For Ultra-HNIs, equity is still the king: Kotak Private Banking "Top of the Pyramid" report

While 47 percent of the global investors prefer to invest in residential real estate, global equities (42 percent) and mutual funds (42 percent) are also being preferred.

Despite continued market volatility, equities continue to remain in focus for UHNIs, according to a latest report by Kotak Private Banking. The "Top of the pyramid" report on investing trends amongst HNIs and UHNIs, noted that UHNIs allocated around 32 percent of their investments into equities with around 89 percent favouring stocks. Closely followed behind is mutual funds at 83 percent, PMS funds at 55 percent, Insurance/ULIPs at 40 percent and Unlisted Equities at 15 percent.

The report also notes that the strong economic activity has been fuelling a IPO Boom among Ultra-HNIs. Around 150 HNIs and UHNIs were interviewed for the report.

The number of UHNIs in India, as of the beginning of 2024, was about 2.18 lakh individuals, which is expected to grow to about 4.30 lakh by 2028.

Growing global allocations

UHNIs have also been increasing their global allocation with US being the preferred destination followed by UK, Singapore, UAE etc. The report notes that various factors such as increased LRS limits, favourable regulations and policymaking and other global developments have made conditions conducive for investing in global markets. Around 58 percent of the respondents said that expectations of better returns is a key driver for investing in foreign markets. Other reasons include portfolio diversification (49 percent) and ease of doing business (4o percent).

While 47 percent of the global investors prefer to invest in residential real estate, global equities (42 percent) and mutual funds (42 percent) are also being preferred.

On the other hand for debt, the report notes that 1 in every 5 investor plans to reduce debt in their portfolio with around 7 out of 10 looking to increase their portfolio allocation to equities and real estate.

Despite the recent downward trend in the equity market, Kotak Private Bank remains positive on equities and do not see investors moving out from the space. They noted that over the last 5–6 years, Indian markets have experienced multiple market cycles, including institutional crises and the impact of COVID. But today, ultra-high-net-worth individuals (UHNIs) are patient investors who follow a disciplined asset allocation strategy based on their risk profile, with clear allocation across listed equities, debt, and alternative assets. "Investors no longer make opportunistic moves—such as shifting entirely to cash and re-entering equities at market bottoms—because timing the market is extremely difficult. This lesson has been learned the hard way. Investors will continue to participate in markets, strategically phasing their investments, especially during volatile periods," they noted.