“MORE THAN JUST BUSI­NESS”

Non-con­ven­tional as­sets are rapidly emerg­ing as a cat­e­gory that has caught the in­ter­est of ul­tra high net worth in­di­vid­u­als

MillionaireAsia India - - News - RAJMOHAN KRISHNAN

An avid golfer, Rajmohan Krishnan is the Prin­ci­pal Founder and Man­ag­ing Di­rec­tor of En­trust Fam­ily Of ce In­vest­ment Ad­vi­sors.

In July 2017, In­dia’s “vac­cine bil­lion­aire” Cyrus Poon­awalla ac­quired a pen­cil por­trait of Ma­hatma Gandhi for £32,500 (ap­prox­i­mately ` 27 lakhs) dur­ing an auc­tion at Sotheby’s. The por­trait shows the great leader seated, in­tensely fo­cused on a chore, while in the UK for the 1931 Round Ta­ble Con­fer­ence. What makes this art­work truly spe­cial is that Bapu him­self has in­scribed it with the words ‘Truth is God/MK Gandhi/4.12.’31’. Asked why he would want to ac­quire the sketch, Poon­awalla said that it was an op­por­tu­nity to bring a work of such his­tor­i­cal value back to In­dia.

Em­pir­i­cal ev­i­dence sug­gests that ev­ery bil­lion­aire reaches a point where mere re­turns pale in com­par­i­son to the pas­sion stoked by an in­vest­ment. Ap­par­ently, at high thresh­olds, the law of mar­ginal util­ity be­comes as rel­e­vant in money mat­ters as man­goes.

Wel­come to the world of non­con­ven­tional as­sets. It’s as ex­cit­ing as it is amor­phous. New as­set classes have been deemed wor­thy of in­vest­ing in the last few decades and the panorama is only widen­ing. Be­fore we be­gin ex­plor­ing this world, we have to di­vide them into two broad cat­e­gories: Ma­te­rial in­vest­ments and Ex­pe­ri­en­tial in­vest­ments.

MA­TE­RIAL IN­VEST­MENTS

As per a 2016 study con­ducted by Lloyds Pri­vate Bank­ing, one in six in­vestors now holds col­lectibles such as watches, coins, stamps and wine as part of their port­fo­lio and the up­per limit for th­ese as­sets might be as high as 25 per cent of the to­tal port­fo­lio. Let’s have a quick round-up of the pros and cons as­so­ci­ated with such non-con­ven­tional as­sets.

While con­ven­tional wis­dom states that we must never be emo­tional while in­vest­ing, re­cent mar­ket trends show that the re­turn on in­vest­ment (ROI) from non­con­ven­tional (some would say ex­otic) as­set classes far ex­ceeded that from tra­di­tional as­set classes. Yes, pas­sion is prov­ing to be prota­ble, as is ev­i­dent in the non­con­ven­tional as­sets at a glance ta­ble.

True, only a small per­cent­age of

ul­tra-high net­worth in­di­vid­u­als (UHNIs) pur­sue th­ese as­sets for pure nan­cial gains. But even the oth­ers might ex­pe­ri­ence the thrill of spot­ting win­ners from a dis­tance. This adds to the thrill of own­ing as­sets that are less cere­bral and more heart­felt.

EX­PE­RI­EN­TIAL IN­VEST­MENTS

In De­cem­ber of 2016, leg­endary singer, best­selling writer, phi­lan­thropist and suc­cess­ful busi­ness­man Jimmy Buf­fett made pub­lic his de­sire to travel to space. He said he wanted to com­mem­o­rate this ex­cit­ing jour­ney John Glenn who be­came the old­est space trav­eller in 1998. What adds weight to Buf­fett’s de­sire is his friend­ship with Richard Bran­son – the mer­cu­rial bil­lion­aire who him­self is eye­ing the innity that is star­ing at us.

Buf­fett is not the only ul­tra-rich who wants to scale this nal fron­tier. A cit­i­zen’s ex­pe­di­tion to space might be­come a re­al­ity soon, but it’s un­likely that non-mil­lion­aires can af­ford this trip in the fore­see­able fu­ture.

What is clear is that UHNIs want to in­vest in ex­pe­ri­ences, just like the rest of hu­man­ity. In the colo­nial era, travel to un­known des­ti­na­tions was left to the likes of Colum­bus and Vasco da Gama while the mon­archs who spon­sored their jour­neys (Fer­di­nand I/ Is­abella II of Spain and John III of Por­tu­gal re­spec­tively) awaited word, an­tic­i­pat­ing nan­cial gains and de­lec­ta­ble sto­ries.

To­day, the rich­est amongst us don’t have to rely on proxy nar­ra­tives. They can cre­ate their own. Be­cause they know that while ly­ing on their deathbeds, great­est in­vest­ments will show up in their mem­o­ries.

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