Return-hungry investors shift money from real estate, mutual funds to PMS
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Synopsis
Domestic equities have had a stupendous rally since April, luring traditional investors to stocks. BSE Sensex is up over 50 per cent from March lows. The broader market indices, too, have seen a similar run.
NEW DELHI: Some money managers for the rich have spotted a new trend on Dalal Street: traditional real estate and many mutual fund investors have begun shifting to portfolio management schemes (PMSes).
With real estate prices and demand falling, investors who would usually invest in properties have moved their money to equities, they claim.
Domestic equities have had a stupendous rally since April, luring traditional investors to stocks. BSE Sensex is up over 50 per cent from March lows. The broader market indices, too, have seen a similar run.
“This trend is showing in the mutual fund industry and in the PMSes as well. Among nearly 3,000 new clients, many have been first-time PMS investors. Historically, they have invested only in real estate. Now, they have turned to PMS trying to finally diversify into financial assets,” said Pramod Gubbi, a fund manager at Marcellus Investment Managers.
Gubbi said much of the migration to PMS funds has, however, been from mutual funds, some disappointed by dismal returns, and others having accumulated the Rs 50 lakh minimum corpus required to invest in a PMS.
“There is a definite trend away from traditional forms of investing, because those instruments have not delivered. We have seen a lot of first-time investors, most of whom are coming from mutual funds. I would estimate 60-70 per cent of the people are coming from there,” said Shankar Sharma, who founded and manages First Global.
Sharma said the traditional model of investing that mutual funds follow has not delivered any returns and people are tired. Thus, they are diverting to data-driven models in search of better returns, something PMSes have, he said.
Amit Jeswani of Stallion Asset concurs with Sharma’s assessment. He says PMSes today stand where mutual funds stood in 2009. “This investment tool is set to grow exponentially,” he said.
“If the first decade of this century belonged to real estate and the second to mutual funds, the next decade will be about PMSes. The total market size of the industry is Rs 1.5 lakh crore currently, which I expect to hit Rs 10 lakh crore by 2030,” Jeswani projected.
He, however, said he has not spotted any cross-asset class migration, as far as PMSes are concerned. “Even though wealthy investors were not putting any more money in real estate, most of their net-worth is in that asset class,” he said.
With time, the geographic concentration of PMS investors has also been changing. Most PMS investors in India hail from top-tier cities, but second and third tier cities, too, have started making their presence felt -- a trend similar to what the equity market and the mutual fund industry had seen in recent years, Gubbi said.
However, the story of migration of funds to PMSes may not consistent with all asset managers.
Akhil Chaturvedi, Associate Director and Head of Sales & Distribution, Motilal Oswal AMC, said most of the fresh funds has come as top-up money from existing investors.
“The number of new investors has gone down. Due to lockdown, paperwork required has become cumbersome, as most PMS players are not online. So, 60-70 per cent of volumes are being supported by existing clients adding more money. The rest could be new accounts,” he said.
He said his AMC is not witnessing any money shifting out of real estate into PMS funds.
With real estate prices and demand falling, investors who would usually invest in properties have moved their money to equities, they claim.
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Domestic equities have had a stupendous rally since April, luring traditional investors to stocks. BSE Sensex is up over 50 per cent from March lows. The broader market indices, too, have seen a similar run.
“This trend is showing in the mutual fund industry and in the PMSes as well. Among nearly 3,000 new clients, many have been first-time PMS investors. Historically, they have invested only in real estate. Now, they have turned to PMS trying to finally diversify into financial assets,” said Pramod Gubbi, a fund manager at Marcellus Investment Managers.
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Gubbi said much of the migration to PMS funds has, however, been from mutual funds, some disappointed by dismal returns, and others having accumulated the Rs 50 lakh minimum corpus required to invest in a PMS.
“There is a definite trend away from traditional forms of investing, because those instruments have not delivered. We have seen a lot of first-time investors, most of whom are coming from mutual funds. I would estimate 60-70 per cent of the people are coming from there,” said Shankar Sharma, who founded and manages First Global.
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Sharma said the traditional model of investing that mutual funds follow has not delivered any returns and people are tired. Thus, they are diverting to data-driven models in search of better returns, something PMSes have, he said.
Amit Jeswani of Stallion Asset concurs with Sharma’s assessment. He says PMSes today stand where mutual funds stood in 2009. “This investment tool is set to grow exponentially,” he said.
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“If the first decade of this century belonged to real estate and the second to mutual funds, the next decade will be about PMSes. The total market size of the industry is Rs 1.5 lakh crore currently, which I expect to hit Rs 10 lakh crore by 2030,” Jeswani projected.
He, however, said he has not spotted any cross-asset class migration, as far as PMSes are concerned. “Even though wealthy investors were not putting any more money in real estate, most of their net-worth is in that asset class,” he said.
With time, the geographic concentration of PMS investors has also been changing. Most PMS investors in India hail from top-tier cities, but second and third tier cities, too, have started making their presence felt -- a trend similar to what the equity market and the mutual fund industry had seen in recent years, Gubbi said.
However, the story of migration of funds to PMSes may not consistent with all asset managers.
Akhil Chaturvedi, Associate Director and Head of Sales & Distribution, Motilal Oswal AMC, said most of the fresh funds has come as top-up money from existing investors.
“The number of new investors has gone down. Due to lockdown, paperwork required has become cumbersome, as most PMS players are not online. So, 60-70 per cent of volumes are being supported by existing clients adding more money. The rest could be new accounts,” he said.
He said his AMC is not witnessing any money shifting out of real estate into PMS funds.
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