May 31, 2007 06:37 PM
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This write up is only for investors who want a diversification and are keeping an open mind about it. I am sharing my experience of two PMSs-one has been very positive-with Religare, the other has been negative-with Optimix.
PMS-
Portfolio management services are only offered to high net worth individuals. If you have a portfolio of 25 lacs or so, a credit card spend of 2 lacs per Annam, your name will be circulating among the PMS companies and they will seek you out.
HOW DOES PMS WORK
PMS services are provided by financial groups. Some of the well known ones are RELIGARE, OPTIMIX, RELIANCE, SBI, most private banks.
Generally a minimum amount of 15 lacs is required to be kept in PMS.However, religare and optimix start with 5 lacs minimum. The funds are handled by a fund manager who buys and sells shares.The manager is only mandated to trade in shares for bringing maximum profits to the investors.He can park the profits in cash funds but mutual fund investment is not part of portfolio management. Religare's equity is handled by Amitabh Chaturvedi who has headed reliance growth and vision mutual funds for a long time.
The fund manager also shorts the stocks when he feels market will correct. They also keep liquid cash or in debt funds when market is overheated. Generally idea is to maximise the returns even in a flat or a negative mkt and preserve the capital.
Profit is booked at regular intervals and some of it locked in liquid funds.
MY EXPERIENCE
I placed Rs 11 lacs in Religare on 30th Aug 2006 and Rs 5 lacs with OPTIMIX in Sep 2006 . This is how they have performed so far.
RELIGARE PMS -
AMT INVESTED-11 LACS(30/08/2006)
ON 29/05/2007
REALISED GAIN-Rs 60, 683.56
UNREALISED GAIN-Rs 1, 80, 271.06
INCOME RECD- Rs 2439.70
FEES AND EXP-Rs 22, 521.21
ACCRUED INCOME-Rs 651.60
CURRENT MKT VALUE-Rs. 13, 21, 524.71
GAIN-Rs 2.21, 524.71.
GAIN PERCENTAGE IN 6 MONTHS-10.14%( BSE RETURN SAME PERIOD-7.91%)
GAIN PERCENTAGE SINCE 30/08/2007-25.65%( BSE RETURN-26.15%)
MY COMMENTS-
The returns have been better than BSE in the last 6 months and the PMS seems to be doing well enough. So my strategy is to take out the profit amount of 2.21 lacs now and let the principal amount remain invested.
I also compared to the mutual funds in the same period. SBI magnum contra's NAV has gone up from 32 rs to 40 rs in the same period i.e. 30th Aug 2006 to the present. That again is a return of 25% . ICICI Pru services industries fund and reliance diversified power fund are the only other mutual funds which gave almost similar returns. All other mutual funds gave inferior returns to this PMS in the same period.
Taking individual shares.infosys has remained at almost the same price of 2100 rs(Sep 2006) while reliance has gone up from 1201 rs in Sep to its current price of 1700 rs odd.ICICI BANK, IVRCL, ABB, M&M are some stocks which have given much better returns than the PMS return. The investors reading this are experienced enough to know that selective stocks have done better but also that stock picking is an art and a science in which not all of us are expert.
MY SUGGESTION
if you are thinking of a PMS, religare deserves consideration.
OPTIMIX(an ING VYASA PRODUCT)
PRODUCT NAME-BLENDED ALPHA
(as the name suggests the fund manager divides the money into 3 different PMS s in the ratio of 33% each. The 3 PMS are Fortis, Reliance, SBI AMC. In other words, instead of picking the stocks himself, he picks up the PMS investing in stocks and puts the money in the PMS.
AMT INVESTED- Rs 5 lacs.(Sep 2006)
AS ON 31/01/2007-gross earnings -Rs 49, 416.
-portfolio expenses-Rs 7220.
portfolio value-Rs 5, 42, 196.
-returns- 8.44%
AS ON 31/03/2007- portfolio value went down to Rs 5, 02, 000/- . Another 12 thousand rs was deducted as portfolio expense.
- so the guys managed to lose money and still charged me for managing my money. I asked for a refund on 21st May 2007.
AS ON 21ST MAY 2007- refunded an amount of Rs 5, 35, 970. This is a return of less than 7 percent in the same period when religare has given 26%. It is still lesser than my portfolio value as on 31/01/2007. So they have managed to lose and not make money.
MY COMMENTS
-They are not professionally sound. Just investing our money into other portfolios simply doubles the expense we pay for managing money.
MY RECOMMENDATION- AVOID at all costs. In fact optimix products are all of this type mostly.
I have shared my experience to make you aware of a product like PMS. You cannot stay away from it and must know about it even if not investing in it. As your portfolio grows, you will be approached by bankers and investors of all hues . It is better to be aware than to be sorry.
