An insightful panel discussion at Chennai's PMS Bazaar regional conclave focused on the rising prominence of alternative investments. Here is a summarised version.

The panel was Moderated by Vignesh Shankar, Founder & Managing Partner Artha99, the panel included the following experts who shared their expertise on the topic.

Tarun Sharma, Sr. Executive, Vice President & Fund Manager, 360 ONE Asset 

Karthik Athreya, Director & Head of Strategy - Alternative Credit, Sundaram Alternates 

Lakshmi Iyer, CEO – Investment & Strategy Kotak, Alternate Asset Managers

An insightful panel discussion was held on the rising prominence of alternative investments. Lakshmi Iyer commenced the discussion by sharing her career evolution from mutual funds to alternative investments. She highlighted that while mutual funds offered a standard approach, alternatives provided customised solutions with additional benefits.

Karthik Athreya then delved into the investment horizons and returns related to alternative assets. He pointed out that although traditional equities remained a cornerstone in investment portfolios, alternative investments became increasingly attractive due to their potential for higher returns and diversification. Athreya noted that private credit and real estate, particularly, had gained significant traction, with their share in investment portfolios expanding over the past seven years. He observed that investors were now generally looking at a four to five-year horizon for alternative investments and stressed that private credit could yield robust returns, ranging from 15% to 17%, in contrast to the more modest yields of traditional bonds.

Following this, Tarun Sharma discussed the evolving role of alternative investments and highlighted emerging trends. He noted that domestic institutions increasingly embraced alternative investments, moving beyond the previously dominant global institutions and family offices. Sharma remarked on the growing sophistication of investors, who were now focusing more on specific strategies within alternatives, such as early-stage technology investments and sector-focused growth funds. He projected that the investor base would become more discerning and sophisticated as capital inflows into alternative investments continued to rise.

Lakshmi Iyer further elaborated on the factors driving the growing interest in alternative investments in India. She identified diversification as a key motivator, as investors sought to enhance their portfolios with assets that offered higher yields and unique opportunities not found in listed markets. While acknowledging that awareness of alternative investments was improving, she noted that it remained limited compared to its potential. Despite existing challenges, such as regulatory constraints and limited investor awareness, she expressed optimism about the sector's future growth.

The discussion then shifted to portfolio diversification among various alternative investment options. It was suggested that up to 20% of a portfolio could be allocated to these alternative strategies. The panellists agreed that while alternatives were potent in terms of return generation, they should be viewed as a complementary component rather than the core of an investment portfolio. They emphasised the importance of planning for exits from the outset and being selective in investment choices to maximise returns.

You can watch the entire discussion from the video below: 

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