High-net-worth Indians shift strategy post-Covid, drive LRS investment four-fold higher

Munish Randev, Founder and CEO, Cervin Family Office, Cervin Family Office, said family offices both in India and globally are moving away from simple asset-allocation models. “In the ultra-high-net-worth space, it is not as simple as 60:40,” Randev said. “Families have different pools of capital, and what you see as a portfolio is only one part of the pool that is visible to the public.”

A separate capital pool is now explicitly earmarked for downside protection. “There is another pool which is predominantly about safety and longevity of the family. If something goes wrong in the family business, this pool can sustain their lifestyle for the next five to ten years,” he said.

Only after securing this capital do families decide how much risk to take. “It is first risk-pool allocation and then asset allocation below that. That has now become normal,” Randev said, adding that this shift has accelerated in India over the past decade alongside the rise of structured alternative investment platforms. This thinking has become more pronounced after Covid, as families realised that operating businesses, promoter holdings and personal portfolios are often exposed to the same macro risks.

Alternates become embedded, not optional
As portfolios globalise, alternates are no longer treated as satellite allocations, experts said, but are increasingly embedded across equity and fixed-income buckets.

Rahul Jain, head of wealth management at Nuvama Wealth, said the basic framework of asset allocation remains intact across client segments. “Equity represents growth, fixed income represents stability, and gold is a hedge. That philosophy is universal — whether it is the US, India, HNI or affluent clients,” Jain said.

Alternates, he said, now sit within each of these buckets to generate alpha. “From equity, you can access early-stage, mid-stage, private-to-public or international equity. From fixed income, you have private debt, special situations. All of these come under alternates but give you an edge in the portfolio,” he said.

For most high-net-worth clients, alternates now account for a meaningful share of assets. “For now, for HNIs, around 20 to 25% of the portfolio can be in the form of alternates,” Jain said, adding that allocations depend heavily on liquidity comfort and lock-in tolerance.

He also flagged a clear behavioural split. “In affluent HNIs, the focus is more on aggressive compounding. In wealthier segments, it is more about protection and conservation,” he said.

Private markets: outcomes emerge, dispersion persists
While India’s alternatives ecosystem is still relatively young, market experts said early outcomes are beginning to validate long-term allocations, particularly through IPOs and monetisation events.

Umang Papneja, Managing Director and Head – India, Global Wealth Management at Julius Baer, said meaningful scale in AIFs emerged only after 2019-20. “AIFs were announced around 2012, but most organisations really took off post-Covid when interest rates were very low,” Papneja said.

Papneja said the shift is less about chasing higher returns overseas and more about balancing risk after Covid exposed portfolio concentration. “For most wealthy families, India is already a very large part of their economic exposure through business and listed equities,” he said.

He said today’s IPO pipeline reflects investments made over a decade ago. “What you are seeing now in IPOs is what somebody invested in 10 or 15 years ago,” he said, citing private equity and real estate strategies that delivered mid-teen IRRs before listing.

However, he cautioned against viewing alternatives as a homogenous return generator. “You get median or pooled returns, but the divergence between the best and the worst funds is quite significant,” Papneja said. “We are still building history and data, but frequent reporting and transparency are now becoming interesting to follow.”

Amit Joshi, senior president and chief investment officer at Bajaj General Insurance, said available data suggests private equity has delivered measurable alpha, but selection risk remains high.

“Early-stage private equity has delivered alpha of around 4.5 to 5% over benchmarks, while late-stage growth is closer to 3 to 4%,” Joshi said. “But these are median numbers, and the challenge is identifying the right managers.”

GIFT City as a key outbound channel
The sharp rise in overseas investing is increasingly being channelled through GIFT City structures, said lower regulatory, operational and tax friction for Indian investors.

Dugal said GIFT City has gained relevance after overseas mutual fund feeder routes hit regulatory limits. “Earlier, mutual fund feeders into overseas funds hit their limits. What GIFT now allows is access to global equities, private credit and specialised themes that Indian investors could not access easily earlier,” he said.

He added that recent regulatory changes have broadened participation. “Earlier, there were restrictive thresholds. Now, retail licences allow investments as low as $500, which helps in broad-basing,” Duggal said.

Transparency pressure builds as alternates scale
As alternates attract a wider investor base, experts said the lack of public disclosure on AIF performance is becoming harder to justify.

Randev said the issue was recently discussed with the Indian Venture and Alternate Capital Association (IVCA). “We just had a session with IVCA on this. That data should be available,” he said. With minimum investment thresholds no longer confined to ultra-wealthy investors, panelists said greater transparency could become inevitable as the market matures.

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