In PART 1 we covered fixed income Investments and some of the Equity Solutions. In this article we will look at the rest of the equity solutions and some of the Alternative Investments.
Equity Solutions
3. Initial Public Offerings (IPOs)
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NRIs can participate in IPOs of Indian companies, allowing them to purchase shares during the company’s initial listing on the stock exchange.
4. Pre-IPO shares
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Obtaining shares of a company before it becomes publicly traded, typically in an over-the-counter manner.
Alternative investments
1. AIF
Alternative Investment Funds (AIFs) predominantly serve High Net Worth Individuals (HNIs) and Ultra High Net Worth Individuals (Ultra HNIs), with the goal of consistently outperforming both the index and mutual funds in India. Managed by SEBI-regulated fund managers renowned for their impressive track records, these funds are classified into three types:
Category I AIFs | Invest in startup/early stage ventures, social ventures, SMEs, infrastructure, etc. |
Category II AIFs | Not in Category I or III, no significant leverage or borrowing. |
Category III AIFs | Employ diverse/trading strategies, may use leverage through derivatives. |
INR AIF Funds cover public equity, private equity, real estate, and fixed-income etc. requiring a 3-year lock-in and INR 1 Crore capital.
USD AIF Funds offer offshore opportunities, mainly open-ended from Singapore, Mauritius, and GIFT City, with a $100k minimum investment.
2. Portfolio Management Services
Personalized investment strategies managed by SEBI registered professionals in the client’s own trading account, generating market-beating profits. Four key variants of PMS are explained below:
Active Portfolio Management | Aims to beat the market through active decisions; high-risk, high-return; pricey fees; manager-dependent; volatile. |
Passive Portfolio Management | Follows market indices; low-cost, steady gains; for long-term investors; risk of stagnation; lacks market-beating potential. |
Discretionary Portfolio Management | Manager controls investments; expert-driven; no stress for clients; higher costs; loss if manager makes error. |
Non-Discretionary Management | Clients decide, manager advises; control retained; risk of uninformed moves leading to significant losses; access to expert guidance. |
3. REITS (Real Estate Investment Trust)
REITs are companies that own and manage real estate properties, distributing rental income to investors as dividends, allowing both big and small investors to benefit from real estate ownership and dividend income. Properties in REITs include data centers, healthcare units, and more.
4. Startup Investments:
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Startup investing involves providing funds to new and promising companies at an early stage, aiming to support their growth and potentially earn high returns. Investors become part-owners and share in the startup’s success and challenges.
Investors can invest in startups from Pre-seed stage to Series B and beyond.
Conclusion
To sum up, these are the ways NRIs can invest to make money. Each way has its own risks and rewards, and NRIs can pick the one that matches what they want to achieve with their money.
Author: Kevin Jose
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