ETMarkets NRI Talk| Rs 1 crore, 5-7 years: How NRIs should allocate across Indian equities, bonds, gold and alternatives, says Rohit Sarin

For NRIs planning to invest Rs 1 crore in India over a 5-7 year period, determining the appropriate allocation among equities, fixed income, gold and alternatives can be complex, especially when considering existing India exposure and global assets. Rohit Sarin, Co-Founder of Client Associates, advises NRIs to adopt a holistic approach to their global portfolio, considering factors such as India exposure, liquidity needs, risk tolerance and tax implications.

Sarin suggests an illustrative allocation framework of 55-65% in equities, 15-20% in fixed income, 5-10% in gold and 5-10% in alternatives, with the remainder in real assets or other diversifiers. The key points discussed in the interview include:

1. Access to Indian equities and mutual funds is no longer the primary hurdle for NRIs; rather, it is about creating a seamless framework for investing, monitoring and repatriating wealth.

2. The depreciation of the Indian rupee against the USD against which many NRIs hold their wealth can negatively impact returns. In this context, viewing India as a strategic allocation to participate in India's long-term growth story may be beneficial.

3. An NRI investor should maintain a minimum investment horizon of 10 years in India to achieve both growth and diversification benefits. However, it is important to recognize that many NRIs may be latecomers to the market, and a correction in Indian markets or a further depreciation of the rupee could impact returns negatively.

4. NRIs must carefully decide between NRE and NRO accounts based on the source of funds and repatriation requirements. NRE accounts are designed for foreign earnings and offer greater flexibility for repatriation, while NRO accounts are used for managing income earned in India and have more restrictions on repatriation.

5. NRIs should consider investing in Indian equities as part of a broader portfolio strategy, complementing their existing economic and financial exposure to India. Diversification across asset classes such as AIFs, private credit, REITs and InvITs can provide additional sources of return for sophisticated NRI investors with the appropriate risk profile and investment horizon.