Portfolio managers see good days

Business booms after poll outcome, with jump in investor queries and willingness to allocate more funds

Portfolio management service (PMS) providers say investors are no longer hesitant in writing larger cheques.

Since the year began, the two benchmark indices — BSE Sensex and NSE Nifty — have gone up by a little over 20 per cent. And, the PMS business is witnessing a wave of activity, from the opening of new branches to hiring at the senior levels and increased transaction size.

During the election period, many waited for the final outcome before formulating investment strategies for clients. The electoral mandate given to the Bharatiya Janata Party, in line with market expectations, resulted in a return of investor confidence. Since then, say PMS entities, the phones have been ringing as client queries keep piling. To handle the influx of existing and new clients, hiring is high on the agenda.

PLAYERS BET ON GROWTH

• Equity products back in demand
• Ticket sizes getting larger
• PMS providers hiring advisers and other mid-level officers
• Players expanding to newer geographies
• Assets under management up 27 per cent since last April to Rs 7.78 lakh crore

“Even before the elections, we were looking for advisors. The need has shot up because of the increase in client demand,” said Nishant Agrawal, senior director and head  (products, advisory and family solutions, ASK Wealth Advisors.

The demand is mainly for equity and equity-related products, said those in the segment. Most of the money flow is headed towards the simple equity product basket. The product mix, they said, was shifting in favour of equities, from less than 20 per cent earlier to about 50 per cent now. Debt and gold as asset classes have fallen out of favour, due to declining yields and gold prices.

Real estate continues to be on the investment list but the proportion has come down. According to data from the Securities and Exchange Board of India, the total assets under management of the PMS sector stood at Rs 7.78 lakh crore in April, up 27.3 per cent in the past one-year period.

“Equity mutual funds and equity PMS products is where most of the participation is coming. Within the equity space, it is the mid-cap space that is seeing more traction,” said Ankit Swaika, head (investment advisory and research), Religare Private Wealth.

Some PMS entities are looking at expanding their presence. “We already have 12 branches in some of the largest cities. In FY15, we would be looking at opening branches in a few select cities and increasing our reach,” said Mishra.

The PMS business grew very little in the past four to five years, in the wake of the economic meltdown of 2008. Investors stayed away from the equity asset class, resulting in lower revenue for PMS providers.  Those in the sector said business sentiment had turned for the better, as investor interest had started to revive.

“The mental make-up and framework of investors had been changing positively. Interest among investors has gone up and so have the ticket-sizes,” said Agrawal.

From sectoral estimates, high net worth investors (HNIs) are now looking to invest anywhere between Rs 50 lakh to Rs 1 crore, from Rs 25 lakh earlier. As for ultra HNIs, they’re now willing to write cheques for Rs 3-5 crore, from Rs 1 crore or less before.

“We had been seeing good demand build-up in the past two-three months. Especially post elections, we have seen a huge demand for equities,” said Sunil Mishra, chief executive officer, Karvy Private Wealth.