Key Commercials?

Particulars Class A
Size of Subscription Min. of: Rs. 25 lakhs for PMS; Rs. 1Cr for AIF; US$150,000 for Foreign Investor
Management Fee Refer to Table below
Performance Fee Refer to Table below
Exit Load 3-4% (before 12 months); 2-3% (before 24 months)
Expenses Custody, audits, accounting, brokerage : actuals to be charged
  Mgmt. Fees : Performance Fees
Option 1 2.25% :10%
Option 2 1.75% : 15%
Option 3 * 2.25% or 25%

*In Option 3, the fee is 2.25% management fee or 25% Performance fee, whichever is higher
# In certain cases, a set-up fee is charged

Service Providers?

Bank HDFC Bank
Legal Counsel Nishith Desai Associates
US Counsel Morgan, Lewis & Bockius
Auditor Chetan Dalal & Co
Custodian IL&FS
Fund Accounting ILFS Securities Services Limited, India
Trustee for AIF Vistra ITCL
Fund Administrator, Mauritius Deutsche Bank

Who is a Portfolio Manager?

A portfolio manager is a person or persons who, pursuant to a contract with a client, advises or undertakes or manages investments on behalf of the client (whether as a discretionary portfolio manager or otherwise).

What is the difference between a discretionary portfolio manager and a non- discretionary portfolio manager?

A discretionary portfolio manager discretely and independently manages the funds of each client in accordance with the risk profile of the fund. A non-discretionary portfolio manager manages the funds of a client in accordance with the directions of the client.

Is there any contract between the portfolio manager and its client?

Yes. The portfolio manager, before taking up the job of managing funds or portfolio on behalf of the client, enters into an agreement in writing with the client, clearly
defining the relationship and setting out their mutual rights, liabilities and obligations relating to the management of funds or portfolio of securities, containing the details as specified in Schedule IV of the SEBI (Portfolio Managers) Regulations, 1993.

What fees can a portfolio manager charge from its clients for the services rendered by him?

SEBI Portfolio Manager Regulations do not prescribe any scale of fee to be charged by the portfolio manager to its clients. However, the regulations provide that the portfolio manager shall charge a fee as per the agreement with the client for rendering portfolio management services. The fee so charged may be a fixed amount or a return based fee or a combination of both. The portfolio manager shall take prior permission from the client for charging such fees.

Is there any specified value of funds or securities below which a portfolio manager can’t accept from the client while opening the client account?

The portfolio manager is required to accept minimum Rs. 25 lakhs or securities having a minimum worth of Rs. 25 lakhs from the client while opening the account for the purpose of rendering portfolio management service to the client. Portfolio manager can only invest and not borrow on behalf of his clients.

Are investors required to open demat accounts for PMS services?

Yes. For investment in listed securities, an investor is required to open a specified demat account in his/her own name.

What are the rules governing services of a Portfolio Manager?

The services of a Portfolio Manager are governed by the agreement between the portfolio manager and the investor. The agreement should cover the minimum details as specified in the SEBI Portfolio Manager Regulations. Hence, an investor is advised to read the offer document carefully before signing it.

Is early withdrawal of funds/securities by an investor allowed?

Yes. The funds or securities can be withdrawn or taken back by the client before the maturity of the contract. However, the terms of early withdrawal would be as per the agreement between the client and the portfolio manager. The Portfolio Manager can charge an exit fee from the client for early exit, as laid down in the agreement.