Brokerages dishing out PMS schemes for frenzied investors.

Elephant is an animal that rings in money irrespective of whether it is alive or dead. When alive, the mammal is forced to work its tusk out; and when dead there are always buyers for tusk, nail, hair and skin. For brokers on the D-Street, market is like an elephant. It rings in money when up and alive; and all the more profitable when it is down.

Post the market drubbing over past four weeks and the eventful loss of investor capital thereafter, brokerages are dishing out portfolio management services (PMS) schemes for frenzied investors who are running for cover.

Past three weeks have seen a slew of portfolio management services (PMS) schemes being launched in Indian market. A majority of these are ‘pool PMSs’ (with entry level at Rs 5 lakh) which enable smaller investors to participate in these otherwise exotic ‘affluent-centric’ schemes. “Very positively, there has been several PMS launches over the past few days. This is a good option for investors who do not have the knowledge back-up or time to invest in market judiciously. We are also seeing roll-out of a combination of products as well,” said IDBI AMC’s PMS head, R. Swaminathan.

All the more interesting is the fact that the number of wealthy Indian individuals are on the rise, with an annual growth-rate of 30%. The number of households with bankable assets over $1 million is expected to rise from 1,20,000 in 2007 to 3,00,000 in 2012. In the same period, total bankable assets in India are expected to reach more than $1 trillion.

Pool PMS, the most common and popular segment, is a structured product for a specific group of clients (investors) with similar investment preferences. Unlike general PMSs, pool PMS is not directed to an exclusive client. Customers do not even need a demat account to invest in Pool PMSs; they only have to sign a general PMS agreement, entrusting the brokerage to manage their investments.

Anil Ambani’s Reliance Money has launched PMS with minimum investment of Rs 5 lakh, as specified by Sebi. The scheme that targeted executives and professionals in metros and smaller towns would be available with an infinite upper investment limit. “The firm will not charge any fees if the returns are less than 8%. However if the return is between 8-20%, it would charge a nominal 10% as fees,” said Reliance Money CEO Sudip Bandyopadhyay.

“Fund managers have the liberty to include as many investors as they want to pool-in a sizeable investment. As far as investors are concerned, they are literally hand-held through their investments till the maturity date,” Mr Bandyopadhyay added.

Apollo Sindhoori Capital Investments is planning to start a PMS scheme that would target pension earners. The brokerage plans to generate secured returns through arbitrage operations between cash and futures markets. The brokerage expect to generate a minimum 12% annualised return to its investors.
Source:-economic times