Introduction:
Shyam Maheshwari, the founder and partner of SSG Capital Management, is a prominent figure in the world of finance. With a keen eye for investment opportunities, Maheshwari plays a pivotal role in the Ares SSG investment committee and serves as a director of Ares SSG Singapore. His focus spans across India and various regions in Asia, where he evaluates and originates investment opportunities. In addition to his financial expertise, Mr. Shyam Maheshwari is also an Associate Member at the Institute of Chartered Accountants of India. In this blog post, we delve into Shyam Maheshwari’s insights on the importance of incorporating fixed income deposits into your core investment portfolio.
The Growing Significance of Fixed Income: A Global Perspective
Shyam Maheshwari emphasizes that fixed income assets should be a dominant part of an investment portfolio, mirroring the global trend. Traditionally, bank deposits and savings accounts formed the bedrock of fixed income investments. However, the landscape has evolved over time. Mutual funds with liquid plans have emerged as attractive options, offering better tax-adjusted returns than conventional bank deposits. This shift in preference has led savers and investors to explore alternative avenues for fixed income.
Global Markets vs. Indian Markets: Fixed Income Dynamics
Comparing global markets to the Indian scenario, Shyam Maheshwari draws a clear distinction. In the global investment landscape, fixed income takes center stage, exemplified by the widely discussed 60:40 portfolio allocation (favoring stocks over fixed income). However, emerging markets like India introduce a different dimension. These markets, while promising, are more prone to volatility. Therefore, investors demand adequate compensation for the associated risks, which is readily available in the equity world. Nonetheless, portfolios heavily weighted in equities or real estate carry unique risks, especially during economic downturns and liquidity crises.
The Challenge of High-Yield Opportunities in India
Shyam Maheshwari SSG sheds light on a significant challenge in the Indian investment landscape — the absence of a robust high-yield market. Drawing parallels to the stock market, he envisions a scenario where only blue-chip companies are allowed to list on stock exchanges, rendering the market one-dimensional. In contrast, real-world stock markets offer a diverse range of choices, catering to the risk-reward preferences of individual investors. Shyam Maheshwari firmly believes that the bond market should follow a similar trajectory. Investors should have access to a spectrum of bonds, from AAA to CCC rated, complete with comprehensive disclosures. Such diversity empowers investors to make informed decisions aligned with their financial goals.
A Vision for India’s Bond Market
Shyam Maheshwari advocates for concerted efforts to develop India’s bond market. While India embarks on a high single-digit GDP growth trajectory in the coming decades, a well-functioning bond market is imperative alongside its relatively developed equity market. This synergy is vital to provide the necessary financing for industries to fuel their growth in the foreseeable future.
In conclusion, Shyam Maheshwari’s insights underline the growing significance of fixed income in investment portfolios. As the investment landscape evolves, investors should consider fixed income assets as a vital component of their portfolio strategy. By diversifying with fixed income, individuals can achieve a balanced and resilient investment approach, aligning with their long-term financial objectives. Shyam Maheshwari’s vision for India’s financial markets emphasizes the need for a vibrant bond market to complement the nation’s economic growth journey.
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