A PMS, or Portfolio Management Service, colloquially sometimes also called Portfolio Management Scheme, is a service which you can use to save and invest money. PMS services can be of many types and have many strategies. Typically, a PMS manager will manage a bank and demat account for you (in your name) through which you will be able to invest funds. PMS services are regulated in India and a PMS Funds in India must have a license from the Securities and Exchange Board of India (SEBI), India’s security regulator.

A discretionary PMS investment gives full discretion to the PMS funds manager to deploy your funds in India in the manner it sees fit. Once the PMS India agreement is signed, the PMS India fund manager will have the final call on the PMS investments and the client may have limited to no influence on portfolio management schemes or portfolio management services.

Mr. Rishi Gupta is the fund manager. He has more than 20 years of experience in the capital markets. He is a graduate of Stanford University and was a private equity professional. He has been professionally investing in India since 2008. He has experience interacting and working with top management at the CXO and board of director levels and is a proven judge of managerial character and competence. He has international experience and can assess global market factors affecting a company’s business. He is personally involved in the detailed quantitative and qualitative research that goes into an investment decision and PMS services. He personally reviews the PMS investment portfolio to make sure it is correctly positioned and balanced.

While we are happy to walk you through our process and hypothetical examples of the types of companies our PMS India invests in, we cannot share proprietary information about PMS investments i.e. portfolio holdings.

The fee structure in the PMS India is carefully designed to be fair to clients. The reason the hurdle rate is 6% is because the management fee is 0%. If the management fee was 1 or 2% we could have kept the hurdle rate higher, but we believe the 0% management fee structure produces the best alignment of interests between our clients and us – like a true partnership. (PMS India)

Yes, the early withdrawal fee for the PMS services is 3% in the first year, 2% in the second year, 1% in the third year and there is no withdrawal fee from the PMS accounts after three years.

No. We do not follow a single model portfolio in the PMS India. PMS investment clients have portfolios based on their time of entry. A portfolio management scheme suitable in 2017 would not be suitable in 2020, even though multiple core holdings might remain the same. We follow the buy/hold/sell-range system. That is, each idea or holding of the PMS funds has a price range within which we would buy, hold or sell it at any given point in time.

There is no hard and fast rule since the PMS schemes fund manager has flexibility based on available ideas. This break-up in the PMS services portfolio would be different at different points in time based on market conditions in India at that point of time.

For India residents:
When you are ready to start, please send us required details and scans of your PAN card and address proof. Within 24 hours, we will dispatch a document package to you for your signatures. On return of the completed document set, and following an in-person verification (IPV) by the bank, the bank and demat accounts will be opened (this takes about 4-5 working days). After this, investments can begin.

For NRIs coming into the PMS India the paperwork is more cumbersome and, depending on whether a PMS NRE or NRO account is being opened, the time-frame can also be longer as there might be approvals required from the Reserve Bank of India (RBI).

No. We will be opening new specific portfolio management services bank and demat accounts for you in the Shepherd’s Hill Portfolio Management Services India, as these PMS investment accounts will be linked to each other and maintaining, operating and book-keeping for the exclusive PMS investment accounts is much more operationally efficient.

No, you cannot transfer securities directly into the Portfolio Management Services in India accounts. You must transfer funds to the PMS services bank account (a self-transfer, since this account will be in your name) through checks or through online banking to begin the PMS invest programme.

No, since the PMS India / PMS schemes accounts are custodian accounts, you will not have direct access to the bank and demat accounts. However, all PMS funds account holders will be given Shepherd’s Hill login facilities so that all India resident and NRI investors can check PMS account details at their convenience.

Kotak Mahindra Bank Ltd., one of India’s largest private banks, is the SEBI-registered custodian appointed for Shepherd’s Hill Portfolio Management Services in India (PMS India) clients.

No, all dividends/income that is received in your Portfolio Management Scheme accounts will be reinvested. Dividend income received on your Portfolio Management Scheme portfolio is usually 1-2% per year on average. You are free to proactively withdraw any amount from the Portfolio Management Scheme at any time, subject to applicable early withdrawal fees, as long as the PMS schemes account balance does not go below Rs. 50 lakhs.

Yes, the PMS fund offers this option. Once the initial amount of minimum Rs. 50 lakhs is funded in your PMS funds account, you can add funds to the PMS funds bank account at any time, in lump sum or in tranches. This will be duly invested by the PMS funds manager.

• There is no way to completely insulate yourself from a market downturn in the short-term with PMS investment. However, if you stick with the PMS investment over the long term, our portfolio creation and stock selection aims to ensure that your PMS investment will recover and even exceed the previous market highs over time. 
• If we feel that market prices are exceedingly high and no attractive ideas are available, we may keep a material part of the PMS funds in cash, liquid fixed income instruments or gold ETFs. This may provide some protection on the down side in the PMS invest.

• Our portfolio management services (PMS funds total assets) are small so we have more flexibility and opportunities to invest in good smaller companies.
• Our portfolio management services (PMS services) have a more focused portfolio so we can outperform the index by a bigger margin if our decisions are good.
• Our Portfolio Management Scheme (PMS schemes) have a highly aligned fee structure. No management fees.
• In our PMS investment, we work directly with our clients. We do not work through agents or distributors who earn commissions.
• Mutual funds generally have higher portfolio churns. Our PMS investment portfolio churn is very low.

A quarterly report will be provided when you invest in PMS, which will include:

• Macroeconomic commentary by the Fund Manager
• Return statistics of the PMS funds portfolio
• PMS investment account holdings and transactions statements
• Dividends and income information
• Any other pertinent information regarding the PMS services

Deloitte Haskins & Sells LLP has been appointed to audit all clients’ accounts of the Portfolio Management Services in India and produce a certified set of statements including balance sheet and P&L for the PMS investment account after the end of each fiscal year. This will include tax information and capital gains statements to help file your tax returns.

Once you invest in PMS, you will get login credentials to our website shepherdshill.in where you will be able to see high level PMS NAV and return data on a daily basis, in addition to sector-wise portfolio composition.

For any queries, clarifications, or details you can easily access our relationship managers and management team, as we are a small firm.

Taxes in your PMS India / PMS schemes accounts are the same as if you were investing directly through your personal account. The main income in your PMS India accounts will be capital gains and dividends. Tax rates on these incomes are subject to change from time to time and will depend on your individual circumstances when you invest in PMS. Please consult a certified chartered accountant for tax advice regarding your PMS investment.

The following are the steps in our PMS investment process:

Screening and Short-listing. We use proprietary screening tools and software to focus on only those companies in India that we believe merit further research and analysis. With approximately 5,000 listed companies on the India exchanges, the PMS focuses research on a high-quality subset with the goal of achieving operational efficiencies.

Checklist Verification. The Portfolio Management Services team will employ a proprietary checklist to identify any red flags that appear with respect to a potential investment. Issues for scrutiny include related party transactions, joint ventures, equity or debt investments in other companies, loans and advances that have been written off, exorbitant salaries to managers, and preferential allotments.

Financial Analysis. The Portfolio Management Services team will perform an extensive quantitative analysis with respect to potential investments in India. We will analyse multiple years of publicly available data to create a financial picture covering many facets of operations, including profit margins, return on assets, debt levels, operating leverage, and dividend yields.

Qualitative Research. The Portfolio Management Scheme will research and judge the qualitative aspects of each potential investment. Topics relevant to this part of the process include management quality, minority shareholder communication (including quarterly investor calls), business moats, and relationships with suppliers and customers.

Comparative Analysis. When the number of available investment opportunities for the Portfolio Management Scheme exceeds the number of investments that the portfolio can contain, the PMS funds manager will compare ideas to each other in order to assess the relative attractiveness of each. Considerations relevant to this analysis include over- or under-exposure in an industry sector and perceived correlations between assets.

Decision Point. A deliberate decision is taken on the choice of portfolio company considering all factors, with price of entry being a key consideration.

Continuous Portfolio Monitoring. Once an investment decision has been made for Portfolio Management Scheme, we will monitor each position continuously. Along with each investment decision, we will monitor the entire PMS funds portfolio in an effort to ensure that any portfolio-level risks are considered and mitigated to the extent possible.