Direct equity overtakes FDs and bonds in FY 2015

 Direct equity has been the flavour of FY15. It has become the largest asset class of investments with a y-o-y growth of 29 per cent (Rs 34,39,861 crore) overtaking fixed deposits and bonds.

The upward trend in direct equity is forecasted to continue with a growth of 20 per cent compounded annual growth rate (CAGR) over the next five years.  Fixed deposits and bonds managed to be the second largest investment choice with a y-o-y growth of 13.1 per cent (Rs 33,26,429 crore), and insurance retained the third position with a y-o-y growth of 16.85 per cent (Rs 23,59,790 crore), according to Karvy’s India Wealth Report 2015.

Physical assets saw subdued interest with the wealth held by individuals in physical assets reducing marginally in FY15, on account of reduction in prices of gold and precious metals and gems, and also subdued activity in the real estate sector. The physical assets are expected to grow at a slower rate of 4.4 per cent CAGR for the next five years to reach a level of Rs 148 lakh crore, the report states.

In assets like debt and real estate, individual wealth in India is in line with the global proportions. However, with faster growth in equities and slower growth in gold, the coming decade is likely to witness a trend reversal between equity and alternate assets leading to India broadly being in line with the global proportions in all asset classes, the report states.

The total wealth held by individuals in India has grown by 8.9 per cent to Rs 280 lakh crore. Individual wealth in financial assets grew by 19 per cent while that in physical assets de-grew by 2.3 per cent. The individual wealth in financial assets has increased from Rs 134.7 lakh crore in FY14 to Rs 160.5 lakh crore, and is expected to double to Rs 326 lakh crore in the next five years. The physical assets are expected to grow at a slower rate of 4.4 per cent CAGR for the next five years, the report states.