Wealthy Individuals An Emerging Class In India
India is home to about a third of the world's most poor. The World Bank estimates that close to 40% of the county's population falls below the international poverty line of $1.25 a day, and while the situation is improving, by 2015 an estimated 53 million Indians will still live in extreme poverty and 23.6% of them will still earn poverty level wages. That said, a new report shows that in India today there are 8,200 Indians (including non-resident Indians) worth more than $30 million, with an aggregate net worth of $945 billion. And in this nation of one-billion persons, there are now more than 100 billionaires.
The latest Intelligence Briefing by Wealth-X serves as a "growth map" of India's rich. Using proprietary data on more than 5,000 ultra-high-net-worth Indians, and other sources, the report details the number of Indian UHNWs by eight wealth tiers, ranging from individuals with $30 million to those with more than $1 billion.
"India specifically presents one of the greatest opportunities for wealth managers around the world," said Mykolas Rambus, CEO of Wealth-X, the wealth intelligence firm that provides information on the world's ultra-affluent to private wealth and asset managers, luxury brands, not-for-profits and educational institutions. Wealth X maintains offices in Singapore and New York.
With India's equity markets outpacing all major global stock exchanges-up 109% since the beginning of 2009 compared to an increase of 65% for the Shanghai Exchange and 61% for the Hang Seng exchange, explained David Lincoln, director of global valuations for Wealth-X-some analysts believe India may overtake China as the world's fastest growing major economy within a few years. "This higher market capitalization has contributed to growth in the number and fortunes of UHNW individuals," Lincoln said, adding that the trends were only likely to increase. "Indian Prime Minister Manmohan Singh reportedly plans to double spending on infrastructure, furthering GDP growth and raising the standard of living. Strong private consumption, robust foreign investment, and an increase in exports will continue to bring wealth to India and increase the HNW and UHNW population," he said.
The report indicates that already there are at least 115 Indian billionaires worth a combined $195 billion and more than 275 individuals worth more than $ 500million-representing a combined $300 billion. The aggregate worth of India's most wealthy (about $945 billion) includes shares in public and private companies, residential and investment properties, art collections, planes, cash and other investible assets. What's more, new millionaires are minted in India each week, and many proceed to become UHNW individuals within a few years of creating their initial fortunes, according to the report.
Lincoln cautioned that while emerging entrepreneurs and established business owners in India have a need for various financial services, including investment expertise, trust and estate planning and consulting on taxes, intergenerational wealth transfers, and philanthropy, "the dynamics of the Indian market are fundamentally different compared with Western markets." For example, he noted that Indian clients may have "adverse attitudes" towards traditional wealth management fee structures. "It is important for wealth managers to adapt their revenue model to the different environment," he said. "Additionally, the Indian market is more regulated, which may constrain product development and availability. Wealth managers must be patient and understanding of the challenges posed by doing business in India."
For more information and a copy of the full report, go to www.wealthx.com.
In other news ...
The Credit Suisse Liquid Alternative Beta Index ("CSLAB"), which aims to reflect the return of the overall hedge fund industry, generated positive performance in March, finishing up 1.28% for the month, according to Jordan Drachman, head of research for alternative beta strategies at Credit Suisse. All four LAB sector indices posted gains as managers profited from a number of diverse strategies which generated positive returns across both equity and credit markets, said Drachman, adding that the LAB Event Driven Liquid Index remains the strongest performing index year-to date, returning 4.39%. Go to www.credit-suisse.com/alternativebeta for further information.
Last year 25 hedge fund chiefs pocketed a total of $22.07 billion, according to this year's annual ranking by AR magazine, which tracks the hedge fund industry. "At $50,000 a year, it would take the salaries of 441,400 Americans to match that sum," wrote Julie Creswell in the New York Times on March 31, adding that last year the hedge fund industry as a whole did not perform much better than the stock market. Hedge fund managers can earn millions in management fees regardless of the performance of their funds, according to the newspaper.
Investors are flocking to Brazil at an "unprecedented rate," said Murillo de Aragao, president of the Brazilian political consulting firm Arko Advice and founder of the online intelligence service Brazilian Intelligence (www.brazilintell.com). Aragao cites strong economic growth (7.5% per annum), a large and robust domestic market, and a stable democracy, but notes that Brazilian bureaucracy is a major barrier to doing business there.
Well-heeled North Americans are starting to look more closely at an asset class that until recently was the pariah of the investment world: U.S. residential real estate, according to Reuters. Dean Frankel, a portfolio manager at Urdang Capital Markets in Plymouth Meeting, Pa., who oversees around $1.7 billion in real estate equity investments, said that he sees compelling arguments to act now, if selectively-and that the market is ripe for high-net-worth investors, directly or through real estate investment trusts and real estate funds.
More than a third of $1 billion-plus hedge funds in the U.S. have not yet registered with the SEC ahead of its July 21 deadline for managers to have their applications processed and approved, said Citigroup, as reported by Hedge Funds Review on Monday. Some funds are exempt from registration, including certain foreign managers, investment advisors with under $25 million AUM, and managers with assets of under $150 million who solely advise private funds and who do not advise investor-driven structures. Family offices are also exempt as long as they have no clients other than family clients, according to the review.
Genworth Financial Wealth Management is poised to launch six new mutual funds, including four asset allocation funds, a fixed income fund, and a real return fund, according to Euromoney Institutional Investor (www.emii.com) and MutualFundWire (www.mutualfundwire.com). The GuideMark Global Real Return Fund will be sub-advised by State Street Global Advisors, while the GuideMark Opportunistic Fixed Income Fund will be sub-advised by Franklin Templeton and Loomis Sayles. The GuidePath Absolute Return Asset Allocation Fund, the GuidePath Strategic Asset Allocation Fund, the GuidePath Tactical Constrained Asset Allocation Fund, and the GuidePath Tactical Unconstrained Asset Allocation Fund will be managed by Michael Abelson and Zoe Brunson of Genworth (www.genworthwealth.com).
FTSE Group, which creates and manages indices worldwide, has launched the FTSE Infrastructure Index Series (FIIS); a comprehensive and complementary set of nine indices diversified across six infrastructure sub-sectors, to reflect the market's evolving definition of infrastructure. According to the company, the FIIS enables investors to research, benchmark, and gain exposure to physical infrastructure assets and the important networks, support, and conveyance services that underpin global infrastructure development. The new index captures the performance of more than 800 stocks from over 40 developed and emerging markets. For further information, go to www.ftse.com.
SIFMA's 2nd Annual Private Client Conference-"Client First: Delivering the Vision"-is being held April 7-8 in New York City at the Grand Hyatt. For information go to www.sifma.org.
The Economic Club of New York will hold a lunch meeting featuring Janet L. Yellen, vice chair of the board of governors of the Federal Reserve System, at the Hilton New York on April 11. For further information go to econclubny.org or call 212-947-7665.
Experian, a global information services company, will hold its 30th Annual Vision Conference, May 1-4, at The Westin Diplomat in Hollywood, Fla., featuring keynote addresses by Condoleezza Rice and Tom Brokaw. The conference theme this year, "Insights for navigating the new reality," will address the changing financial and regulatory landscape. Go to www.experian.com/vision for more information.
PrecisionIR Group will host its 2nd Annual Global Investor Day 2011, an online event which brings together high-net-worth investors with companies, sector experts and financial service providers across international borders, on May 11. Go to www.globalinvestorday.com for further information.
The FOX Wealth Advisor Forum will be held May 18-19 in Chicago. For further information, go to www.foxexchange.com.
Retirement Living World China 2011, hosted by China Association of Social Workers in partnership with IMAPAC, will be held in Singapore, May 24-27. The event brings together investors, business leaders and others to address China's aging issues (18.99 million people there are over the age of 80) and opportunities in the burgeoning retirement industry. For more information, go to www.imapac.com.
The Arctic Imperative: Cooperation, Investment, Development, a conference sponsored by AlaskaDispatch.com, will be held June 19-21 at the Alyeska Resort, near Anchorage, Alaska. The goal is to expose business leaders to the opportunities for responsible Arctic investment. For more information, including sponsorship opportunities, call 1-800-380-5337 or go to www.arcticimperative.com.
On The Move
Atlantic Trust, the private wealth management division of Invesco, has appointed Richard Vandenberg, former managing director and business development officer at Bessemer Trust in their San Francisco office, as new managing director and head of Atlantic's San Francisco office.
BNY Mellon Wealth Management has appointed James M. Barnyak, a former partner with Freestone Capital Management in Seattle and head of Citi Smith Barney's office in Sydney, as president of the company's Northwest region, based in Seattle.
Citi Private Bank has added five new investment professionals from Wilmington Trust who will focus on ultra-high-net worth clients, foundations, endowments and privately-held business owners out of Citi's Philadelphia office. Joining are Barbara McCollum and Robert Rosenberg, who will each serve as managing director and private banker; Timothy B. Carroll, as director and wealth planner; Paul T. Gordon, as director and investment counselor; and Jennifer Phillips, as banker associate.
Cleveland-based Fairport Asset Management, which provides wealth management services to high-net-worth individuals, families, and institutions, has appointed J.T. Mullen as chief investment strategist and chair of the investment committee. Mullen previously served as senior vice president and chief financial officer of The Cleveland Foundation, the second-largest community foundation in the U.S.
U.S. Bancorp Fund Services has appointed Michael Mohamadi as vice president, responsible for overseeing the East Coast operations of the firm's alternative investment products division. Previously, Mohamadi was with Goldman Sachs administration services, where he managed the fund accounting group in New Jersey.
Deutsche Bank Private Wealth Management has appointed Durraj Tase as a managing director and head of capital markets for the Americas; he will be based in New York. Previously, Tase was head of capital markets and brokerage advisory services for U.S. Trust Bank of America's private bank, and head of Citigroup private bank's Latin America capital markets business.
Rothschild Private Banking & Trust, based in Zurich, Switzerland, has hired Riccardo Petrachi, former co-head of UBS's international division for the ultra wealthy, to the newly-created position of head of ultra-high-net-worth clients, responsible for those with assets above $27 million.
Lowenhaupt Global Advisors Australia, a family office in Sydney and part of Lowenhaupt Global Advisors, which is headquartered in St. Louis, Mo., has appointed Sean Cortis as chief executive officer. Previously, Cortis was LGA Australia's COO.
Foundation Source, a provider of support services for private foundations based in Fairfield, Conn., has appointed Thomas J. Bergeron as senior vice president of sales. Before joining Foundation and as a consultant Bergeron developed sales programs for Goodrich Landing Gear, Lucent, Avaya, Sunoco, FedEx, American Eagle and Hasbro.
WyeTree Asset Management, a London-based investment manager with expertise in the global residential mortgage market, has hired Yana Kramer as an executive director of investor relations. Previously, Kramer served as the director of marketing for a New York-based hedge fund, and worked in fixed-income capital markets at Credit Suisse and Barclays Capital.
The registered investment advisor Portfolio LLC has opened its third wealth management office, in Scottsdale, Ariz. It will be headed by managing partner Gerry Ciszewski.
Madison Portfolio Consultants, which provides investment consulting and asset class research services to sponsors of portfolios of investment assets, has merged with Clearbrook Global, a New York-based institutional investment consultant, bringing Clearbrook's assets under advisement to more than $30 billion. The Madison team is led by Frederick W. Weiss, who will serve as managing director of Clearbrook; Daniel Lehrer, formerly vice president of Madison, will serve as director of Clearbrook Global; and John Flack, formerly a consultant for Madison, joins Clearbrook Global as a director.