The investment strategy of India’s high-net-worth and ultra-high-net-worth investors is changing. Domestic equity is still an important part of the portfolio, but now instead of depending only on listed shares and mutual funds, attention is also increasing towards private markets, AIFs, private credit, SME companies and global assets.
With rising wealth, the objective of investment also changes. Instead of only growth, more focus is being placed on income, liquidity, capital preservation and keeping the portfolio balanced in different economic conditions.
Let us understand where rich investors are putting their money amid the muted returns of Indian equities and what this change means for investors.
What’s Happening?
The recent performance of the Indian equity market has been muted. The Nifty 50 has given around -7% return over the past one year, while the three-year return has been 6.3%. However, over a 10-year period its annualised return has been around 12%. This indicates that the long-term equity story remains intact, but recent returns have turned the attention of rich investors towards other sources of additional alpha.
According to Mayank Jha of Boston Consulting Group, mutual funds are still important for HNIs and ultra-HNIs, but the role of private market participation is growing rapidly. According to him, while the mutual fund industry is growing at a rate of around 17-18%, the alternatives industry is growing at a pace of nearly 30%. The presence of around 8 lakh millionaire households in India also reflects the expanding scope of this changing wealth management market.
Growing Money Towards AIFs, SMEs and Private Markets
Between March 2025 and March 2026, Indian AIF commitments rose from ₹13.49 lakh crore to ₹16.94 lakh crore, that is, a growth of 25.6%. During the same period, AIF investments rose by 25.7% to ₹6.76 lakh crore. Category II commitments rose by 23.7% to ₹12.74 lakh crore, Category III by 36.9% to ₹3.15 lakh crore and Category I by 18.1% to ₹1.05 lakh crore, while the minimum investment in AIFs starts from ₹1 crore.
SMEs are also becoming an important theme for ultra-rich investors. According to Moneycontrol, Getfive Funds’ ₹100 crore Fund 1 and ₹500 crore Fund 2 are focused on SMEs. The strategy is to invest in such profitable companies that can list in six to 12 months and the investment can be held for at least three years. Fund 1 has given around 52% annual return.
In one example, the revenue of a logistics company with a valuation of ₹100 crore rose from ₹85 crore to ₹257 crore and the valuation reached around ₹500-600 crore. 90-95% of the fund’s book is held for three to four years, while the NSE Emerge index has given 44% CAGR over five years.
Private Credit and Global Diversification
In 2025, private-credit capital deployment was $12.4 billion, which rose by 35%; however, in the first half of 2026 it was $3.5 billion, which was 61% lower on a year-on-year basis. In the EY survey, 33% of investors targeted 12-18% IRR, while 67% preferred opportunities of more than 18%. These are target returns, not guaranteed.
Outward remittances related to investment rose from $2.60 billion in FY24 to $2.67 billion in FY25 and $3.88 billion in FY26, that is, a 45.5% jump in FY26. In Q1 FY27 it rose by 78.2%. The share of investment in total LRS outflow rose from 8.2% in FY24 and 13.4% in FY26 to 20.4% in Q1 FY27.
According to BCG, cross-border wealth rose by 10.3% in 2025 and India can add more than $2 trillion of additional wealth by 2030.
What Does This Mean for Investors?
Large investors are no longer looking at the portfolio only from the perspective of equity versus debt. Private equity can provide growth, private credit income, infrastructure long-duration cash flow and international assets geographical diversification. In the US, HNIs and ultra-HNIs keep around 15-20% of their portfolio in private markets, while in Europe and APAC it is around 5%.
But along with returns, liquidity risk also increases. In private investments, exit can take several years. According to Outlook Money, it is necessary to keep capital with a five, seven or 10-year investment horizon separate from capital needed for near-term requirements. For this reason, asset quality, underwriting, collateral, leverage, repayment capacity and governance become more important.
What’s Next?
A gradual change is visible in the portfolios of India’s rich investors. Along with listed equity and mutual funds, the presence of AIFs, private markets, private credit and overseas assets is increasing. This change shows that wealth management is now moving towards a more diversified and multi-asset structure.
According to BCG, cross-border wealth rose by 10.3% in 2025, while India is among those emerging markets where strong growth in financial wealth is possible by 2030. Along with this, BCG estimates that India can add more than $2 trillion to total wealth by 2030. This indicates that going forward, as the scope of wealth management expands, the role of global and alternative assets can also become more important.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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