HNIs on the rise: Angel One Wealth tells where rich investors are putting their money in volatile markets

The wealth management landscape in India is evolving rapidly, per industry reports. With a CAGR of 16%, India’s HNI population is projected to grow to 1.65 million by 2027. To enhance its presence in the fast-growing market of HNI and UHNI wealth management, Angel One has invested Rs 250 crore in its wealth management arm, Angel One Wealth. The capital will be deployed to develop core technological infrastructure, leveraging AI and analytics, expand presence in key markets, and develop product strategies.

In an interaction with Business Today, Srikanth Subramanian, Managing Director & CEO of Angel One Wealth Limited, shared his insights on market dynamics of HNI wealth management, key trends, diversification strategies, investment opportunities, and more. Edited excerpts:

What are the market dynamics of wealth management in India?

The wealth management sector in India is experiencing a compound annual growth rate (CAGR) of 25–30%, fuelled by three primary growth drivers. We are betting on this ‘Triple Multiplier Effect’ which is the growth in the number of high-net-worth individuals (HNI), asset appreciation, and incremental growth in income of individuals.

What is Angel One Wealth’s philosophy, and how do you tailor it to the needs of HNI clients in India?

The vision behind Angel One Wealth is to re-imagine wealth management at the intersection of domain expertise in investment with the power of technology. As the Indian market matures, reflecting both increased asset accumulation and shifting client preferences, we anticipate that an omni-channel wealth-tech platform will increasingly resonate with emerging HNIs in India. These clients are digitally savvy, discerning, and possess high aspirations.

The equity market is near record highs and witnessing high volatility. Where are the HNIs and UHNIs investing their money now? How should investors diversify their portfolios?

The trend towards equity markets remains very strong in India, as mutual fund assets have grown from below Rs 10 lakh crore to over Rs 61 lakh crore in the last 10 years. HNIs and UHNIs are more aware of diversification, reflected in the blend of traditional and innovative strategies such as PMS and AIF. For example, alternative investment funds (AIFs), which include private equity, venture capital, and hedge funds, provide exposure to non-traditional assets, offering potential high returns and diversification benefits. There is also a strong interest in unlisted stocks and pre-IPO funds, apart from global equities and structured products.

How will you respond to the challenges faced in a rapidly growing Indian wealth management market?

We endeavour to navigate the evolving landscape of wealth management by leveraging a three-quotient framework:

• Investment quotient: Our investment strategy is anchored on a strong institutional framework and is acutely attuned to macroeconomic shifts and emerging trends.
• Digital quotient: We are blending tech-enabled and tech-assist strategies to enable RMs to service HNIs and UHNIs with different user preferences.
• Emotional quotient: A distinguished team, comprising of private bankers, product experts, and strategic analysts, with deep industry experience from leading financial institutions.

Building on a decade of experience in asset management, we are confident that this comprehensive approach will position us strongly for wealth management in India for the next decade and beyond.

What are the key trends and challenges you foresee in the Indian wealth management industry in the near future?

India’s long-term GDP growth prospects being one of the best globally, complimented by young and aspirational demographics, rising income levels, and low levels of wealth management penetration highlight sustained growth prospects over the next decade. There are multiple tailwinds:

1. There is a significant transition in savings from physical assets such as property and gold towards financial assets. Traditionally dominated by fixed deposits, small savings, and provident funds, the focus is now shifting towards equity and higher-yield products.
2. The growth of mutual fund assets is increasingly driven by regions outside the top five cities, highlighting a deepening of financial markets beyond traditional urban cities.
3. New asset classes are emerging, supported by regulatory changes such as small and medium REIT, reduced minimum investment sizes for corporate deposits, and other proposed new asset classes.
4. Technology is improving delivery of service via automation, AI, and platforms like Account Aggregator, enhancing efficiency.

As markets mature and per capita income grows, we expect the wealth management industry to witness a long-term, secular growth trajectory going forward.