Alternative investments: Rahul Jain puts risk before returns

Investors considering alternatives should assess risk before expected returns or tax advantages, Rahul Jain, President & Head of Nuvama Wealth Management, said at the ET Alpha Wealth Summit 2.0 in October 2026. He suggested that private credit could account for around 20–30% of a fixed-income portfolio, depending on the investor’s circumstances and appetite for risk.

Economic Times Markets reported his remarks during the summit’s ‘Following Smart Money’ panel. Jain described alternatives as routes into equity and debt opportunities that conventional listed markets may not offer, rather than simply another category of investment.

His discussion covered private businesses, alternative investment funds (AIFs), private credit, special situations and real estate and infrastructure investment trusts. Across these avenues, he stressed that investors may need to accept longer holding periods and reduced access to their money.

Private markets offer access—but require specialist assessment

Jain identified defence, engineering and artificial intelligence as sectors where developing businesses could grow substantially without yet being adequately represented on stock exchanges. Private markets, he said, could give investors access to these companies and to startups that are unavailable through listed shares.

He also suggested that some private-market investments could offer more attractive entry valuations than public-market alternatives. That possibility, however, required an assessment of each business rather than a blanket preference for unlisted investments.

For investors seeking startup or private-equity exposure, Jain favoured considering professionally managed AIFs over direct stakes in individual companies. He said specialist managers could bring stronger business evaluation, risk assessment and investment-structuring capabilities, including an understanding of shareholder rights and contractual protections.

Those capabilities matter because access to information, governance arrangements and routes to exit can differ from listed equities. Investing through a fund does not remove the need to consider illiquidity and a longer investment horizon.

Private credit allocation comes with liquidity conditions

On the debt side, Jain pointed to private credit and special-situation strategies as ways to reach opportunities beyond conventional listed debt. His suggested 20–30% allocation concerned the fixed-income portion of a portfolio, not the investor’s entire holdings.

He described private credit and special situations as closely related approaches despite their different labels. Any prospect of higher yields, he said, needed to be weighed against borrower risk, the terms of individual deals and constraints on withdrawing capital.

Jain also highlighted real estate investment trusts (REITs), infrastructure investment trusts (InvITs), and opportunities before assets enter such structures. These could provide exposure to commercial property and infrastructure, with income characteristics different from conventional fixed-income investments. The trade-off could include a longer commitment of capital and limited liquidity.

Overseas equities are a diversification choice, not a shortcut

For Indian investors considering international markets, Jain suggested that around 10–15% of the equity portion of a portfolio could be allocated to global shares. As with private credit, the percentage referred to a particular asset allocation rather than total wealth.

He characterised Indian equity returns over the preceding two to three years as relatively subdued, but also judged global equities expensive at the time of the discussion. Overseas exposure should therefore serve a broader diversification plan, he argued, rather than be an automatic response to disappointment with domestic markets.

Jain suggested considering emerging markets alongside passive and actively managed global strategies, with allocations adjusted for valuations, market conditions and the investor’s overall asset mix.

The decision order: risk, return, then tax

Jain warned against selecting investments primarily for tax savings or an appealing return expectation. His preferred order was to understand the risks first, evaluate prospective returns next and examine tax consequences last.

That approach places an investor’s ability to bear losses and keep money committed ahead of the attraction of a specialised product. His allocation suggestions were conditional on individual circumstances, not universal targets.