Where Do Millionaires Invest? In Unlisted Technology, Says ASK Wealth Advisors

Pandemic has led to rapid growth of new technologies, attracting new entrepreneurs. According to ASK Wealth Advisors, one way to participate in that growth is through unlisted companies.

“Since 2020, the big change has been the acceptance of the unlisted,” Somnath Mukherjee, managing partner, ASK Wealth Advisors told BQ Prime’s Niraj Shah in the special series 'Where Do Millionaires Invest?'

Alternative investment and investment in unlisted companies, he said, have found acceptance among investors in the post-pandemic world. “From early-stage to mid-stage to growth-capital to pre-IPO, the entire lifecycle on the unlisted side has seen a massive pickup in terms of allocations from family office to high-network clientele,” he said.

Technology has suddenly become one of the key agenda for most business houses, says Rajesh Saluja, chief executive officer and managing partner at the wealth advisory firm.

However, the wealth managers agree that all investment opportunities need not always lead to higher returns, but can be utilised to minimise the risk taken to create the same wealth.

“It is always looking for opportunities to find extra sources of returns as well as extra medium of optimising risk,” said Mukherjee.

Wealth Allocation

Global equity benchmarks are in a turmoil as countries struggle to beat rising price and threats of shrinking economy. Consequently, the wealth house has a "neutral" stance with allocations "that are neither overweight nor underweight in equities".

On an average, Saluja said, the investors associated with the wealth fund are exposed to 50% in listed equities. Of the 50% equities, 10% is in international equities market. Nearly 30% in fixed income and between 15% to 20% in alternative investments like private equity funds, real estate funds, and structured credit funds, he added.

Within equity, the two wealth managers advise to invest in large-cap companies in times of volatility.

“It is lot better to stick to the top 35-40 companies than to the next 100 or 150 companies,” Mukherjee said. “Or go down below that as well because profit pools will be under greater threat there.”

“It will be the larger company that will have better cushion, better market share to absorb some of the margin compressions and comparative pressures arising out of both rates and commodity prices,” he said.

Saluja underscored the equity allocation to 65% in large cap and 35% in small cap, as companies with better quality balance sheets tend to do well in difficult times.

“In tough economic conditions, small companies itself who have maybe smaller balance sheets have other kinds of stress which maybe make them take a different direction,” he said.

However, he clarified that the wealth advisory firm isn’t averse to small cap stocks but is “extra selective there, in terms of quality of management, quality of business, the balance sheet, and the promoter background.”

Watch the full interaction here: