Family offices unfazed by market turmoil

Monday saw the benchmark Sensex shedding nearly three percent or 2,222.55 points with more than 3,600 stocks ending the day in the red as against a mere 952 gainers.

Courage taught me no matter how bad a crisis gets .. any sound investment will eventually pay off

- Carlos Slim

If courage is all it takes to tide over a crisis while not losing sights of good investment opportunities, then the last couple of days have shown that family offices in India are quite courageous in terms of making good investment decisions, especially during times of widespread panic in the markets.

Wealth managers are unanimous in their views that while the Indian stock markets went into a freefall mode on Monday amidst a global turmoil, family offices did not panic one bit, only to use the plunge to increase exposure in stocks with a long-term investment horizon.

“There was no panic selling or worry within the family office clients as it was just another day in the market,” said Ashutosh Bishnoi, Director, Multi-Act Family Office while adding that most of their clients do not own stocks in the mid- and small-cap space that saw the maximum correction on Monday. Rather the portfolios are well diversified across asset classes, and the equity allocation is mostly in high quality stocks, he said.

Saying it was just another day in the market also requires courage as Monday saw the benchmark Sensex shedding nearly three percent or 2,222.55 points with more than 3,600 stocks ending the day in the red as against a mere 952 gainers.

This assumes further significance since Monday also saw foreign portfolio investors (FPIs) selling shares worth a little over Rs 10,000 crore – the highest single-day selling by foreign investors since June 3 when election results were announced.

But if the investment approach of family offices is anything to go by, then it would not be wrong to say that while these data points could be worrisome for many, they are certainly not for the sophisticated family office club who are there in the market for the long haul.

“Family offices remain cautious and are not rushing in to invest all of their available liquidity into a single asset class. Some family offices did buy on dips as a matter of investment discipline and as a part of their process of maintaining their respective strategic asset allocation,” said Manisha Gudka, founder of Sapienta Family Office Solutions.

“Correction can be time correction or price correction. However, no one can time the markets. In the light of evolving geopolitical situation around various countries outside India, a cautious approach is required to investing. Profit lost is less painful than capital lost,” she adds.

Interestingly, one of the biggest PMS firms of the country saw many family offices calling in to top up their investments on Monday.

“We did not see any outflows yesterday. In fact, we received enquiries from clients and received top-ups also,” said a senior official of the PMS firm, wishing not to be named.

“People are neither worried nor there is any panic among investors. Every bounce back from the fall reinstates the belief of people that there is no sustained weakness in the market,” he adds.

Mukesh Jindal of Alpha Cap Family Office noted that accounts with lower exposure to Indian equities took advantage of the recent market dips to buy in. He however said that the correction in Indian equities was lower compared to other global markets.

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