The next few months are quite critical in forming a long-term investment strategy; especially with elections happening in India and United States; the geo-political unrest in the region and beyond; and most importantly the direction to be taken by the Fed on the rates revision and inflation adjustments, an investment expert said.
“We currently remain overweight on high-grade and long duration bonds. Given the increase in interest rates over the last two years, this particular asset class has been beaten the most and presents a unique opportunity to lock an attractive coupon yield for a significant period of time and benefit from potential rate cuts in future with capital appreciation. We also remain overweight on US equities with bias towards mid-cap and Indian Equities with bias towards the blue-chip companies,” Renoy Kundukulam, CEO, FinMark Capital Limited, told Khaleej Times in an interview.
FinMark Capital was established three and a half years ago. A financial intermediary company, FinMark Capital manages over $350 million in assets under management (AUM) and serves clients across Asia, Africa and Europe
“Having worked extensively with both global and local banks, one common trend that we observed was that traditional banks tended to focus on specific client segments, offering products, pricing, and policies that often fell short of meeting the comprehensive needs of customers. Taking cues from developed markets like Switzerland, Singapore, London, and Hong Kong, where intermediaries played a crucial role in connecting clients with investment products, we saw an opportunity. Our decision to establish FinMark was further reinforced by the progressive initiatives of the Dubai International Financial Centre (DIFC), which has been actively promoting financial intermediaries over the past decade,” Kundukulam said.
To become a client at FinMark Capital, individuals need to meet a minimum threshold of investible assets worth $1 million. “Once onboarded, we further categorise them based on their risk profiles, knowledge, and experience, ensuring a tailored approach to their investment journey. Our product offerings encompass three main categories: investment solutions, legacy planning (which includes estate planning and intergenerational wealth transfers), and capital advisory services tailored for corporates seeking financial solutions such as trade finance,” Kundukulam said.
In terms of investment options, Kundukulam said that over the past year, FinMark has been advocating for clients to explore investment opportunities in bonds. “As interest rates rose, bond valuations experienced a significant decrease, presenting an attractive valuation for clients to enter the bond market. Encouraging clients to capitalise on this strategy has been a key recommendation in building their investment portfolios,” Kundukulam said.
Another ongoing conversation revolves around the importance of diversification, including investments in commodities like gold. “While not a mainstream investment, incorporating a small portion of gold into their portfolio has enhanced diversification and mitigated risk,” Kundukulam said.
Furthermore, FinMark is continuously exploring various thematic investment opportunities, such as those in technology, healthcare, and travel-related sectors. “Depending on market trends and developments, we provide recommendations to our clients, adopting a dynamic and tactical approach rather than a static strategy,” Kundukulam said.
FinMark has two main parts in its investment approach. First, there’s the core portfolio, which is a mix of different types of investments like stocks, bonds, and alternatives. “We tailor this mix based on clients financial goals, acceptable risk and investment time horizon,” Kundukulam said.
Then, there’s the satellite portfolio, where more specific themes are explored. “These could be things like artificial intelligence or bio-medical, based on what our research suggests and how much client understand these alternative themes. We also offer strategies using derivatives to protect our clients’ money during uncertain times in the market. This means they can still be part of the market but with their initial investment safe, and only their profits or losses changing,” Kundukulam said.
There is a constant delay in the US dropping the interest rates as they are not seeing inflation coming down. “As a result, there are theories being floated around that there wouldn’t be any rate cuts this year. This has raised concerns in the markets as they have already factored in more than one rate cut this year. Additionally, ongoing geopolitical tensions, including wars, have contributed to market uncertainty. While these factors have already been taken into account to some extent, they have the potential to influence market dynamics in the future,” Kundukulam said.