India: A Middle Class of 230 Million Investors

"I believe in equality for everyone, except for reporters and photographers."

Mahatma Gandhi (1869- 1948)

Despite the double-digit negative performance of the Bombay Sensex so far in 2008, the growing wealth among Indians has spawned the country's first multi-family office. A former MD of industrial giant (and out-sourcing specialist), Infosys Technologies, as reported in The Times of India, established Ethos Capital Advisors to manage the wealth and trusts of a number of families.

The traditional method of wealth management had fallen upon individual families in collusion with their accountants with surplus funds parked in a separate company or trust structure. the current development is moving towards a more formal system of wealth management that has been copied in the U.S. and Europe over a number of generations already.

It is worth noting that the family offices have typically been unafraid to invest in alternatives including hedge funds, private equity and real estate. This development suggests that there may steady and increasing demand years for strategies and acorss various asset classes that diversify out of the Indian Rupee.

This might be a not-inconsequential sum given that it is generally known that there is a growing middle class in India numbering over 230 million people and that there are more dollar millionaries in India than there are in the U.S.

And, as if to drive home my point a recent GS report on global middle classes postulates that the incredible transfer of these new buyers into the global ecnomy will exert a new force both politically and in terms of what good and services are produced. Think about it. If only 1% of India's 230 million "middle classes" actually have disposable income in excess of US$10 million then that means there are 2.3 million potential hedge fund buyers about to enter the market!Opportunity knocks. Mahalo.