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Business News/ Money / Personal Finance/  8 essential strategies for bespoke portfolio creation for UHNI investors

8 essential strategies for bespoke portfolio creation for UHNI investors

UHNIs have a unique relationship with money and require bespoke investment strategies tailored to their goals, risk tolerance, and circumstances.

Bespoke portfolio creation for UHNI Investors.Premium
Bespoke portfolio creation for UHNI Investors.

UHNI as defined are individuals that operate in large sums of money in terms of incomes and assets. They too are made of flesh and blood, they have a human mind, the only difference is their understanding and relationship with money. The relationship between a high-net-worth individual (HNWI) and their money is often complex and multifaceted. It goes beyond just accumulating wealth and extends to how they manage, preserve, and utilise their assets.

It's important to note that bespoke investment strategies for wealthy individuals are often complex and require the guidance of experienced professionals, such as wealth managers, investment advisors, tax experts, and legal counsel. 

These strategies should be tailored to the specific goals, risk tolerance, and circumstances of each individual or family. When it comes to bespoke investments for such investors, there are several parameters and considerations that come into play. Some of them are –

a. Asset Allocation – Wealthy investors often have a diversified portfolio that includes traditional assets like stocks, bonds, and real estate, as well as alternative investments such as private equity, hedge funds, and venture capital. The asset allocation strategy should align with their risk tolerance, investment objectives, and time horizon.

b. Taxes – Taxes are amongst important factors in the UHNI investing space. They often seek strategies to minimise their tax liabilities. This would involve looking at tax-efficient investment vehicles, tax-loss harvesting, charitable trusts, and other tax-planning techniques.

c. Liquidity – UHNIs can afford to allocate a larger portion of their portfolio to illiquid investments, such as private equity, real estate, and direct deals. These investments may offer higher potential returns but come with increased risks and reduced liquidity.

d. Increased Diversification: UHNIs typically have the resources to achieve a higher degree of diversification across a broader range of asset classes, geographic regions, and investment strategies. This can include more exposure to alternative investments, such as private equity, hedge funds, real estate, and direct investments in private companies or projects.

  • Alternative Assets Investment – UHNIs often have access to exclusive investment opportunities, such as private equity funds, hedge funds, real estate investments, and direct investments in startups or established companies. These investments can provide diversification and potential for higher returns but also carry higher risks.
  • Direct Investments – Information and ideas seek monies that are potent to exploit the same. may engage in direct deals, such as acquiring companies, investing in real estate developments, or funding specific projects. These opportunities often involve substantial capital commitments and require extensive due diligence.

e. Legacy Planning – Wealth preservation and intergenerational wealth transfer are crucial aspects for many affluent investors. This may involve setting up trusts, family offices, and other estate planning strategies to ensure a smooth transition of assets to future generations.

f. Philanthropy – The UHNIs may incorporate philanthropic goals into their investment strategies, such as impact investing, socially responsible investing, or setting up charitable foundations or donor-advised funds.

g. Risk Management – Comprehensive risk management is essential for preserving and growing wealth. This may involve hedging strategies, insurance solutions, and diversification across various asset classes and geographical regions. One needs to also respect investor alignment for the concept of risk as regards volatility versus permanent loss of capital.

h. Well-defined monitoring and Reviews – Continuous monitoring of investments and external market developments, periodic performance reviews against designated benchmarks and prudence in rebalancing at defined frequencies as routine and during events warranted by changes in outlook or new information/development. 

Jiten Doshi, Co-founder & CIO, Enam AMC 

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Published: 06 Jun 2024, 08:58 AM IST
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