Over 80% of Indian investors prefer digital assets despite market turbulence

More than a fifth, or 81%, of investors in India believe that digital assets are an important part of an investment portfolio, despite multiple setbacks to the markets this year. As of now, 66% of global investors hold digital assets, compared to 74% in India, according to the Standard Chartered’s Wealth Expectancy Report 2022.

The report examined the shifts in investor decisions for more than 15,000 emerging affluent, affluent, and high net worth (HNW) investors in 14 markets, including India, along with resulting movements in major asset classes. Survey results showed that 66% of local investors are more actively managing their wealth and making changes to their investment strategies, given current economic challenges.

Saurabh Jain, head, Wealth Management, India, Standard Chartered Bank, said, “As inflation and geopolitical tensions drive uncertainty in the investment outlook, many investors have cited that complexities in preparing and changing investment strategies are making it harder for them to pursue new goals. At Standard Chartered, we are committed to helping clients realise their wealth goals by providing high quality investment insights, innovative products and secure digital platforms.”

Following are the major takeaways from the report:

Inflation concerns

Indian investors cited inflation (23%), an uncertain global economy (18%) and the threat of recession (16%) as their top concerns. Rising inflation (34%), a recession (27%) and uncertain global economy (22%) are key worries for investors internationally, too.

In the past year, local investors made changes to their finances, such as spending less (28%) and making new decisions around their portfolios (26%), which will prompt shifts in major asset classes.

To outpace inflation, 61% of global investors are looking to reduce their cash holdings, compared to 70% in India. Standard Chartered predicts that global cash allocations will fall from 26% in 2022 to 15% in 2023, indicated by investor responses.

Investors are reconsidering their holdings of equities as market volatility increases, although this asset class will remain an integral part of portfolios. Of those currently invested in equities, there is an indication that the allocation of equities in Indian portfolios to fall from 10.8% to 7.6% in the next year based on survey responses.

This year, gold remained of high interest among Indian investors, with 61% saying they invested in the precious metal as a result of inflation.

In 2022, investment interest in value stocks was at 60%, and in bonds at 59%.

Sustainable investments will continue to receive investor interest and capital, even though greenwashing concerns persist. More than half of global investors (52%) expect to increase their sustainable investments in 2023. 64% of investors in India will also do so.

Digital assets continue to interest investors

The study revealed that 81% of local investors still believe that digital assets are an important part of any investment portfolio, despite multiple setbacks in the market this year.

Currently, 66% of global investors hold digital assets, compared to 74% in India. Looking ahead, 81% of local investors surveyed plan to increase their investments in digital assets in the coming year. This is in part because many said they have seen people make significant returns on digital assets (36%), and 33% consider them to be a good way to diversify their portfolios.

However, it is important to note this survey was conducted before the FTX crash and the events of the past few weeks may dampen this sentiment.

Helping investors make better decisions

While most global investors polled (62%) were primarily managing their own finances, with some variation across markets. Many investors in India (42%) use professional wealth managers. On average, across the 14 markets, younger (18-35) investors (63%) are more likely to use a professional compared with 39% in the 55+ bracket. On average, investors taking advantage of professional advice were more likely to have diversified portfolios and higher holdings in sustainable investments.

Nitin Chengappa, head, Affluent, Private Bank, NRI and Deposits, India, Standard Chartered Bank, said, ‘‘There has been a clear shift in the way Indian investors are managing their wealth. They are making feasible alterations in their investments to tackle inflation and spread their asset portfolio. Investors are considering to lower their assets in cash and are opting for more sustainable investments. We expect this period of flux to continue till inflation and recession worries abate.”