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Investment options you can opt in 2022

Investment options you can opt in 2022

Investment options you can opt in 2022
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By CNBCTV18.com Contributor Dec 28, 2021 6:00:25 PM IST (Updated)

It is quite easy to recognise the perils of COVID but the pandemic also provided people an opportunity to rekindle personal and professional aspects of their future.

Every moment the world presents an astounding investment opportunity corresponding to similar risk. Successful investors have made fortunes by choosing carefully examined long-term growth-oriented investments without looking at short-term blips.

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After 2 appalling years of COVID-19 behind us, 2022 is expected to be a year of bliss for all. A huge part of our population is vaccinated, people are well aware of the precautionary measures against COVID; most of the companies have extended their pre-COVID production and revenue levels. Important Economic indicators consisting of Consumption, Investment & Trade data have been consistently showing signs of sustainable economic recovery with some sectors expected to outperform due to systemic changes in the growth drivers of the overall composition and functioning of the Global economy.
It is quite easy to recognise the perils of COVID but the pandemic also provided people an opportunity to rekindle personal and professional aspects of their future. Higher broadband speed, better handheld devices, easily available Investment information, and a large section of Gen X or young earning population, together led to massive adoption of online investments.
There had been a significant rise in the number of Investors & Traders across India especially in Tier 2 and Tier 3 towns within the last 2 years. The pandemic had compelled the world leaders to work together for identifying a Global solution for COVID. It had increased collaboration and enhanced opportunities for trade and investments.
The above factors are establishing new trends and impelling investors for changing their asset allocation into new geographies and sectors through an innovative Investment framework that embraces the following:
Global Investing-
  • Fractional Investing
  • Stacks-Predefined research-based strategic portfolios, (Electric mobility, Technology)
  • Hedge against Dollar
  • Investment in companies of futuristic products and services(AI, Blockchain, Cloud, Robotics, Healthcare, Biosciences)
  • ETF-Exchange Traded Fund- It is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. It significantly minimizes the risk and diversifies the investment across many sectors, geographies, companies, asset classes. An investor who doesn’t understand the intricacies of investments can choose this asset class. It has a relatively low fee structure and had given good returns in long term. Index Funds, Global Funds, Gold ETF, etc.
    IPO- It had been a popular investment asset class lately. Investors have made astounding gains within a short duration. Some IPOs like Paras Defence, Zomato had listed with exceptional gains. Therefore it has become an imperative investment in the overall Wealth portfolio.
    Wealth Baskets- Customized investment portfolios developed by leading Portfolio Managers
    Stock SIP’s- Rupee cost averaging and compounding benefits. Long-term capital appreciation by investing in consistently growing and profitable companies with prudent management. These companies include conglomerates and industry leaders like TCS, Reliance, HDFC, etc.
    Systematic Transfer Plan- Lumpsum investment in a debt fund and divesting the money into equity funds. This strategy had reaped exceptionally good returns in the long run.
    Dynamic Mutual Funds (Balanced Advantage Funds)- People who can’t manage or don’t have time to track investments can opt for these.
    AIF-Alternate Investment Funds- Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.
    UHNi and HNi invest in these niches and highly risky asset classes having exponential returns potential. This fund invests VC Funds, Early-stage startups, Real Estate,
    • Category I AIF: o Venture capital funds (Including Angel Funds) o SME Funds o Social Venture Funds o Infrastructure funds
    • Category II AIF - AIFs which do not fall in Category I and III and which do not undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted in the SEBI. Various types of funds such as real estate funds, private equity funds (PE funds), funds for distressed assets, etc. are registered as Category II AIFs.
    • Category III AIF: AIFs which employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives. Various types of funds such as hedge funds; PIPE Funds, etc. are registered as Category III AIFs.
    Digital Gold- People can now directly invest in 24-carat gold in digital format and can redeem it as per their convenience without any liquidity risk.
    Unlisted Shares- Earlier only large institutions had the resources to invest in unlisted stocks but recently the process has become so easy and user-friendly that even retail investors can participate in this lucrative asset class. It includes the Stocks of some very successful and companies with a profitable and resilient business model. These companies have an intention to list themselves on the exchanges in the future. Some of the famous names are Tata Technologies Ltd, Reliance Retail, NSE, etc.
    REITs- REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. Even they are exchange-traded. In terms of return generating potential, they have a similar return potential compared to InvITs. Normally these trusts hold commercial real estate in their portfolio, and their primary source of income is rent.
    At least 90 percent of the rental income earned by the REIT has to be distributed to its unitholders. Listing of REIT is mandatory and till now three REITs have been listed – Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust. There have been news reports of other developers evaluating REIT for their commercial real estate portfolio.
    InvITs- are special trusts formed for individual and institutional investors to take a position in infrastructure projects and earn a minor portion of the income as returns. These InvITs are exchange-traded and normally quarterly or half-yearly investments; they distribute income to the unitholders within the style of either interest or dividend income.
    Other than that, the unitholder may earn returns if there's a rise within the price of the InvITs on the exchange from his/her terms. Just like REITs, it's common for InvITs to carry assets through SPVs. Of the whole assets, a listed InvIT is required to take a position a minimum of 80 percent in completed and revenue-generating infrastructure assets (can be held through SPVs). The remainder is often invested in under-construction infrastructure assets or securities of infrastructure companies.
    There is a caveat while choosing any of the above Investment alternatives one must sit down with a certified consultant to avoid unnecessary risk and capital erosion. It’s prudent to pay a minuscule fee for the right advice than making a regrettable investment choice.
    The author, Ankit Agarwal is Managing Director at Alankit. The views expressed are personal
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