Rakesh Bhargava, Chairman, Blue Spruce Global Advisors

Interviews - Delegates at Family Office Fourm

November 7, 2015

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March-April 2014

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Indian family offices need to step out

Rakesh Bhargava,Chairman, Blue Spruce Global Advisors

Rakesh Bhargava,Chairman, Blue Spruce Global Advisors

Rakesh Bhargava’s experience spans 30 years, both as a private banker and a portfolio manager. In July 2004, he left Wachovia to form his own Broker Dealer – Bhargava Wealth Management, LLC (member FINRA/SIPC) and his Advisory firm – Blue Spruce Global Advisors, LLC (SEC registered investment advisor), which is a SEC registered investment advisor. He thinks, Indian family offices for about a decade have remained India-centric. Now they should diversify a portion of their assets outside of India
• Tell us something about your organisation. When was it initiated and how has it evolved over the years?
The firm was founded by me in 2004. Blue Spruce Global Advisors is a SEC registered investment advisor. We provide customised portfolio management services to family offices and high net worth individuals. Currently, the company acts in an advisory capacity for approximately $215 million in assets.

• What kind of services do you provide and how can these benefit the Ultra High Net-worth individuals?

We provide portfolio managements services to global clients across asset classes and strategies, including alternative investments.

• Are your existing clients’ single family units or multiple families?

Our clients are single family units.

• What is your firm’s investment philosophy?

Our philosophy is to build longterm relationships with our clients. As an advisory firm, we work with integrity, passion and commitment to create innovative solutions. We work closely with our clients to help them achieve their financial goals by providing customized solutions to their investment needs.

• How are your teams structured to deliver services to the clients? Do you have different services for different Ultra High Net-worth individuals, inheritors, self-made and professionals?

We have created two teams within the firm; one that does in-house portfolio management and the other allocates capital to specialist third party managers. Customised solutions are offered to the clients based on their investment objectives.

• What are the top three characteristics that distinguish your firm the most from your competitors?

The key differentiators for the firm are as follows:

a) We focus on research driven, risk managed strategies across multiple asset classes.

b) In order to achieve superior risk adjusted returns and lower portfolio volatility, we allocate relatively higher amounts to alternatives (such as hedge funds and private equity). Our objective is to preserve capital and to prevent excessive drawdowns during major market corrections.

c) The team comprises of members who have a strong global focus. They often travel to different parts of the world to better assess the rate of change. As an example, our emerging markets allocations are often at a higher percentage of the total portfolio than a typical benchmark.

• What communication methods have you used with your clients?

We strive to have a strong personal relationship with our clients and our approach is to have face to face meetings periodically.

• Do you provide any client education programmes? Please mention.

Yes. We educate our clients so that they can better understand our portfolio management rationale.

• What is your approach towards risk management?

We use a diversified approach towards portfolio allocation and each strategy within the portfolio has embedded risk management framework. We often will add an additional level of downside protection by using certain hedging techniques to manage systemic risks.

• Is there any impact of economic slowdown on the demand? Are clients more cost conscious or quality conscious in the times of slowdown?

After the 2008 financial crisis, clients are much more focused on quality, especially the sustainability of returns alongside system and processes to protect capital. Quality remains for us a critical component for managing all portfolios. We keep our cost structures in line with industry averages and are clients are comfortable with the cost structure.

• What kind of potential do you see for the Indian family office business? What is your outlook? What are the current trends and opportunities?

From 1992 to 2010, the Indian family office remained very India centric. This was because of outsized returns from real estate, gold, fixed income and stocks. In the last three years, with the sharp drop in currency, decline in gold prices, weaker stock market, mixed prices in real estate and rising inflation; the growth in wealth creation came to a stop.

We believe for the future, the Indian family offices need to diversify a portion of their assets outside of India. There are compelling opportunities in the US in areas such as real estate (apartment complexes), mid-stream and down-stream oil & gas sector (opportunities available through Master Limited Partnerships and the US manufacturing renaissance as a result of lower energy cost), hedge funds designed to capture large dispersions in valuations and private equity (distressed and deeper values).

For the long term, we see investments in commodities and emerging markets to be a good contrarian idea. An averaging approach towards investment could be put in place.



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