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The passion portfolio
In a new report titled 'Profit or Pleasure?', Barclays has explored the motivations behind treasure trends. Indians, it says, let emotions drive their investment decisions. TOI-Crest spoke to Satya Bansal, CEO-India Wealth & Investment Management, for more insights
The recent 'Profit or Pleasure' wealth report by Barclays reveals that 68 per cent of the treasures held by Indians are acquired to impress social circles. What does it say about our high net worth individuals?
The decision to own treasure assets is primarily driven by passion rather than the need to make a financial investment. Emotions play a larger role in making this decision and this could be driven by personal enjoyment, social motivation or even the desire to preserve one's heritage. According to the report, globally HNIs like to share and display treasures like vintage cars, art and sculptures, antique furniture, stamp collections. They believe that they earn respect by owning these rare treasure assets.
What are the top passion investments for Indians?
The survey found that 93 per cent of Indians said they own precious jewellery which indicates that inheritance and heritage are the key drivers. The report does not specify the brands of the assets or any specific bias towards certain assets. But from the knowledge available in the public domain I can safely say that Indians, mostly from the royal families, have always had a soft spot for vintage automobiles like Aston Martins, Chevrolets and Rolls Royces.
What are the trends for the future?
According to the report, the top five treasure assets that Indian investors would look at investing over the next years would be: fine art pictures and paintings (60 per cent); precious jewellery (58 per cent); classic automobiles (57 per cent); antique furniture (48 per cent) and precious metals (44 per cent).
The trend of owning sports teams and clubs is catching on here. Do you see this becoming bigger in the coming years?
Ultra high worth families and sports go hand in hand globally. Now, we are seeing the same trend in India. IPL was the first initiative and now we are seeing more such projects in other sports like football.
India has a growing population of the "nouveau rich". What kind of passion investments are they making?
India is still at an early stage of the aspiration cycle. Hence, most wealthy individuals still prefer to invest in assets where they expect some returns. Given some of the difficulties associated with maintaining, securing and liquidating treasure assets, it appears that precious metals and jewellery are still a favourite. The survey brings to light that around 72 per cent of Indians feel they should invest their money so it is made available for others to use productively, rather than buy desirable items for personal enjoyment.
What other interesting trends does the report reveal?
Indians have a high propensity to let emotions rule in financial decisions. The emotional connect together with the inherent altruistic nature is reflected in the study findings which states that 82 per cent of Indians agree that it is their duty to share valuable possessions for the good of society. Seventy six per cent said they would lend some of their possessions to museums or exhibitions. The social motivation among Indians to hold treasure is so high that 87 per cent agree that the financial value of art is driven largely by public taste rather than intrinsic worth. Indians currently form the largest proportion of respondents who own precious jewellery (93 per cent) and classic automobiles (79 per cent).
What role do passion investments play in the economy?
In India, most passion investments are related to creative arts. These are investments that families like to engage with and spend time with. They could be sub-optimal from a financial risk perspective. With more wealthy Indians pursuing their passions, such investments will lead to promotion of art and culture in the domestic market. It will create a ripple effect in the economy and more artists will be able to safely pursue their creative careers, just the way it happens in, say, Western Europe.
Do people expect long term returns from passion investments?
As many as 79 per cent of Indians agreed that emotions influence financial decision making. Relatively fewer wealthy individuals own treasure solely for its financial characteristics. The survey proves that only 18 per cent of the treasures that survey respondents own are held purely as an investment and only 21 per cent are believed by their owners to provide financial security if conventional investments fail.
Investors who do seek financial returns or insurance from their treasure typically favour commodity-like items, such as precious metals, coins and jewellery. They derive relatively low enjoyment from what they own and are more likely to sell their treasure than those who are influenced by other motives.
No investment, let alone treasure, is held entirely for financial reasons or emotional ones. Treasures, are often regarded as a part of an individual's personal holdings (assets which are owned to support lifestyle or enjoyment purposes), rather than as a separate asset class in the investment portfolio. Owning treasure can also be a social activity such as sharing with friends or showing it to people. Some wealthy individuals may also acquire treasure for its heritage value. These individuals enjoy what they own, and want their descendents to enjoy it too. They are often reluctant to sell their treasure at any price and believe that they have a duty to share what they own for the good of society.
In India do most people sell their treasures or keep it with them within the family? What's the trend here with treasure maintenance?
The survey reveals that across the globe Indians hold the highest proportion of assets for cultural reasons (58 per cent) and as heirlooms (67 per cent) to be enjoyed by children and grandchildren. Most families in India want to keep their legacy alive and private museums best serve this purpose. Museums help preserve personal assets of wealthy individuals without family funding. If there are some revenue streams like viewing fees, etc. those can be used for the preservation of the assets. The popularity of private museums is growing despite the rich in India investing only a small proportion of their wealth in treasure assets as we have been increasingly requested by our clients to help them in setting up private museums to display their treasure assets.
Given the ongoing slowdown, what kind of passion investments will you recommend?
Wealthy individuals should be clear about their motivations for acquiring treasure and they should ensure that it is considered in the context of their broader wealth. Those that acquire treasure primarily for financial reasons must be aware that it is immensely difficult to earn consistent returns. For most individuals, however, the principal role for treasure will be the enjoyment that it brings and its ability to enrich life.
POP THE QUESTION
I bought new shoes!
Yawn. So what's new.
No. These are the latest and trendiest beauties out there.
You must've bought another pair of those red Christian Louboutin heels. You've spent a mini-fortune on them already!
No dearie. I have moved on. These are gold. The real stuff and not the kind Elton John wears.
Gold? No wonder it's so expensive now. They've started making shoes with it.
Don't be silly. These are understated chic.
Right. Gold isn't blingy at all. By the way, how much gold are we talking about here?
Each shoe has 23. 75 carat gold-leaf signature heels and it takes 20 hours alone to just gild the heel. That's not counting the 120 other processes that go into making this Rupert Sanderson shoe.
23. 75 carats. Maybe the next time recession hits, you can actually sell your shoes.
I'm not selling these ever. These are so exclusive. You can only get them in Hong Kong.
Oh I wouldn't sit back just yet. I'm sure all Indian jewellers must be placing orders to sell them in their showrooms. Your mom and aunts will want a pair just as much.
Shudder. These would look really nice next to my beige flats with the gold leaf decoration, also a Sanderson original.
You already had shoes with gold on them? What is this world coming to?
Darling, don't you a know a woman can never have enough shoes. But I'm so sad I couldn't get my hands on the blue courts. A woman bought a dozen pairs for herself!
I bet she bought them so that she could melt all the gold and make herself a nice new necklace.
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