Let it Rain
What can possibly be said about the Indian monsoon that has not already been said? It is symbolic of nature’s bounty, productivity and prosperity. The importance of monsoons is omnipresent in our society. It can be seen in the special monsoon delicacies, the songs sung around it, the rain-drenched festivities and above all, the smiles on the face of our farmers.
Shower of Prosperity
In a way, this season of rain symbolizes collective prosperity. Every year, we hope that it rains so that the parched earth blossoms millions of buds and saplings. Staying in tune with the season, we hope that abundance and blessings shower down upon you as well. Let it be a rain of possibilities and prosperities, opportunities and positive experiences.
Your Window of Investment Opportunities
We always hope and pray that you embark and continue on an investment journey that showers income and wealth upon you like the monsoon rains. Also emerging, albeit like a drizzle, are the new-age investment opportunities. Investments have always evolved through the ages. From gold and silver, through government bonds and stocks, on to mutual funds and cryptos, the financial world is perpetually dynamic. So, while we say “Let it Rain”, let us find out some of the interesting investment options precipitating in our financial skyline.
Environmental, Social and Governance-based Investing (ESG)
ESG is a mantra that you can practice on your own, by judging and selecting companies and funds based on their ESG standing. However, SEBI has made it easier for you by allowing the launch of ESG mutual funds. These schemes invest at least 65% of their funds in companies for which the Business Responsibility and Sustainability Report is undertaken. ESG mutual funds are available for investment under the sectoral/thematic category. With ESG prominent among the long-term goals of the United Nations, the importance of ESG is only going to grow in the days ahead in every country.
Fortunately for you, you can read all you need to know about fractional ownership in this issue of Compass. However, very briefly, fractional ownership is an investment in small fractions of high-value assets through a common platform. Fractional asset platforms offer the opportunity to invest in these assets, which are otherwise out of the reach of the common person. These platforms purchase a high-value asset and divide the asset into financial terms. They then make this asset available to the investors in smaller shares. As a fractional asset owner, you own a portion of the asset. These platforms are of different types and have different investment models. If, for instance, you invest with a fractional asset platform that invests in high-value commercial real estate. Your investment will generate rental income earned from the properties, and enjoy the appreciation in their market value.
Fractional ownership gives this investment an organised format, where the platform handles the maintenance and storage of the assets as well as its insurance.
Some companies invite investment opportunities from investors in the form of inventory financing. As an investor, you get the opportunity to back the company to acquire its inventory. Your money is invested in the company’s growth and, therefore, has a good return prospect. Inventory financing is known to provide investors with up to 12% in pre-tax returns. There are new-age investment platforms that audit and verify such companies, and recommend them to investors like you. As an investor, you get a non-market-linked return within a short-term investment window.
Infrastructure investment trusts or InvITs are similar to mutual funds. These trusts accept funds from investors and use them to invest in infrastructure-oriented income-bearing projects. These projects can be in avenues like roads and highways, power plants, gas pipelines, railways, etc. InvITs are a regulated form of investment, being run under SEBI supervision. As most of these big-ticket infrastructure projects are initiated by the government, your InvIT investment is indirectly backed by the government. Most of the projects that InvITs invest in are public utility assets and infrastructures. These projects bear an almost assured income upon completion. Listed InvITs can also be found in the stock market, and you can invest in them through your demat account.
Bonus: An Old Faithful
Initial Public Offering is not something that you don’t know. And yet, IPOs are very much in line with the theme we're discussing. Firstly, it is raining IPOs, and they can be your ticket to short and long-term wealth formation.
Utkarsh Small Finance Bank registered strong listing gains, as did IPOs like Cyient DLM, ideaForge, IKIO Lighting and Sah Polymers. There are more to follow, including promising ones like Tata Technologies and Netweb Technologies. However, if there are successes like Sigachi, there are disappointments like LIC too. Therefore, detailed due diligence is very important in IPO investments.
To sum it up
With a sneak peek into some of the new-age investments, and an evergreen one, we can conclude that we are amidst some interesting times as investors. We hope that with a few smart investments, you can garner high and sustained returns. And after the year-long stagnation in the equity market, your future investment choices give a new bloom to your portfolio.