Portfolio Management Services (PMS) are an alternate to Mutual Funds. Mutual Funds collectively own large number of shares and then allocate units to its investors on NAV (price of holdings at a particular time) whereas PMS holds shares in YOUR name in YOUR demat account and YOU can view your actual portfolio at any time. We build an investment portfolio for you in Indian listed stocks and bonds. This portfolio is professionally managed by us. Our endeavour is to build wealth for you while mitigating the risk to capital.
MRG Capital provides Investment Management Solutions in PMS, under the Discretionary style. – Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager.
Portfolio Management Services can be offered only by entities registered with SEBI for rendering portfolio management services. Currently in India PMS is offered primarily by asset management companies and brokerage houses. MRG Capital is an independent Investment manager and hence devoid any conflict of interests typically seen with broker managed PMS businesses.
Our PMS registration number is INP000006253.
The Investment solutions provided by a PMS generally caters to the set of cleints who have a slightly higher risk profile and who look for higher returns. A typical MF is very well diversified and rarely has a concentrated portfolio. We would endeavour to do our research and build a portfolio over a period of time but ensuring a right entry point in a company.
And that is why we would be happy to sit on large % sums of cash rather than trying to win a race of capital deployment.
The clients can be Individuals or Institutions. SEBI has mandated INR 50, 00,000/- (Fifty Lakhs) as minimum capital investment for PMS.
If you fall under any of the following categories, you are eligible to sign up:
- Hindu Undivided Families
- Association of Persons
- Partnership firms
- Limited Companies
- NRIs, Overseas companies, proprietary firms, societies, and overseas Trusts (subject to RBI approval)
We need to sign the following documents for you to sign up:
- DP Account with Kotak Mahindra Bank in YOUR name (This account will hold the shares we buy on your behalf)
- Dedicated bank account with Kotak Bank is mandatory for NRI’s and optional for others (This will be used for pay-ins, pay-outs and dividend credits)
- NRIs also need a Portfolio Investment Scheme (PIS) approval from RBI. The bank will help to procure the same. There can be only one active PIS approval at a given time.
- Client Agreement with MRG Capital along with a specific power of attorney for us to manage the account on your behalf (This contract will detail the fees, rights and obligations)
- Trading account with a designated broker (Only required for NRIs)
Initial corpus can be brought into the Portfolio Management Service by way of Money transfer/cheque/DD and also by transfer of shares favouring MRG Investment Partners Pvt Ltd.
- Account No
- IFSC Code
Yes, the payment has to be made upfront. Minimum amount is INR 50,00,000/- or in additional multiples of INR 100,000 thereof
Yes, you can transfer the shares. The basis of valuation will be closing price of the stocks on which day the shares are being credited to PMS linked demat account.
Under PMS all investments will be made in the name of the client, i.e. YOU. Though we will have different schemes under which investments will be categorised, Securities are held in your name in your demat account.
As per regulations governing Portfolio Management Services in India, returns cannot be guaranteed. However, like all fund managers across the globe our endeavour is to outperform the benchmark indices and schemes.
But there is no guarantee or certainty of the same. However, we believe (in line with our past track record and experience) that over long term, managed equity portfolio performance will track corporate performance of the companies that we hold.
As the Oracle of Omaha says, the ideal holding period is for life (on 1st June 1990 each share of Berkshire Hathway traded at approx. USD700 that’s trading at approx. USD 315000 a piece as on Dec 2018) Good companies held over a long period of time are most likely to reward the investors phenomenally. For a good company a quarter or a small period can be bad or below expectations, but if the management and business principles are sound, the company will outperform.
We would still recommend a time horizon of 10-20 years for Wealth Maximizer, 7-15 years in Wealth Enhancer and 3-5 years in Wealth Protector.
Equities are cyclical and returns are lumpy in nature. Our Portfolio management Schemes are designed from a long-term perspective and we will invest in accordance with the objectives of each Scheme.
A good business must be bought at a fair price. Our style of investment is based of Quantitative (Numbers, performance, trailing results over a min of 5-7 years) Qualitative (Quality of Management) Potential (Sustainability of a business through various cycles).
Daily – delayed by a day. You can see the security holding, cash, marked to market profit/loss totalling your exact investment and provision for our fees. We endeavour to be as transparent as we can. Else you can just ask us anything on our official WhatsApp and you shall receive a response in less than 12 hrs.
In addition, you get quarterly statements of transactions, holdings etc. If you need any additional information you can always mail to us at firstname.lastname@example.org
- The composition and the value of the portfolio, description of security, number of securities, value of each security held in the portfolio, cash balance and aggregate value of the portfolio as on the date of report
- Transactions undertaken during the period of report including date of transaction and details of purchases and sales
- Beneficial interest received during that period in respect of interest, dividend, bonus shares, rights shares and debentures
- Expenses incurred in managing the portfolio of the client
Since trades in PMS accounts is done through a pool account for operational efficiency hence, you won’t be getting a separate contract notes for the transactions made in your portfolio.
No, unlike Equity mutual funds there is no such fixed percentage which PMS Manager is mandated to stay invested in equity shares. We reiterate we are not in a rush to complete the rave without running the symbolic 42 kms of the marathon. So we could be sitting well on cash / liquid funds till we find the right entry point into a security.
Since we offer Discretionary Portfolio management Services, the discretion to invest primarily lies with the Portfolio Manager.
The following charges will be applicable.
- Asset Management Fees: 1% p.a. paid on quarterly basis charged on the avg. AUM of the portfolio.
- Brokerage: Actual as charged by the Broker. For the benefit of our investors, we deal primarily with discount brokers which charge very low brokerages when compared to regular brokers. Also, other expenses like custodian fees, audit fees and statutory charges as charged to every transaction and DP charges charged by the depository Participant are also charged on actual basis.
- Actual expenses incurred for account opening typically ~ INR 5000/-.
- Management fees are chargeable on daily average Market Value at the end of every quarter or withdrawal of fund whichever is earlier. (Please refer the product brochure/fee schedule for complete bifurcation of charges)
- Portfolio manager will charge a performance fee on the portion of Assets under Management which has outperformed in excess to 10% of the capital contribution for any given year, net of other charges on high watermark principal.
- All applicable taxes (including service tax) and levies, if any (together with surcharge and additional surcharge, as may be applicable) leviable on such Fee, shall be charged to the Client Portfolio.
- In a nutshell if we manage to return 15% CAGR we would end up making approx. 2% in fees and if we end up making 10% for you, we would only charge 1% p.a
Performance fee is charged at 20% of the profits over and above the hurdle rate of 10% ROI. 10% is called the hurdle rate in the agreement. The detailed calculation with illustration will be provided to you in a separate annexure along with the client agreement. Performance fee for subsequent years will be payable only on the gains, made during the year, over and above the High-water mark as at start of the year. High water mark is the highest year-end Fair Market Value of the Portfolio (after payment of all fees and expenses) since Portfolio Commencement date. Our relationship manager will explain it to you in detail, the basis of this calculation and the manner in which it will be charged to you.
One illustration where Portfolio has generated ROI of 20% in first year is given below for your understanding.
Capital Contribution (A)
Less: Actual Upfront Fees (B)
Assets Under Management (C) = (A-B)
Add: Profit on Investment During the Year @ 20% On Assets Under Management(D)
Gross Value of Portfolio at The End of The Year (C+D)
Less: Brokerage/ DP Charges/ Transaction Charges on Actuals Including Statutory Levies (E.G. 0.5% of Rs. 50,00,000/-)
Less: Management Fees (E.G. 1% Of Rs.50,00,000/-) (F)
Total Charges During the Year (E+F)
Value of The Portfolio at The End of The Year Before Performance Fees
Less: Performance Fees (@20% Of Rs. 4,15,000 Working Given Below) (G)
Net Value of Portfolio After Performance Fees
% Change Over Capital Contributed Before Performance Fee
% Change Over Capital Contributed After Performance Fees
Calculation of Performance Fees for above (G)
Nature of Fees
Amount in Rs.
Profit for the year
Expenses for the year (excluding upfront fees)
Profit for the year (Net Profit after all expenses)
Less: Minimum profit level (Hurdle Rate @ 10% on ‘Asset under management)
Amount on which Profit-Sharing Fees to be Calculated (C – D)
Performance Fees (@ 20% of E)
You can withdraw your profits as well as capital investment as & when you want, provided you maintain the minimum ticket size. Exit charges for the period agreed would be applicable. You need to give us a notice at least 15 days prior to your desired redemption date. This is advised so that in case we are going through a terrible market cycle, we can try and strategically reduce the perceived loss or maximise the profit. In case there is an emergency, You can still withdraw the money and the amount will be credited to your account in 4 working days.
The Portfolio Management Service has no lock-in period. However, we will charge an exit load 2% of the AUM if you redeem your investment between 0 to 12 months and 1% of the AUM if its greater than 12 months and upto 24 months. This is primarily for our efforts and research. This is well in line and much lower than the industry standards and few other PMS services that charge upto 3% exit load in the first year.
No exit load will be charged on any redemptions after 24 months.
Under the Portfolio Management Scheme, each transaction will be considered as an independent trade and capital gains will be applied on each depending upon whether the relevant stock was held long term or short term. Presently 15% tax is chargeable for Short Term Capital gains and 10% tax is chargeable on Long Term Capital Gains. The STT charges will also apply. You will have the onus of declaring and filing the returns on income generated in the PMS. We will provide the detailed capital gains report and any other information as needed to you or your CA.
MRG Capital has appointed Kotak Mahindra Bank as the Custodian for all PMS Accounts. This ensures complete safety as the stock ownership always rests with the client and Kotak Mahindra Bank overseas the cash and stock positions on behalf of the client.
Investors would find the name, address and telephone number of the investor relation officer of the portfolio manager who attends to the investor queries and complaints, in the Disclosure Document. The grievance redressal and dispute mechanism is also mentioned in the Disclosure Document. Investors can also approach SEBI for redressal of their complaints if they are not answered by Investor relations manager satisfactorily. On receipt of complaints, SEBI takes up the matter with the concerned portfolio manager and follows up with them.