146,000 ultra HNIs in India in FY16: Report

The total wealth of the ultra HNIs, or those with a networth of over Rs 25 cr, grew by five per cent to Rs 1.35 lakh cr

Growth of ultra-high networth individuals (HNIs) in the country slowed to under seven per cent to reach 146,000 at the end of 2015-16, according to a report.

The total wealth of the ultra HNIs, or those with a networth of over Rs 25 crore, grew by five per cent to Rs 1.35 lakh crore, a report by Kotak Mahindra said on Tuesday.

Even though the growth in the number of ultra HNIs as well as their wealth slowed down, the report estimated that the community will grow to 294,000 with a combined networth of Rs 3.19 lakh crore over the next five years.

RICH CHOICE

• Rs 1.35 lakh crore total wealth of the ultra HNIs
• Rs 3.19 lakh crore estimated combined net worth in five years
• Around half of UHNIs under the age of 40
• 39% of investments was in equities
• 28% in real estate
• 22% in debt
• 11% in alternate investments
• 44% UHNIs have exposure in impact investment
• 98% of UHNIs consider succession planning as critical, and wills continue to be most common instrument
• Wearable devices such as smart watches, fitness bands and head phones are popular among UHNIs
• About 57% have incorporated such effects as part of their lifestyle

This will be driven primarily by emerging sectors and newer avenues of investments promising higher returns, it said, adding smaller cities will also house an increasing number of the ultra rich.

The report, prepared by professional services firm EY for Kotak Mahindra Wealth, said the average age of the ultra HNIs is also falling and nearly half of them are under the age of 40.

Going by their investment preferences according to asset classes, 39 per cent of the money went to equities, followed by 28 per cent to real estate, 22 per cent to debt, while alternate investments accounted for 11 per cent.

Equities found less favour because of the subdued markets, which led to a spurt in allocations in other asset classes, it said, adding 72 per cent of this was invested in commodities.

Impact investing or investment which does good for the society is also gaining traction, with 44 per cent of the ultra HNIs having an exposure to it, the report said. Financial services, affordable housing, clean and renewable energy are the favourite avenues.

“Ultra HNIs are increasingly getting involved in renewable energy initiatives — be it on the investment side or even embedding it into their daily life,” EY’s Partner for advisory services Murali Balaraman said.

The report, for which over 250 individuals were interviewed, said 98 per cent of ultra HNIs considered succession planning as critical.

While wills continue to be the most common instrument of choice among UHNIs.

On the spending side, wearable devices such as smart watches, fitness bands, virtual reality headsets and head phones are popular, with the UHNIs looking at them as status symbols. Nearly 57 per cent of UHNIs have incorporated such effects as part of their lifestyle. Contrary to popular assumption, there were higher adoptions in the 36-50 age group rather than those below 35 years, it said.

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