Private wealth in physical assets falls 2.3%: Karvy

The total wealth held by individuals in India has grown by 8.9 per cent to Rs 280 lakh crore in FY15 over the previous year, with wealth in financial assets growing in double digits and that in physical assets experiencing a fall.

The individual wealth in financial assets has increased from Rs 134.7 lakh crore in FY14 to Rs 160.5 lakh crore, a growth of 19 per cent. This figure is expected to double to Rs 326 lakh crore from the present Rs 160 lakh crore in the next five years, said the sixth edition of Karvy Private Wealth’s India Wealth Report.

Wealth in physical assets saw a marginal fall of 2.3 per cent to Rs 119 lakh crore due to fall in gold, silver and platinum, and a slowdown in the real estate market. The physical assets are expected to grow at a slower rate of 4.4 per cent CAGR (compound annual growth rate) for the next five years to Rs 148 lakh crore. That said, gold and real estate still together form about 92 per cent of the physical wealth in India.

Direct equity was the flavour of FY15, overtaking fixed deposits and bonds to become the largest investment asset class. “We expect a close to 20 per cent CAGR in the equity market over the next five years,” said the report.

Fixed deposit and bonds managed to be the second largest investment choice with a year on year growth of 13.1 per cent at Rs 33.26 lakh crore and insurance retained the third position with a year on year growth of 16.8 per cent at Rs 23.6 lakh crore.

Overall, debt (including cash) still cornered the bulk of the individual wealth (41 per cent), followed by alternate assets, which includes gold, precious metals & gems (24 per cent) and real estate (19 per cent).

In assets like debt and real estate, individual wealth in India is in line with the global proportions, said the report. “However, with faster growth in equities and slower growth in gold, the coming decade is likely to witness a trend reversal between equity and alternate assets leading to India broadly being in line with the global proportions in all asset classes.

Global private financial wealth stood at $164 trillion, posting a growth of nearly 12 per cent in 2014. The rise was in line with the previous year, when global wealth grew by just over 12 per cent.

North America retained the position of being the world’s wealthiest region in 2014, with $51 trillion in private wealth. Asia-Pacific (excluding Japan) overtook Europe to become the world’s second wealthiest region with $47 trillion. “The region is also projected to hold 34 per cent of global wealth in 2019. Private wealth in India and China showed significant market gains, mainly as a result of investments and growth in the local equities,” said the report.