. Emotional ties to India remain strong, but a new wave of affluent and informed NRIs is steering toward a more strategic, globally aware investment mindset. Play Video Play Skip Backward Skip Forward Mute Current Time 0:00 / Duration 0:00 Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions and subtitles off , selected Audio Track Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. In this edition of ETMarkets NRI Talk, Sachin Sawrikar , Founder and Managing Partner at Artha Bharat, unpacks the shifts in NRI investment behavior—from the surge in remittances and tax arbitrage benefits in zero-tax jurisdictions, to the growing appetite for innovation-driven sectors and alternative assets. Whether it's capital preservation or long-term value creation, NRIs are expanding their portfolios with greater purpose, caution, and confidence. Edited Excerpts – Q) How are NRIs looking at India as a long term investment destination? And, what are the other hot countries which they invest in? by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Bank Owned Properties For Sale In Cikarang (Prices May Surprise You) Foreclosed Homes | Search ads Search Now Undo A) NRIs have consistently played a pivotal role in India's economic development, with their financial contributions delivering significant macroeconomic impact. In 2023, India received an estimated $125 billion in remittances, reaffirming its position as the world's largest recipient. These inflows act as a critical buffer against the country's persistent merchandise trade deficit, bolstering foreign exchange reserves and supporting current account stability. Live Events India's growing appeal to NRIs as a long-term investment destination is underpinned by its resilient economic fundamentals, ambitious structural and regulatory reforms, and a dynamic, fast-expanding startup ecosystem. These factors not only create diverse investment avenues but also signal long-term economic stability and innovation potential. Furthermore, the enduring emotional and cultural ties that many NRIs maintain with India blends financial intent with a deep-rooted personal connection. As financial affluence among NRIs grows, many increasingly diversify their investments across geographies, guided by their country of residence and global market opportunities. The United States, as the world's largest economy, continues to be a preferred destination—particularly for investments in equity markets and technology startups. Other favored destinations include the UAE, Singapore, and the United Kingdom, each offering distinct strategic advantages. One of the key factors driving NRI investment in markets like the U.S., U.K., and Singapore is the presence of stable legal systems and favorable tax regimes, which provide clarity, protection, and long-term financial planning benefits. These jurisdictions also offer robust infrastructure for establishing family offices, making them attractive for wealth preservation and intergenerational planning. Q) There is big debate on social media about taxation. Help us understand why NRIs In Dubai, Singapore & Mauritius have to pay zero tax on mutual fund gains? A) NRIs investing in mutual funds from countries that have a Double Taxation Avoidance Agreement (DTAA) with India benefit from tax exemptions, as the agreement typically stipulates that capital gains taxes are to be paid in the country of residence, rather than in India. As a result, such investors are generally not liable for taxes on the sale of mutual funds in India. For countries like Singapore, UAE, and Mauritius, where capital gains are not taxed, NRIs can enjoy the benefit of zero tax on mutual fund gains. However, it's important to note that this benefit applies specifically to mutual funds and not stocks. This distinction arises because mutual funds are structured as trusts, which fall outside the scope of capital gains taxation under most DTAAs. Q) How much money is moving in real estate/REIT/fractional investment? Is this the right way? A) NRIs often make substantial investments in real estate, as many plan to return to India and seek property to reside in. This is especially true for Gulf-based NRIs, who do not have access to citizenship or residency rights in their host countries. While Real Estate Investment Trusts (REITs) and fractional ownership options have emerged as potential alternatives, they have not gained significant traction among NRIs. This is largely due to the relatively low yields offered by these investment models. In India, REITs face an additional challenge: the rental yields in the real estate market are generally low, making them less attractive to investors. Moreover, India is one of the few countries where there is a negative spread—the cost of borrowing is higher than the rental yields from properties. This disparity further diminishes the appeal of REITs, as the returns from these investments do not adequately compensate for the cost of financing. Q) What are the big mistakes which NRIs should avoid when making investment in India? A) Some of the issues that need to be addressed when making investment in India, are: 1. Ignoring INR Depreciation: Many NRIs invest in rupee-denominated deposits in India, often attracted by the tax-free nature of interest income. However, these deposits offer low net returns when considering currency depreciation. The weakening of the Indian Rupee (INR) over time can significantly reduce the actual returns in the NRI's home currency, making these investments less attractive in the long run. 2. Lack of Portfolio Diversification: NRIs often have concentrated portfolios, primarily invested in real estate or equity and mostly within a single country (India). This lack of diversification exposes them to higher risks. It is crucial for NRIs to broaden their investments across different asset classes, sectors, and geographies to minimize risk and maximize returns. 3. Relying on Unverified Advisors or Agents: Many NRIs depend on advisors, agents, or friends for investment advice without verifying their credentials or track record. This lack of due diligence can lead to fraudulent schemes or poor investment decisions. Numerous cases have surfaced in the media where NRIs have been duped by untrustworthy individuals promising high returns or offering dubious investment opportunities. 4. Neglecting Estate Planning: Owning real estate and other assets in India without proper estate planning can lead to complex, time-consuming legal issues for NRIs and their families. The transfer of assets, especially property, can become a sticky process involving prolonged legal proceedings. NRIs should ensure they have a clear will, trusts, and an understanding of inheritance laws in India to avoid complications for their heirs. Q) What is the money mindset which NRIs follow. Are there any common attributes? A) It's challenging to generalize about all NRIs, given the diversity in backgrounds, financial goals, and experiences. However, there are some common attributes that many NRIs tend to share when it comes to investments. These are more general trends rather than rules, but they provide insights into the typical NRI investment mindset 1. Conservative or Lower Risk Appetite Many NRIs come from humble backgrounds and, as a result, tend to be more risk-averse when it comes to investments. They generally prefer low-risk, stable options like real estate and fixed deposits to ensure capital preservation. This conservative approach stems from their desire for financial security and a sense of stability, both for themselves and their families. 2. Preference for India as an Investment Destination India holds strong emotional appeal for many NRIs. There's a deep-rooted cultural connection, and many of them view India as a future homecoming destination, which makes it a preferred investment locale. Moreover, most NRIs are more familiar with the Indian market and its dynamics, which gives them a comfort level when investing in Indian stocks, mutual funds, real estate, and other assets. The familiarity and trust they have with Indian systems make India a natural choice for their investments. 3. Awareness of Tax Implications Tax efficiency is a major concern for NRIs, particularly those from countries like the Gulf, where there are no personal income taxes. These NRIs tend to prefer tax-free investment options or low-tax structures, such as exempted income from real estate or tax-free government bonds. They are also keen on Double Taxation Avoidance Agreements (DTAAs) that help minimize tax liabilities between their home country and India. This focus on tax optimization plays a significant role in shaping their investment choices. Q) Which investment options or asset classes are hot favourites of NRIs and why A) NRIs continue to show a strong inclination toward specific sectors and asset classes in India, driven by a blend of emotional ties, perceived stability, and the country's economic potential. Below are three of the most preferred investment avenues among NRIs: 1. Real Estate Real estate remains a cornerstone of NRI investment portfolios due to its tangible nature, perceived stability, and potential for long-term capital appreciation. Many NRIs view it as a future residence if they plan to return to India, while also benefitting from rental income in the interim. 2. Mutual Funds Systematic Investment Plans (SIPs) in Indian mutual funds are increasingly popular among NRIs, particularly due to the country's robust economic growth and the higher return potential from mid- and small-cap stocks. As NRI portfolios mature, there's growing awareness of the need for global diversification. Investing through funds in GIFT City allows NRIs to access international markets such as the U.S., U.K., and other developed economies, while still operating under a jurisdiction they understand and benefiting from favorable tax treatment. 3. Fixed Deposits NRE fixed deposits remain a traditional favorite due to their tax-free interest, capital safety, and the perception that funds are safer in Indian banks. However, with persistent INR depreciation, the real return on rupee deposits has diminished over time. NRIs should consider USD-denominated deposits in GIFT City, which combine the security of fixed income with currency risk mitigation. These deposits offer an opportunity to retain earnings in hard currency while still leveraging India's regulatory clarity and tax benefits. While NRIs continue to prefer traditional investment options like real estate, mutual funds, and fixed deposits, platforms like GIFT City are opening new doors for globally diversified, tax-efficient investments—all within a framework that NRIs are comfortable navigating. This evolution marks a shift from emotional investing to a more strategic and globally aware approach to wealth management. Q) Which sectors are more preferred when NRIs look to invest in India? A) NRIs tend to gravitate toward sectors where they see strong long-term potential, global relevance, and a certain degree of familiarity. The following sectors consistently rank high on their investment radar: 1. Information Technology (IT & Tech Services) A large number of NRIs, particularly from the US and UK, have backgrounds in tech and are familiar with the sector's dynamics. India's position as a global hub for IT services, with strong players in software development, cloud services, cybersecurity, and outsourcing, makes it a natural investment destination. 2. Healthcare & Pharmaceuticals India is now firmly established as a global supplier of pharmaceutical products and active pharmaceutical ingredients (APIs).The sector benefits from both rising domestic demand and robust export growth, especially post-COVID. 3. Private Equity & Startups (Tech-Focused) Increasingly, affluent NRIs are participating in angel investing or private equity deals, especially in sectors they understand—tech, fintech, edtech, and healthtech. These sectors offer high growth potential and align well with global innovation trends. 4. Real Estate (Residential & Commercial) Real estate remains a tangible, long-term asset that offers both emotional security and income potential. Residential property is often acquired for personal use or as a future retirement home, particularly for Gulf-based NRIs. Commercial property is favored for its rental income generation and potential capital appreciation in high-growth urban centers. These sectors combine familiarity, global relevance, and sustainable growth, aligning well with the typical NRI investor's mindset—long-term, moderately conservative, and value-driven. Q) What about luxury items – art, cars, watches which of the themes are hot favourites? A) There is growing interest among affluent NRIs in non-traditional assets, particularly art, which is increasingly seen as a potential store of value and cultural investment. Indian contemporary and modern art, in particular, is gaining traction due to its emotional resonance, aesthetic appeal, and global recognition. While luxury cars and high-end watches are being actively acquired, they are still viewed primarily as lifestyle or personal indulgences, rather than as structured, long-term investments. The collectible value of these items is acknowledged but not yet fully integrated into wealth planning strategies by most NRIs. A key constraint in this space is the specialised knowledge required to invest in such assets. Understanding authenticity, provenance, valuation, and appreciation trends involves a steep learning curve. As awareness and expertise improve, these alternative investments may gradually become a more significant part of sophisticated NRI portfolios, especially among those seeking diversification beyond traditional financial and real estate assets.
Economic Times
05-05-2025
- Business
- Economic Times
ETMarkets NRI Talk: Stefan Hofer on why gold, euros & private markets may be NRI wealth shields
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel As global markets grapple with escalating trade tensions and policy unpredictability, Non-Resident Indians (NRIs) are increasingly looking for ways to safeguard their wealth from rising this edition of ETMarkets NRI Talk, Stefan Hofer, Chief Investment Strategist at LGT Private Banking Asia Pacific, outlines why traditional bets on the US dollar and equities may no longer offer the same safety he highlights the strategic value of gold, the euro, and private markets as more resilient components of a globally diversified portfolio—especially in a world drifting toward multipolarity. Edited Excerpts –A) With less than one month having passed since the launch of the new US tariff regime, investors do not have hard economic data on hand to gauge the expected drag on surveys have been published, and these are uniformly negative, as well as expectations of inflation which have moved other major new phenomenon is the broad weakening of the US dollar, in line with the alleged aims of the Trump Administration.A) We advocate globally diversified portfolios as we rush towards a more multi-polar world. In terms of particular regions outside India, European assets and the Euro stand out a being potential longer-term beneficiaries as US exceptionalism – even at current elevated levels – may be useful as a hedge against rising US inflation fixed income, we recommend predominantly high credit ratings and shorter duration instruments, given the highly uncertain rates outlook for the US Federal Reserve.A) In addition to diversifying away from US equity exposure and the US dollar in general, more defensive strategies that lower the beta of an overall portfolio would make sense in the current means considering market-neutral strategies and/or private market solutions, be it in private equity or credit.A) India is in pole position to expand its market share in global manufacturing exports, and anecdotal evidence (Apple assembling iPhones in India) suggests that important progress is being made in this the longer term, for India to be on the cutting edge of manufacturing exports, then a further ramping up of logistics infrastructure is needed, namely seaports, highways, rail and airports, for example.A) The policy-making environment is very volatile, and this is being expressed in asset prices around the world.A well-diversified portfolio across geographies and currencies should help investors navigate the current strategies that protect the downside of a portfolio need to be carefully assessed from a cost-benefit perspective, as hedging costs can change quickly.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
05-05-2025
- Business
- Time of India
ETMarkets NRI Talk: Stefan Hofer on why gold, euros & private markets may be NRI wealth shields
As global markets grapple with escalating trade tensions and policy unpredictability, Non-Resident Indians (NRIs) are increasingly looking for ways to safeguard their wealth from rising volatility. In this edition of ETMarkets NRI Talk, Stefan Hofer, Chief Investment Strategist at LGT Private Banking Asia Pacific, outlines why traditional bets on the US dollar and equities may no longer offer the same safety net. Instead, he highlights the strategic value of gold, the euro, and private markets as more resilient components of a globally diversified portfolio—especially in a world drifting toward multipolarity. Edited Excerpts – Q) How might escalating trade tensions between major economies like the US and China affect the global investment landscape for NRIs? A) With less than one month having passed since the launch of the new US tariff regime, investors do not have hard economic data on hand to gauge the expected drag on spending. Sentiment surveys have been published, and these are uniformly negative, as well as expectations of inflation which have moved higher. The other major new phenomenon is the broad weakening of the US dollar, in line with the alleged aims of the Trump Administration. Q) In the wake of a tariff war, should NRIs consider reallocating part of their portfolio from global equities to safer fixed-income instruments or gold? A) We advocate globally diversified portfolios as we rush towards a more multi-polar world. In terms of particular regions outside India, European assets and the Euro stand out a being potential longer-term beneficiaries as US exceptionalism fades. Gold – even at current elevated levels – may be useful as a hedge against rising US inflation expectations. For fixed income, we recommend predominantly high credit ratings and shorter duration instruments, given the highly uncertain rates outlook for the US Federal Reserve. Q) What kind of geographical diversification strategies should NRIs adopt to hedge against the volatility caused by trade wars? A) In addition to diversifying away from US equity exposure and the US dollar in general, more defensive strategies that lower the beta of an overall portfolio would make sense in the current environment. This means considering market-neutral strategies and/or private market solutions, be it in private equity or credit. Q) Could India benefit as a manufacturing alternative amid US-China trade tensions, and how can NRIs capitalize on this shift? A) India is in pole position to expand its market share in global manufacturing exports, and anecdotal evidence (Apple assembling iPhones in India) suggests that important progress is being made in this area. Over the longer term, for India to be on the cutting edge of manufacturing exports, then a further ramping up of logistics infrastructure is needed, namely seaports, highways, rail and airports, for example. Q) Are wealth managers recommending any specific asset classes or geographies as a hedge against trade-related global market turbulence? A) The policy-making environment is very volatile, and this is being expressed in asset prices around the world. A well-diversified portfolio across geographies and currencies should help investors navigate the current turbulence. Hedging strategies that protect the downside of a portfolio need to be carefully assessed from a cost-benefit perspective, as hedging costs can change quickly.
Time of India
23-04-2025
- Business
- Time of India
ETMarkets NRI talk: US-China trade tensions could reshape global portfolios—NRIs must rethink strategy, says Quest CEO
As trade tensions between the US and China escalate, the global investment landscape is undergoing a profound shift—one that calls for a strategic rethink, especially for Non-Resident Indians ( NRIs ). In an exclusive interaction with ETMarkets NRI Talk, Rajkumar Singal, CEO of Quest Investment Advisors, highlights how tariff wars , supply chain realignments, and geopolitical uncertainties are creating both risks and tactical opportunities across asset classes. From rebalancing global equity exposure to increasing allocations in INR-denominated assets, and capitalizing on India's rise as a manufacturing alternative, Singal outlines a pragmatic roadmap for NRIs looking to navigate volatility and align portfolios with long-term goals. Edited Excerpts - Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Thanks for taking the time out. How might escalating trade tensions between major economies like the US and China affect the global investment landscape for NRIs? Escalating trade tensions between major economies like the US and China have far-reaching implications that ripple across asset classes and geographies. Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo While the immediate aim of tariffs and trade barriers may be to correct imbalances or protect domestic industries, the unintended consequences are often broader and more damaging. Firstly, inflation and demand destruction become key risks. Tariffs raise the cost of imported goods, which leads to higher prices for consumers. Secondly, we are witnessing disruptions in global supply chains as companies scramble to diversify away from overdependence on China. This reconfiguration adds costs, delays, and complexities Live Events The combined effect of these forces—higher costs, slower consumption, and uncertain supply—raises the risk of a global economic slowdown or even recession. We've already seen a synchronized sell-off across asset classes: global equities have corrected, US and Japanese bond yields have risen (pushing prices down), and even the US dollar, typically a safe haven, has weakened due to changing expectations on monetary policy. For NRIs, this environment increases volatility across traditional portfolios. However, it also creates tactical opportunities: In the wake of a tariff war, should NRIs consider reallocating part of their portfolio from global equities to safer fixed-income instruments or gold? The short answer is: not necessarily a wholesale shift, but thoughtful rebalancing makes sense. A tariff war typically introduces uncertainty—slower global growth, supply chain dislocations, and inflationary pressures. These dynamics increase volatility across equity markets, especially those exposed to global trade like the US, China, and Europe. For NRIs, this raises a valid question about preserving capital and managing risk. Here's how we think about it. First rebalancing, not retreat, this may be a good time to trim overweight positions in vulnerable sectors or geographies (like export-heavy manufacturing or US tech with China exposure) and reallocate toward more defensive assets. Secondly fixed-income as a stability anchor so high-quality fixed-income instruments—especially short-duration or inflation-protected ones, or buying long dated stuff where we have more clarity on monetary easing—can provide diversification to the portfolio. Thirdly, treat gold as a hedge, not a core, gold can play a role as a geopolitical and inflation hedge, but it's not a cash-flow-generating asset. A small allocation (5–10%) helps diversify the portfolio, especially when both equities and bonds are under pressure. What kind of geographical diversification strategies should NRIs adopt to hedge against the volatility caused by trade wars? In an increasingly fragmented and protectionist world, NRIs should think beyond just global diversification and focus on the right kind of diversification, especially one that aligns with long-term currency exposure and real-world liabilities. Most global portfolios today are overweight the U.S.—both in currency (USD) and geography (US equities and fixed income). That trade is crowded. With rising fiscal imbalances, a stretched dollar, and growing geopolitical risks, this overexposure may no longer offer the same safety net it once did. Here's what makes sense now: Shift some allocation to Home-Currency Assets If your financial goals are India-linked—whether family support, eventual relocation, or retirement—it makes sense to allocate more to INR-denominated assets, including Indian equities and fixed income. This reduces FX risk and increases alignment with your life's cash flows. Balance Dollar Exposure with Asia & EM Allocation, besides India, consider a broader Asia and EM allocation, which tend to benefit from trade re-routing (China+1, manufacturing shifts) and offer growth with less direct vulnerability to US-China tensions. Look for domestic demand stories, favor geographies and sectors driven by internal consumption, not just exports. These economies tend to be more resilient during global trade disruptions Could India benefit as a manufacturing alternative amid US-China trade tensions, and how can NRIs capitalize on this shift? India stands to gain significantly from the China + 1 strategy, as global firms diversify supply chains away from China due to rising costs, geopolitical tensions, and over-dependence concerns. We are already seeing a bit of that in the case of Apple's iPhone production. From nowhere a couple of years back we have already reached $22 bn in FY 2025 and of these $17 bn were for exports. So global majors like Apple, Foxconn, and Samsung are expanding in India. Other sectors which can benefit include Pharmaceuticals & APIs where China dominates API supply; India is reviving its bulk drug parks to reduce import dependence, Textiles & Apparel where rising Chinese labor costs and factory shutdowns are making India attractive. Finally, Chemicals & Specialty Chemicals where many global players are moving production of intermediates to India due to stricter environmental norms in China What role do international investment opportunities play in the portfolios of Indian HNIs, and how are wealth managers facilitating access to these markets? A) Indians have been able to access international opportunities under the LRS scheme. Amount remitted out for equity/debt investment have gone from USD 400-600 mn in earlier periods to USD 1.2-1.5 bn in FY23 and FY24 respectively. Large part of that is going to US markets and off late some to Chinese markets. Largely, I think this is going through regular international banking channels like HSBC but there are quite a few platforms like Interactive Brokers, Vested, Groww etc. which are also facilitating the access to these markets. I think it's still early stages and limited to very ultra-high net worth individuals who are doing such kind of investments How is the increasing wealth in Tier 2 and Tier 3 cities influencing your firm's client acquisition and service strategies? We are quite bullish about Tier 2 and Tier 3 opportunities as we believe there is large untapped market out there. Most of these investors are already investing through traditional mutual fund route but are very interested in tapping bespoke and concentrated portfolio management strategies as well. Our pitch is that we are offering professional management services for your direct equity portfolio. Are wealth managers recommending any specific asset classes or geographies as a hedge against trade-related global market turbulence? A) If you observe generally recommendations have a recency bias so I am assuming investments in gold ETF will be one such in recent times. But please note that this is the 3rd consecutive year for gold where it's showing 20% plus return in INR. I like gold as a diversification strategy but I will be cautious putting more capital to work going forward If someone plans to invest $10,000 in India – what should be the ideal asset allocation strategy for the next 3-5 years? For a 3-5 year view clearly I prefer equity as an asset class and in that either I will allocate it to a more active funds or if it needs to more passive then split that into large cap and mid/small cap.
