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You are familiar with investing in equities, mutual funds, and the stock markets. But portfolio diversification theory tells us that 95% of the portfolio returns come from diversifying among other asset classes.
Fixed income or bonds, residential and commercial real estate, asset leases, inventory, venture capital investments, or angel investing in companies provide alternative assets that diversify your portfolio beyond conventional assets like equities and gold.
Previous alternative investments were offered to high net worth individuals with a large ticket size of the investment.
Wint Wealth and Grip Invest are alternative investment platforms through which you can invest and diversify your portfolio among non-correlated assets.
In times of volatility, investing in alternative investments is an effective way to diversify risk.
What is the main business proposition of Wint and Grip?
Wint has designed a radical way to facilitate the deepening of the bond market in India through retail participation.
In India, bond market investing is limited to investments by commercial banks and bond mutual funds. Wint looks at private sector bonds or good corporate credits, which offer a high yield.
When you invest through a bond fund, the yield on the bond mutual fund is reduced by the Fund Manager’s asset management fees and other operational costs.
As bond fund returns are also taxed, you do not get a high rate of return on the bonds. Previously, the minimum investment was prohibitively large when purchasing bonds, pegged at Rs. 10 Lakhs per bond. This means that you could not create your bond portfolio through direct investment.
Wint makes it possible for you to invest directly in bonds by securitising bonds into smaller minimums suitable for retail investors. Wint allows you to invest directly in NBFC-issued bonds, which carry high yields with minimum investments of Rs 10,000.
Apart from a slightly elevated premium paid on purchasing the bond, only taxes will reduce your total yield. This offers a large spread compared to conventional bank deposits, plus it has the advantage of making fixed-income payments.
Grip, in contrast, offers securitised asset pools like asset leases, inventory, real estate and venture capital and start-up transactions. Again, these assets are offered at retail minimums, making investing easy.
Both are online fintech platforms offering alternative investments securitised into retail minimums in which a small retail investor can participate.
The universe of investments offered by them is a departure from conventional investments, which are known to you and offer good diversification opportunities for your portfolio and income streams.
Their investments provide regular income streams, except for private equity, where the return is realised only upon IPO and listing on the stock exchange.
Main Differences between Wint and Grip
|1||Type of investment||Senior, Secured Bonds of NBFCs||Securitised asset leases, inventory and commercial real estate are all asset-backed, and venture capital/start-up equity|
|2||Minimum Investment||Rs 10,000||Varies from Rs. 10,000 for asset leases and inventory going up to Rs. 1,00,000 for commercial real estate and venture capital|
|3.||Security/Collateral||The bonds are senior bonds which means they are backed by collateral and rank first in interest payments and repayments if the company is wound up.||Asset leases, inventory, and commercial are asset-backed, which means they pay out of the cash flows of the asset. Venture capital or start-up capital is risky and subject to the successful take-off of the venture|
|4||The tenor of the investment||Normally up to two years.||Varying tenors are offered, inventory investments range from 1 to 6 months and asset-backed leases from 24 to 36 months. Real estate investments have a longer tenor, and venture capital and start-up capital are long-term up to the exit of the investment|
|5||Payments of return||Bond interest payments can be half-yearly or quarterly.||It is monthly payments in the case of asset-backed leases or inventory, the commercial real estate pays yields quarterly, and in the case of venture capital, the return is realised based on the multiple the security gets upon listing.|
|6||Yield||Yields may be around 11% p.a. pre-tax||Asset-backed leases offer yields up to 21% p.a. pre-tax, inventory offers a 12% pre-tax yield, commercial real estate offers 11% pre-tax, and venture capital can be multiple times based on successful listings.|
|7||Underlying risk||Corporate credit of NBFCs||Leases and inventory are corporate credit, commercial credit is MNC tenants, and venture capital is investment and venture partners (high-risk category).|
Similarities between Wint and Grip
Both are online tech platforms facilitating easy investment. Both provide a universe of alternative investments. Both provide securitised asset-backed investment opportunities for retail investors. Both of them help in your portfolio diversification by offering unrelated assets. Their investments are high-yielding assets.
Investments offered by both are subject to credit default risk in the case of bonds, asset-backed leases, inventory, and commercial real estate.
There is also liquidity risk and risk of fraud. Their investments offer protection because they are collateralised. Venture capital is subject to market risk from the stock market or not getting listing gains upon listing on the exchange.
Also, start-ups are early-stage companies whose business model can fail, resulting in a loss of your capital.
As a retail investor, you have an unprecedented opportunity to invest in alternative investments. Through their online offerings, Wint and Grip have provided an ideal opportunity to diversify your portfolio holdings.
Moreover, these asset classes are not linked to equity markets and provide a high return rate. After the Covid-19 pandemic, corporate assets are available at cheaper valuations, maximising your return.
You gain the advantage of a steady income stream by investing in these assets. In the case of venture capital, you have the opportunity to participate at lower valuations much, much before market listing.