Investment Management for HNIs
9 May, 2024
Key Takeaways:
Investment management for HNIs involves comprehensive portfolio diversification as per their long-term goals, objectives and risk profiles.
Continuous portfolio monitoring and adapting to new investment opportunities are crucial for achieving financial stability and growth.
Explore the various benefits of expert investment management such as tax efficiency, reduced risks, and diversification of investment opportunities.
As a high net-worth individual (HNI), investing must be a routine affair for you. You must be investing your surplus in various instruments intending to grow your wealth and meet your financial goals. However, without effective investment management, your investments may fail to perform as per the expectations.
Investment management extends beyond the mere buying and selling of assets. It encompasses the management of your financial assets and other investment instruments. This article explores various aspects of investment management in detail, including what investment management is, its primary objectives, and the benefits of investment management for HNIs like you.
What is investment management?
Investment management involves the maintenance and management of an investment portfolio comprising various financial assets. It encompasses activities such as buying and selling assets, formulating short-term and long-term investment strategies, monitoring asset allocation within a portfolio, and devising a tax strategy. Whether undertaken independently or with the assistance of an investment manager, investment management is a comprehensive process.
Portfolio management and asset management are other terms that are often used interchangeably with investment management. However, investment management goes beyond the mere handling of individual assets within a portfolio. It also entails ensuring that your portfolio consistently aligns with your short-term and long-term financial goals, risk tolerance, and market circumstances.
Objectives of investment management
Investment management holds special significance for HNIs as they possess substantial financial resources that can be challenging to manage. Below are a few objectives of investment management tailored exclusively for HNIs:
Wealth preservation and growth
Wealth preservation is a fundamental objective for HNIs. Investment managers work to safeguard their capital while seeking growth opportunities. They try to balance the risk-return ratio by focusing on creating a diversified portfolio that includes a mix of various asset classes such as equities, fixed-income instruments, gold, real estate, and alternative investments.Monitor portfolio progress
Investment managers continuously monitor investment portfolios on your behalf to ensure that they align with your short-term and long-term financial goals. They are even authorised to make changes to your portfolio to extract maximum returns. They also look to find lucrative investment opportunities in the market and add them to your portfolio from time to time.Identify new investment opportunities
Investment managers stay updated about the latest economic trends, market conditions, and industry developments. They constantly look to identify new investment opportunities and invest in them to generate optimum returns for their clients.Risk management
Risk management is a crucial component of investment management. It refers to the process of identifying and assessing potential risks in an investment portfolio followed by the application of risk mitigation strategies to control or minimise the impact of these risks.
Liquidity management
HNIs often require high liquidity to fund lifestyle expenses, business ventures, or unforeseen circumstances. Effective investment management involves striking a balance between illiquid, long-term investments and maintaining sufficient liquidity. It ensures that you can access funds when needed without compromising or modifying your overall investment strategy.
Types of investment management
The types of investment management depend on various investment strategies and vehicles. They include:
Traditional investment management
It is the most fundamental form of investment management, wherein an investment manager allocates funds to stocks, bonds, real estate, mutual funds, and other assets based on your specific financial goals.Hedge fund investing
Hedge funds are alternative investment vehicles that employ unconventional strategies, such as leveraging debt and derivatives, to optimise returns.Private equity investing
Private equity investing involves acquiring stakes in non-publicly traded private companies that are not yet listed on the stock exchanges.Portfolio management
Portfolio management is often used interchangeably with investment management. However, it is a type of investment management wherein a portfolio manager supervises the complete investment process, encompassing the selection of investment instruments, monitoring the performance of existing investments, and implementing necessary actions when required.
Advantages of investment management services by experts
Helps you achieve your financial goals
Investment managers work closely with their clients to understand their financial goals and devise suitable investment strategies. They help you create an adequate corpus to meet your short-term and long-term goals, such as retirement, children’s education, etc.Reduces risk in investment
Investment managers conduct a comprehensive risk assessment to understand your unique risk profile and implement suitable investment strategies. A few examples of such strategies include diversification, hedging, etc. They help reduce the overall risks in your investment portfolio.Minimises your tax liabilities
Your tax outgo may comprise your investment returns. Investment managers work closely with tax professionals to structure tax-efficient portfolios by leveraging strategies such as capital gains management, investing in tax-efficient vehicles, etc.
Access to a broad range of options
Investment managers have access to a wide array of investment opportunities, including stocks, bonds, mutual funds, real estate, and alternative investments. They allow for a well-rounded portfolio that can adapt to changing market dynamics.
The bottom line
Investment management is a necessity for HNIs like you. By leveraging the expertise of investment managers, you can efficiently sail through the complex waters of market uncertainties and achieve your long-term financial objectives.
As a part of its wealth management services, HDFC Bank offers prudent investment management to help you streamline your portfolio and extract maximum returns. Click to know more. Know more about high networth banking in India.
*Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Investments are subject to changes in tax laws. Please contact a professional consultant for an exact calculation of your liabilities.