The financial crisis of 2008 taught Shiv Gupta, MD, RBS Private Banking, an important lesson: “Be greedy when others are fearful.” The best investment opportunities are found during market dislocations. More on his investment philosophy:

What was your first investment?  

Working in the wealth management industry, I was fortunate to have been relatively well informed about the equities market and so my first investment was in US equities.

Your best and worst investments?  

My best investment has been in a real estate holding in Asia made during a major market dislocation, where assets were being sold at depressed prices. Despite the prediction of further gloom, the adage “Be greedy when others are fearful” held true for me, and I learnt that with conviction, the best opportunities could be found during market dislocations.

My worst investment has less to do with an individual asset and more to do with investment style. I once held a concentrated equity portfolio of only three stocks, which lost more than half its value in 2008-09, even though the companies had sound businesses. This reminded me of how volatile markets can be and that one should never underestimate the importance of portfolio diversification.

Is there scope for bettering returns from newer asset classes such as wine and art? 

On the one hand, equities, fixed income and the two alternative assets gold and real estate provide sufficient diversification and reasonably sound risk-adjusted returns. On the other hand, any asset class, including passion investments, where prices have lower correlations with traditional asset classes, can be used to enhance a portfolio’s risk-adjusted returns. In fact, the Coutts Index has captured the price return of 15 passion assets and has shown that such investments have returned 77 per cent on an average since 2005, far outperforming equities.

Why should investors seek fee-based advice when free advice is easily available in the market?

Robert Heinlein famously said, “Nothing of value is free. Even the breath of life is purchased at birth only through gasping effort and pain.” Local investors’ erstwhile reluctance to pay has been driven by the perception that there is little value differential between free and paid advice.

However, there is evidence that, where firms have been able to show clients how their advisory processes have indeed added value and that fee-based models can often result in lower overall costs, client perceptions have begun to change.

Which products are good for retirement needs? 

Assuming that real estate and medical insurance have been taken care of, as investors approach retirement, their objectives tend to be a combination of wealth preservation and income generation to take care of living expenses.

This is best achieved through a portfolio of fixed income securities with a small equity allocation, either directly or through mutual funds.

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