Shepherd’s Hill offers discretionary portfolio management services (PMS India). This means you let us manage your money, similar to a mutual fund. However, PMS managers have advantages over mutual funds, being a smaller size and able to provide personalised service. Shepherd’s Hill PMS is one of the only PMS providers in India that does not charge any client a fixed management fee. Fees paid by PMS clients are purely based on performance.
Minimum investible capital of Rs. 50 lakhs.
Must be a resident or non-resident Indian.
A PMS, or Portfolio Management Service, is a service which you can use to save and invest money. PMS managers 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 managers are regulated entities in India and a PMS in India must have a license from the Securities and Exchange Board of India (SEBI), India’s security regulator.
A discretionary PMS gives full discretion to the PMS 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 investments and the client may have limited to no influence on portfolio management.
Mr. Rishi Gupta is the fund manager. He has more than 15 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 good 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. He personally reviews the PMS 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 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 (India) 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 clients have portfolios based on their time of entry. A portfolio 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 (India) 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 fund manager has flexibility based on available ideas. This break-up in the PMS (India) 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 fill out the PMS (India) application form and send us scans of your PAN card and address proof (passport or aadhaar card). 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 PMS bank and demat accounts for you in the Shepherd’s Hill PMS (India), as these PMS accounts will be linked to each other and maintaining, operating and book-keeping for the exclusive PMS accounts is much more operationally efficient.
No, you cannot transfer securities directly into the PMS accounts. You must transfer funds to the PMS bank account (a self-transfer, since this account will be in your name) through checks or through online banking to begin the PMS (India) investment programme.
No, since the PMS (India) accounts are custodian accounts, you will not have direct access to the bank and demat accounts. However, all PMS 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 PMS India clients.
No, all dividends/income that is received in your PMS (India) accounts will be reinvested. Dividend income received on your PMS portfolio is usually 1-2% per year on average. You are free to proactively withdraw any amount from the PMS at any time, subject to applicable early withdrawal fees, as long as the PMS account balance does not go below Rs. 50 lakhs.
Yes, the PMS offers this option. Once the initial amount of minimum Rs. 50 lakhs is funded in your PMS account, you can add funds to the PMS bank account at any time, in lump sum or in tranches. This will be duly invested by the PMS manager.
A quarterly report will be provided for all PMS (India) clients which will include:
Deloitte Haskins & Sells LLP has been appointed to audit all clients’ accounts and produce a certified set of statements including balance sheet and P&L for the PMS India investment account after the end of each fiscal year. This will include tax information and capital gains statements to help file your tax returns.
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) 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. Please consult a certified chartered accountant for tax advice.
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 PMS 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 PMS 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 PMS 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 PMS exceeds the number of investments that the portfolio can contain, the PMS fund 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 PMS, we will monitor each position continuously. Along with each investment decision, we will monitor the entire PMS portfolio in an effort to ensure that any portfolio-level risks are considered and mitigated to the extent possible.
Click on the image below to see a graphical representation of the Shepherd’s Hill PMS India process:
B5, STC Society, NS Phadke Marg, Andheri (E), Mumbai 400069, India.
1, Goldfield Plaza, Sassoon Road, Pune 411001.