You can consider various types of asset classes to build your portfolio and invest in the Indian markets. It is essential to understand these asset classes as per the risk involved in each type and build the portfolio accordingly. These classes are differentiated on the basis of the risk involved, returns and liquidity options.
Private equity investment in India is one of the asset classes that is largely defined by the county’s markets. There are typically four kinds of asset classes that are involved in private equity investment in India:
Fixed Income: It is the most popular asset class in India. As the name suggests, the returns of this type are fixed and the amount of investment is also mostly fixed. The products of the fixed income class are almost free of risk. Fixed deposit in a bank is an example of this type in which you basically lend money to the bank with the promise of timely return. However, they’re not free of market inflation. It is suitable for the ones looking to invest in an asset with lower risk.
Equity: Private equity in India is witnessing a surge in operations owing to the recognition of this asset class in recent years. Investing in equity basically means buying ownership in a company. Buying stocks of a company makes you a partial owner of that company depending on the amount you invest. The growth of company entails profits for you. However, businesses grow over time and your investment is subject to the ups and downs of the company. The volatile nature of such investments doesn’t attract a lot of investors, but it is possible to gain high returns with this type.
Real Estate: Residential or commercial properties and land etc. represent this asset type. These properties are either personally inhabited or rented out or sold after considerable time to earn profits. Investing in real estate is affected by various factors. Such investments have seen a surge in India in the past couple of decades. Suburbs along with cities have become important locations for business purposes. Real estate is subject to phases or cycles that define the returns on this asset class.
Commodities: This asset type is distinctive as it is usually utilized for trading. Gold, silver, oil, rice etc. are types of commodities that can be held in possession and sold when the prices are high. The prices are largely dependent on the market demand and supply. This option is not suitable for the people wanting to invest for long terms and instead want to trade in short periods of time.