Looking beyond stocks: ‘ETMarkets Emerging Investment Opportunities’ event unveils new investment frontiers

The recent ‘ETMarkets Emerging Investment Opportunities’ event, held in association with Mudrex, brought together experts to illuminate new investment frontiers beyond traditional equities. From bonds and fixed deposits (FDs) to cryptocurrencies, Real Estate Investment Trusts (REITs) and the innovative area of ​​asset tokenization, the event provided valuable insights into diverse investment opportunities. Here are the edited excerpts from the event, highlighting discussions on each investment product and insights shared by experts on opportunities beyond equities:

Crypto Horizons: Exploring Future Opportunities in Digital Assets

Edul Patel, CEO of Mudrex, addressed some of the most frequently asked questions about Bitcoin and its investment potential. As the cryptocurrency landscape evolves rapidly, Patel aimed to shed light on key aspects to help investors navigate this dynamic market. One of the fundamental questions Patel tackled was the legality of Bitcoin in India. He referred to the India Strategy Paper by NITI Aayog, which highlights the potential of blockchain technology to streamline transactions and reduce bureaucracy. With India seeing significant grassroots adoption of cryptocurrencies, Patel stressed that buying, selling, transferring and holding Bitcoin is completely legal in the country. Additionally, regulatory frameworks such as the Prevention of Money Laundering Act (PMLA) now extend to crypto companies, ensuring compliance and oversight.

Patel explored the rationale behind investing in Bitcoin, highlighting its role as a high-risk, high-reward asset. Despite its volatility, Bitcoin has shown a downward trend in risk along with sustained high returns over the years. He compared Bitcoin’s risk-return profile to traditional assets such as stocks and gold, highlighting its potential for portfolio diversification. Patel suggested allocating a modest percentage, typically between 2-5%, of one’s investment portfolio to Bitcoin for optimal diversification benefits.

Patel addressed the timing of investments and discussed Bitcoin’s historical market cycles and the factors influencing its current trajectory. He highlighted the recent launch of Bitcoin spot exchange-traded funds (ETFs), which have attracted significant institutional interest worldwide. With Bitcoin emerging as a digital store of value and witnessing increased demand amid global economic uncertainties, Patel suggested that now is as good a time as any to consider investing in Bitcoin.

Patel also offered some essential dos and don’ts for potential investors. He stressed the importance of choosing reliable platforms with robust security measures and regulatory compliance. Patel urged investors to practice risk management through diversification and regular investments while avoiding speculative FOMO-driven behavior. He warned against falling for get-rich-quick schemes and advised investors to approach Bitcoin investing with a long-term perspective. Beyond stocks: Insights into bonds and FDs for risk-averse investors Ajinkya Kulkarni, co-founder and CEO of Wint Wealth, shared valuable insights into the often-overlooked world of bonds during a Fireside chat titled ‘Risk Averse Investors : Beyond Equities – Bonds’ at the ‘ETMarkets Emerging Investment Opportunities’ event.

Kulkarni highlighted bonds as debt instruments within the fixed income asset class, highlighting their role in diversifying investment portfolios. With over 17,000 bond options available across 14 categories in India, Kulkarni highlighted the promising landscape of bond investments. However, he acknowledged the prevailing challenge of investor unfamiliarity with bonds, questioning their understanding and the asset class’ popularity catching up.

Reflecting on the historical context, Kulkarni noted the traditional inaccessibility of bonds to retail investors due to high ticket sizes, often reaching Rs 10 lakh. Yet recent regulatory interventions, including proposed reduction in ticket sizes by Sebi, have transformed bonds into a more retail-friendly investment avenue. Kulkarni emphasized the importance of these regulatory efforts, which make bonds more attractive and viable for retail investors.

The removal of indexation benefits on debt mutual funds in March thrust bonds further into the spotlight, increasing their appeal as an alternative investment avenue. Kulkarni elaborated on the need for diversification in bond investments, emphasizing the allocation of capital across multiple bonds to mitigate concentration risks. With regulatory support and increased accessibility, even smaller retail investors are now poised to explore bond investments with greater confidence.

Kulkarni expressed optimism about the future of bonds and emphasized their crucial role in supporting economic growth. As governments push for infrastructure projects and encourage participation in capital markets, bonds are expected to develop into an integral component of the economy. Kulkarni’s bullish stance on bonds resonates with their potential to boost a robust economy and provide profitable investment opportunities for risk-averse investors.

FDs as an alternative to shares

Saurabh Jain, CEO of Stable Money, a platform revolutionizing India’s beloved asset class Fixed Deposits (FDs), provided insight into FDs as a viable alternative to equities.

Reflecting on the prevailing market scenario, Jain addressed the primary question of whether investing in FDs is conducive to the current climate. Despite the popularity of mutual funds and stocks, Jain emphasized the importance of FDs, especially given the prevailing economic conditions.

Highlighting the peak repo rates in India, Jain pointed out that FDs offer attractive interest rates reaching up to 9.5% for senior citizens amid inflation concerns. With repo rates unchanged for the last five to six quarters and expected declines in the near future, banks are offering higher interest rates on short-term FDs. This unusual trend reflects banks’ expectation of rate falls, leading to higher rates for shorter periods.

Jain highlighted the opportune moment for individuals to capitalize on these higher interest rates, which reach up to 9%, by securing shorter-term FDs. This strategy allows investors to benefit from higher returns while mitigating the risks associated with potential rate declines in the future.

Understand​​​​the world of REITs and asset tokenization

Meanwhile, Avijit Mishra, co-founder of Alt DRX, delved into the intricacies of Real Estate Investment Trusts (REITs) and the emerging field of asset tokenization.

REITs, as Mishra explained, serve as vehicles to pool investor capital to acquire, manage and operate income-generating real estate assets. In India, Sebi-regulated REITs are listed on major stock exchanges, giving investors access to a diversified portfolio of commercial properties spanning various sectors such as offices, hotels, retail, industrial units and healthcare facilities.

Mishra highlighted the key benefit of REITs: their ability to lower the barrier to entry for investors. Unlike traditional real estate investments that require significant capital, REITs enable participation with smaller ticket sizes, providing liquidity through stock exchange listing. This accessibility opens doors for investors of different financial abilities to benefit from property ownership.

Fractional Real Estate platforms empower investors to access real estate assets with smaller investment amounts, typically ranging from lakhs to crores. Sebi’s introduction of small and medium REITs (SM REITs) further democratizes access, enabling investments in single properties with reduced asset size requirements.

The concept of tokenization represents a paradigm shift in real estate investing. Tokenized real estate assets offer ownership stakes in properties backed by digital tokens, enabling participation with minimal capital, starting as low as Rs 10,000. Mishra emphasized the potential of tokenization to democratize real estate investing and broaden access to wealth creation opportunities.

Mishra emphasized the transformative impact of REITs and token assets in diversifying investment portfolios and promoting financial inclusion. By promoting greater awareness and understanding, these innovative investment opportunities have the potential to drive inclusive growth and prosperity in the real estate sector.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. They do not represent the views of The Economic Times)

(You can now subscribe to our ETMarkets WhatsApp channel)

(Originally published on March 31, 2024)