KOCHI: For decades, Gulf Malayalis parked their savings in gold, land and bank deposits. Now, a growing number of them are taking a different route — investing in Indian equities through systematic investment plans (SIPs), according to a study by Equirus Wealth, a wealth management firm in Kerala.
The shift has become particularly visible over the past two to three years, even as the stock market has remained volatile and tested investors’ patience. Financial advisors say many Non-Resident Indians (NRIs) from Kerala are looking beyond short-term market fluctuations and focusing on wealth creation over a five to seven-year window.
The study says the appeal of SIPs lies in their simplicity: investors deposit a fixed amount every month, participate in the market in a disciplined manner and avoid the stress of trying to time market highs and lows. The model also fits naturally with the monthly remittance flows from Gulf countries.
K Dinesh Nair, director of Equirus Wealth, said there is a clear shift away from traditional assets such as real estate and gold towards organised financial products.
“While there is no Kerala-specific data on NRI equity investments, our estimates suggest that around 15-20% of the state’s annual remittance inflow could be finding its way into equities, mutual funds, SIPs and portfolio management products,” he said. Based on Kerala’s estimated remittance inflow of `2.16 lakh crore in FY25, this would translate to roughly `30,000 crore to `45,000 crore being invested annually in equity-linked assets.
According to Dinesh, the trend is particularly strong among Gulf-based investors earning less than `50 lakh a year. These investors are focused on gradually building wealth in India rather than seeking quick gains.
The growing popularity of SIPs comes despite the continued attractiveness of Foreign Currency Non-Resident (FCNR) deposits.
Though FCNR deposits offer capital protection, tax benefits and insulation from currency fluctuations, Dinesh pointed out that these are primarily wealth-preservation products. “Fixed-income products help protect capital, but over the long term, inflation and rising financial goals can reduce their effectiveness,” he said.
Jiju Varghese, deputy general manager and head of Third Party Products at South Indian Bank, said the investment behaviour of retail investors, including NRIs, changed significantly after the pandemic. “There is greater participation in financial markets today. One indicator is the sharp rise in the mutual fund assets under management (AUM)-to-bank-deposit ratio, which has increased from 12.6% to 32.2%,” he said. Though the recent depreciation of the rupee has revived interest in FCNR deposits among some NRIs, market experts caution against making investment decisions based solely on currency movements.
“Investors often make the mistake of chasing the asset class that has performed well recently. Moving away from equities after a weak market phase and shifting to FCNR deposits because the rupee has fallen can be a behavioural mistake. Currency movements are cyclical and should not drive long-term investment decisions,” said Jones George, executive director of Geojit Financial Services. He noted that while the rupee has weakened significantly against major currencies over the past four decades, Indian equities have delivered far superior returns compared with fixed deposits.
“FCNR deposits have an important role in capital protection and liquidity management. But for long-term wealth creation, equities remain the stronger asset class. The key question is whether Indian businesses will continue creating value faster than the pace of currency depreciation. History shows they have done so by a wide margin,” he said. For many Gulf Malayalis, that belief is enough reason to stay invested through SIPs, despite the market’s recent ups and downs, and wait for the rewards that may come over the next several years.
Appeal of SIPS
1. Investors deposit a fixed amount every month, participate in the market in a disciplined manner and avoid the stress of trying to time market highs and lows
2. The model also fits naturally with the monthly remittance flows from Gulf countries
3. Experts say a clear shift away from traditional assets such as real estate and gold towards organised financial products
4. Trend is particularly strong among Gulf-based investors earning less than `50 lakh a year