If you have a portfolio of Rs 10 Lakh to 10 crore, here is an attractive offer for Portfolio Management Services in India.
Details of our Portfolio Management Services in India:
- No upfront fees; no management charges; no money transfer hassles. In our model, we do not take any capital from you for management. The only money transfer to us will be our share of the profit at the end of the engagment, in return for our portfolio advisory service.
- Engagement timeframe 3 months. Profit sharing is done at the end of each quarter (3 months) by liquidating the portfolio completely and converting into cash, and client has the choice to initiate a fresh portfolio service with us. We use the timeframe of 3 months because we rely more on stock trading rather than buying and holding for long durations, and we often liquidate our portfolio by selling all the stocks. 3 months is a good time to measure trading results.
- Simple profit sharing model: Upon portfolio liquidation after 3 months, the first 5% profit belongs to the client (that’s over 20% annualized return). Then the remaning profit is shared 50-50 between client and portfolio advisor. For example: if portfolio gain is 5% after 3 months, then full 5% belongs to the client, and 0% belongs to the portfolio advisor. If portfolio gain is 10% after 3 months, then 7.5% belongs to the client, and 2.5% belongs to the portfolio advisor. If portfolio gain is 15% after 3 months, then 10% belongs to the client, and 5% belongs to the portfolio advisor.
- We only trade in top quality stocks in Nifty and Nifty Junior Index. That is a set of 100 stocks. In addition, we use Index ETFs to carry out long term trades that can last 6-12 weeks per trade. We value liquidity in the stocks we trade because the ability to buy/sell large quantity of shares without price impact, is important while managing large portfolios.
- Our clients use their own stock trading/brokerage account, and we give them specific inputs for their stock portfolio within their brokerage account. This stock trading account must be used only for trading stocks as per our instructions, for exact measurement of portfolio performance at the end of 3 months. If clients want, we can set up their brokerage account on their name at our end, and they can load the account with capital. We can do the trading on this account
- If client is busy with work/business, they can allocate the stock trading work to one of their trusted people, who will execute our stock trading advice. Our team member can also do the trades on behalf of the client if a power of attorney agreement is signed beforehand. This service is available to clients with portfolio size of Rs 25 lakh and above. Thus, we do not place any emphasis on who should do the trade or where the capital is located. Our emphasis is on ensuring that a given trade is done on a given date in the given price band.
- Our inputs to clients vary according to their portfolio size. A portfolio of Rs 20 lakh can easily be run profitably with 4-5 stocks, while a portfolio of Rs 10 crore will need at least 10 stocks and a 1-2 ETFs to ensure diverfication and risk mitigation. So it is important to understand that the trading plan for small portfolio will be different from the trading plan for a large portfolio.
- We communicate the trading information to clients by email, and also explain on phone when important points have to be shared. We will speak with the client on phone at least once per month.
If this interests you and for any questions, please email: info @ indiainvestors.org
Please Note: Given the nature of our service, we can work with maximum 50 clients in 2011-2012 because we also run our own trading company where our shareholders rely on us to generate returns for them. We offer Portfolio Management Services in India as a way to share our market experience and help genuine clients earn better returns from their India investments.
———–Portfolio Management Strategy and Details————-
With the increasing importance of the emerging economies like India, China, Brazil, Russia there is increasing demand for professionals who are actively presenting these emerging markets and who have a clear understanding and a track record of growing investment portfolios in these markets. So if you are looking for portfolio management services in India then this website has the detailed information for you.
Portfolio management services in India are regulated by various bodies, including SEBI, which is Securities Exchange Board of India. In the conventional portfolio management services in India the client would transfer capital to the account of the portfolio manager and the portfolio manager would actually own that capital for the duration of the agreement and based on the terms and conditions of the portfolio agreement the portfolio manager would liquidate the portfolio at the end of the term and return the amount to the client based on whatever terms of the agreement are there for the profit sharing.
However, with the various constraints around capital flows and repatriation of capital from India back into the originating foreign country, we have found that the physical transfer of capital is not always the most easy or neat way to execute such a service. What we have found from our experience is that a portfolio management service, which is more of an advisory service, has lower regulatory problems and hurdles, and also easy to manage for the client because almost every investor of a sizeable portfolio already has at least one or more brokerage accounts in place already.
So rather than asking the client to transfer the capital to us as portfolio manager, we have found that it is prudent and easy to let the client maintain his capital in his own brokerage account and we would only advise on what stock should be purchased, at what price, when and similarly when to sell the stocks at what price. So active guidance of the portfolio is the way we see portfolio services in India emerging going forward.
It also has lower tax implications for everyone involved because money is not changing hands; client owns the money all the time. The only catch why everybody does not do this is that there is a level of trust involved here. We trust our clients to honestly share or pass our share of the profit at the end of the term as per the agreement. If the client does not transfer our share of the profit at the end of the term then there are not many easy ways to get it done, we can always go to the court, but those are not the things that we want to do or we intent to do. They are more distractions for time.
So the portfolio advisory service where it is based on profit-sharing, is based on a high-level of trust. We do not take any capital from the client and we only take a share of the profit after a high-level of profit has already been earned by the client.
So this is the model that we think will increase in adoption in investors coming to India and we surely believe that this is a model that is beneficial for the client and it can only be offered by those portfolio advisors like us who have a high degree of confidence in their own services and in their own ability to produce gains for themselves and for the clients, and because the relationship is based on trust. In those rare cases where a client does not pay the due share of profits to the portfolio advisor then that relation would not proceed to the next stage.
And we have worked with clients who had started with relatively smaller amounts and then gone on to take our advice for significantly large portfolios that can be equal to the size of some of the mutual funds in India. So the level of trust, like in any relationship, goes and builds over a period of time and for those clients who have been with us for longer durations where the trust levels are high, their money is sacrosanct for us, even though we do not have it in our own accounts and the client is having the capital in their own brokerage accounts, we are constantly monitoring the performance of the portfolio because we have a mirror of each client portfolio on our systems.
So at the end of every day we know which client’s portfolio is standing at what position and what we should do tomorrow or next week on that portfolio to preserve the profits or to make any new trade or to get out of an existing trade. So just because the stocks and the capital does not reside with us it does not mean that we are taking any less serious responsibility about growing that capital. The primary reason for acting in the advisory role is to minimize or eliminate the movement of capital when it is not really necessary.
We have also found that many of our clients who come from abroad, from foreign countries in Europe and America, they also come through the method of participatory notes wherein they have the ability to invest in India through participatory notes through foreign banks, and even in such cases we have been able to advise clients with specific inputs on profitable trades in large cap stocks that they could take for a period of 3 to 6 months.
How are we different from the vast number of portfolio managers in India?
The single biggest difference is that we work with a high-level of trust from day one. We do not charge any fees for management or advisory services. The only fee that we would take from our clients is a share of the profit as per the agreed term for each case and that will only happen at the end of the term.
So we do not believe in taking money for services. We only believe in receiving a share when the client has actually made profit and profit ahead of us because we always have a high hurdle rate that must be satisfied before we even get into receiving any share of the profit. We can be contacted for getting more details about the portfolio management terms and conditions that we work with.
We are also unique, compared to most portfolio managers operating in India with the fact that we trade only in the NIFTY and NIFTY Junior stocks. So this is an index of 100 stocks now – 50 stocks in NIFTY and 50 stocks in NIFTY Junior Index, and this is the only set that we would deal with and that is because these stocks offer the highest liquidity.
The corporate governance is the best within these 100 stocks and the fact that they have large market cap and they are liquid means that clients with very large positions can sell and buy without having an impact on the share price. That’s one of the biggest reasons why though there are vast number of bargains in the stock market in the midcap and small cap stocks where valuations are really attractive, we do not go into those stocks in our portfolios because it is very difficult to sell a very large number of stocks in them or to acquire a large chunk of shares in them.
The midcaps and the small caps are good for mostly either people who have a very long-term view where they can just buy and hold for five years, or people who are in the retails investor category who are not going to buy thousands of shares, which will impact the purchase or sale price.
Liquidity of a stock is very important for us because that is essential to ensure that when we want to exit a stock we just have to press a button and we can be out. It’s very painful to lose 5-10% of a stock price in the process of selling the stock and this always happens in the stocks that are less liquid, invariably the midcaps and the small caps.
So we will focus on large caps and liquid stocks and these are typically found in the NIFTY index and the NIFTY Jr. index – the stocks like Reliance Industries, Tata Steel, Tata Motors, Reliance Power, ISCI, IDBI Bank, ICICI Bank, we have ONGC, BPCL, SBI, HDFC – these are the kind of stocks that we trade and these are all very good quality companies with high levels of corporate governance.
Also the fact that these are owned by a very diverse set of investors from within India and across the world gives us the confidence that they are also being watched and researched by others along with us. So there is a sufficient level of research happening and we know that even if we don’t talk to the management for a month or a quarter or six months, nothing untoward will happen and that there are other fund managers and market analysts who are constantly tracking the companies and bringing out information that we can read.
This is another problem with some of the midcaps and small caps where we can only go where we have a high degree of confidence, which comes after interacting with the management for some amount of time and if we stopped that communication channel with the managements then we often tend to lose the touch and the confidence levels can also go down in the stock if we don’t know where the company is moving.
So large caps also benefit us from the high degree of market research and market tracking that goes behind them. It’s good for the investors and traders involved in that stock.
So the universe of stocks is very limited for us even within the hundred stocks of NIFTY and NIFTY Junior index we have 20 stocks that we really focus on. We monitor them very carefully on a day-to-day basis for our trading and we also have some of the investment positions in these stocks. So this is how we operate our portfolio and this is also how we advise our clients on operating their portfolio.
For each client we would advise them on creating a specific portfolio based on the amount of capital that they have in their brokerage account and then we would mirror that portfolio on our system so that we can constantly track the performance of that portfolio and we would email or call the client every time there is a trade requires to be done, whether it is to buy some shares or sell some shares at a given price range, we would do that.
So typically our clients are what we call as the HNIs or High Net-worth Individuals and that is the portfolio level at which we find there is value involved in us coming to them with our market experience and market depth because they have the kind of capital which is just at the lower end of what can really make good trades. So if it’s a few lakhs then that is good and with that amount one can trade in any stock. But I think the moment you start looking at capital which is in the range of one crore or so, then even if it’s 5 or 6 stocks, one should be very clear on when to buy, when to sell.
What we find often from our clients’ experiences before they come to us is that they have bought stocks, they have made profits, but they have also made losses and often the losses in the stocks have been because they did not know when to sell or that the market indicators or market analysts around them were suggesting hold or accumulate or those kind of messages whereas the stock kept on going down and now it’s been a year or two that the stock prices are way below their purchase prices and capital is blocked.
We don’t like capital being blocked and that’s one of the core principles of our trading that we will not let any stock go below a certain stop loss percentage, we will sell and that’s the reason why we want liquid stocks, large cap stocks, because we don’t want to be holding a stock below our cutoff point.
We are looking at making gains which are typically in the range of 15-20% of trade. Sometimes we are satisfied with even 7-10% per trade and our goal is to really go for a few such trades every year for each client and thereby get them returns that are clearly ahead of every mutual fund in India.
So our competition will always be with the top 10% mutual funds in India and the top ten fund managers. We know who they are, we know their strategies and they come from similar backgrounds as us. The difference is I think over a period of time the fund manager has his own constraints, the mutual fund manager has his own constraints that he has to keep – a large percentage of his capital deployed at all times. So that’s the constraints that they work with, being a publicly monitored business, whereas we are very comfortable holding 100% of our capital in cash for long durations waiting for the opportunity to come.
So you can think of our strategy of the market as that of a crocodile where we are okay not doing anything for large durations of time sitting with cash, watching the market, but when the right opportunity comes we can and we do move very fast and get to the trade and execute that trade and monitor it closely for that 5, 10, 15-20% gain that comes once our stock starts moving in the way we had anticipated.
For example, in the recent month of March we started buying the NIFTY at 5300 and 5400 levels because it was clear to us that the market is moving towards 5900 levels. So we have, along with our clients, profited with a 500-point gain on NIFTY when most people were still not sure whether to buy, whether to sell, and that is the kind of conviction that is needed in the market and our clients have come back and said we were the only people who were asking us to buy while everyone else was saying sell, because we were getting the kind of messages and indicators from our trading systems that market has stabilized at 5400 levels and it is now time to get in to the trade.
Similarly, when the markets were falling in January, when the market cut 6,000 we said we don’t want to be in the market anymore and we sold off at 6,000 levels of NIFTY and it went on to 5177 – at least you can say a 15% fall from there, from the time we sold. And people who were holding midcaps, their stocks came down by 40-50% while NIFTY fell 15%.
So avoiding large losses is as critical as making large profitable trades. So when we can do a combination of the both where we avoid loss-making trades and select only the profitable trades, you would see a very clear improvement in the portfolio performance year-on-year, and that’s the strategy that we have been using that it’s better to wait out and miss a trade then to get into a loss-making trade because then we have to work again to get that money back and get our portfolio back towards initial level.
So in that sense, we will be in the market for selective durations, short-term, and we come back into cash very often. So some of the new clients find that quite different from their usual approach of owning stocks and holding them for long durations and they have been holding stocks for multiple years and when we say that we will sell this stock in two weeks and then we will be sitting in cash for the next one month probably, they are all surprised because they are not used to sitting with 100% cash.
And what we have found is sitting with 100% cash is probably the best way to take profitable opportunities of 5-10% that come every once in a while, and to attack them and grab them and if we do even five or six such trades per year with the total capital, that’s almost 50% gain on the portfolio per year. Not every time we are able to do it but it’s very much possible to gain 40-50% on the portfolio year-on-year only if one is willing to sit with 100% cash for significant durations of time.
When the market is going nowhere or when the market is falling one should not be in eagerness to buy when the stocks are falling or the lower levels. It takes a lot of patience actually to wait for the stocks to bottom out and to start moving up and that’s what we have found from experience and from losing money in the past in our own trading life that the right times to buy come towards the end of a bottoming out phase of the market, and that’s when usually the pessimism is highest.
Similarly, the time to sell is somewhere around the top of the market and we have never been able to catch the exact stop of the market; it’s very difficult. But we have been able to see when the market is now falling and along with that initial fall we are willing to sell the stock at whatever profit or loss we have because the prices are probably going to go down from that point onwards, like it happened with NIFTY in January when it suddenly broke 6,000 levels and started moving down quite rapidly and we were out of that market and all our portfolio and our clients.
Those of the investors who had illiquid stocks, having thousands of shares in midcaps, they could not sell those stocks properly and they had to face 30 to 40-50% cut in their portfolio value and we know many such investors.
So if you are looking for an active portfolio advisor on the Indian stock market who is going to only take you into the market when the profitable trade is visible, and who will only keep you in liquid stocks so that you can sell any time you want, then we welcome your enquiry and we look forward to hearing from you. Thank you.
If this interests you and for any questions, please email: info @ indiainvestors.org