The initial public offering of Anand Rathi Wealth will close for subscription on Monday and the issue has received a recent response thus far. In an interaction with ETmarkets.com, Anand Rathi, founder and chairman of Anand Rathi Wealth, shared his views on various asset classes including cryptocurrencies and wealth management. Here are the key excerpts from the interview:

What is your take on Cryptocurrencies? They have been the talk of the town recently and if cryptocurrencies are categorised as an asset class in the upcoming bill, would you prefer to invest in them? How different would it be from equity investing?
Clients are discussing cryptocurrencies in some pockets, but we have not seen many clients seeking exposure to cryptos. We believe that while the underlying blockchain technology of crypto holds great promise, most cryptos themselves have no inherent underlying value.

The current value is merely derived from the belief that someone else will be willing to pay a greater price down the road. This matter is under consideration of various Governments for creating a regulatory framework and only then there will be greater clarity about its use as an investment.

What are your investment calls for aggressive investors? Which pockets do you invest in to fetch higher returns for them and how do you allocate resources to ensure the safety of moderate and conservative investors?

As a matter of strategy, we focus on such clients, who seek moderate long-term returns that can beat their lifestyle inflation comfortably. We cater to clients who have already created reasonable levels of wealth and are seeking both wealth preservation and moderate growth while taking on prudent levels of risk. So, we don't offer solutions to very aggressive investors. Any high return strategy would have a much higher risk.

In which asset classes, your clients are seeing the most value? What is your investment thesis and how long should one stay invested in an asset?
We believe in equity as a long-term asset class for creating wealth. The big advantage of this asset class is not only the potential for good long-term returns but comes along with very efficient taxation, high liquidity and well-regulated investment vehicles like mutual funds.

However, this is an asset class that one needs to be invested in for over 5-10 years to have a high probability of earning the long-term trend rate of return and not exposing capital to structural losses. As a policy, we believe that investors are best advised to use mutual funds as a vehicle to build their long-only equity exposure, as while the asset class needs long-term exposure, underlying stocks and businesses see constant change, which is best left to a good professional manager.

What are the gross commissions you earned as a mutual fund distributor in FY19, 20, 21? How much yield do you generate vis-à-vis the industry/peers?
We have been ranked amongst the top three non-banking mutual fund distributors in India based on gross commission earned and ranked no. 1 in the non-bank - B to C category. We earned a gross commission of Rs 121.1 crore in FY19, Rs 114.9 crore in FY20 and Rs 98.8 crore in FY21 as a mutual fund distributor.

According to the data from Amfi, our yield has been one of the best amongst all the non-bank mutual fund distributors in the B to C category. Our yield was 0.89 per cent in FY21.

How are you different from other players in the Wealth space?
We have chosen to cater to the HNI segment, which have an investable surplus of Rs 5-50 crore and who are happy to pay the full price for the value delivered. We understand that competition in this segment is limited as creating a platform to serve this segment is time-consuming and difficult to build.

Our approach for our client is holistic, uncomplicated and standardised. We don't follow a product selling approach but a client's goal-driven approach which aims to achieve consistent client return outcomes through a standardised investment strategy.

We also facilitate estate planning, succession planning and create wills and trust as part of our core objectives, without charging any cost to our Clients. We also believe that our entrepreneurial, collaborative work culture and training mechanism are the critical factors for the success of our business.