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Rising interest rates are likely to bring Fixed Income, Debt Funds back into focus Diversification is core but Indian Manufacturing can be a good bet Aspiring to reach Rs 10,000 crore AUM in the next 3-5 years

Mumbai : Emkay Wealth Management, the wealth management and advisory arm of Emkay Global Financial Services held a media webinar ‘Mediascape Q2’ today – a discussion on the importance of asset allocation, rising opportunities in Fixed Income and Debt Funds in a rising interest rate scenario.

Emkay Wealth Management is currently offering bespoke services to over 1,600 families to date. The unit posted revenue of Rs 14.78 crore in FY22. The company has consistently grown with a healthy rate of >50% YoY across all parameters such as AUM, Revenue & Client base. The company has assets under the distribution of over Rs 1900 crores with operations across the country, and branches in 10 key cities. With strong tailwinds and the efforts of the past 4 years, the company is aspiring to reach an AUM of Rs 10,000 crore in the next 3-5 years.

The post-pandemic years witnessed a relentless rally across the world market fuelled primarily by easy monetary policies by global central banks. In contrast, the second half of CY22 saw a sharp correction in the West, lower than expected correction for the Indian markets. The easy monetary policy caused inflation to shoot up to a level never seen in decades, this resulted in rate hikes and a reversal of excess liquidity. The move caused a correction in equities and sharp depreciation of currencies vs the USD.

On the aspect of market and fund flows, the road ahead will be a lot different than the previous two years. Geo-political tensions, spikes in crude prices, and concerns around recession in the developed markets are some of the major risks to markets. While there is no major risk to the domestic economy, there are some risks of exports slowing down and currency depreciation.

With respect to asset allocation, Emkay Wealth Management strongly believes prudent asset allocation diversification can help create long-term wealth for investors. While diversification across asset classes and equity markets is important, investors should look at Indian manufacturing as a key theme for investment as we witness the China+1 strategy unfolding post the pandemic.

Speaking at the media webinar, Dr. Joseph K Thomas, Head of Research, Emkay Wealth Management said, “Inflation has become a concern for most major economies, and the central banks are resorting to aggressive rate hikes. This move could push up inflationary pressures, proving counterproductive in the short run. The Dollar index and crude are the two key indicators to watch out for the next few quarters”

Speaking at the webinar, Mr. Vishal Amarnani, Head of Fixed Income, Emkay Wealth Management said, “We are witnessing fund flows to fixed income and debt due to the rising rates, also a wider belief that rate will scale higher from here. The system liquidity is in a deficit of over Rs 21,800 cr, this along with the delay of inclusion of Indian bonds in the global bond index has also led to a rise in the government securities yields. The benchmark yield is back to 7.40-7.50 levels as expected. However, yields for long fixed-income instruments have increased and seem attractive in the near to mid-term.”

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