NRI advisers in the UAE suggest a balanced global portfolio, rather than putting all the allocable investments in the Indian market, in view of the anaemic growth outlook in India and a modest rebound in emerging markets in 2020.
Last week, Jojo James, chief executive officer, Fosbury Wealth Managers, and Partner of Tamim Chartered Accountants, Dubai, suggested a reallocation strategy that NRI should shift their investments to different portfolios such as migrating to debt funds or switch to US-focused INR funds as they performed well in the past two years.
Agreeing with James, Sajith Kumar PK, chief executive officer of IBMC International, Dubai-based financial services company, said NRI investors should also build a portfolio other than that of Indian markets, as there are opportunities in the emerging markets.
UAE-based NRIs, being global citizens, should have a global view and tap opportunities elsewhere in the world as far as investment returns, stability and sustainability are concerned.
“They should adopt a balanced strategy as arbitrage facility is available in select instruments across the markets. The European markets and emerging markets hold promise in view of the growth outlook projected by the International Monetary Fund.
“The global economy is poised for a modest rebound this year. Emerging markets, in particular, will witness a continued economic rebound and will outperform from an equity market perspective in 2020,” Sajith Kumar added.
Ample opportunities in 2020
Jan Poser, chief strategist and head of sustainability research, echoed the same sentiment in Bank J Safra Sarasin’s 2020 Economic and Financial Market Outook: “Equity markets have priced to a good extent a backdrop of firming manufacturing indicators and favourable liquidity conditions, which should cap upside potential and usher some consolidation in the first quarter.
“We advise overweighting cyclical regional markets, particularly the euro area, the UK and emerging markets.
“At the sector level, we favour a blend of growth sectors, including information technology, healthcare as well as cyclical industries like automobile, chemicals, capital goods and banks.”
The report said the financial markets will provide ample opportunities in 2020 even though total return will remain lower than in 2019. Higher inflation expectations will lead to steeper yield curves and higher bond yields.
Emerging market bonds, as well as corporate credits, provide better return perspectives with lower duration risks. Sustainable assets will provide unique investment opportunities in the years to come.
SIPs the best route
However, advisers like KV Shamsudheen, director, Burjeel Geojit Financial Services, Dubai, prefer to bet on the Indian market, fearing a volatility in the forex market.
“It’s cherry-picking time for investors in the Indian market and SIPs of mutual funds should be part of every investor’s portfolio. NRIs should resolve to save more for the future and keep aside at least 30% of their income for productive investments to secure a financially comfortable retired life back home.
“As it is, a large number of NRIs in the UAE have good exposure to the Indian equity market, mainly through the mutual fund and the SIP routes, real estate and government securities,” he said.
Shamsudheen echoed other advisers’ view of handsome returns for long-term SIP investors. “Ideally, NRIs with average income should continue their SIPs throughout their stay, say about 20-25 years, in the host country, so that they can continue to enjoy the same life style in their retired life also.”
