Dezerv offers to manage your portfolio with hurdle rate of 15%

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Wealth management start-up Dezerv has launched a portfolio management service (PMS) to clean up legacy portfolios which have ad-hoc investments. Founded by former IIFL executives Sandeep Jethwani, Vaibhav Porwal and Sahil Contractor, the one-year-old startup has already amassed assets of around 600 crore. It currently has a mutual fund distribution business.

Dezerv targets the ‘middle market’ of individuals with investable surpluses of 15 lakh to a few crores. Such individuals often have legacy investments – a random stock here or a mutual fund there which can be systematically managed through a PMS, according to Dezerv co founder Sandeep Jethwani. “There is a strong risk aversion among investors which leads them to hold loss making investments for years together. In our PMS we will clean up such investments and direct the money realized towards our set of recommended mutual funds (MFs). The PMS will only invest in MFs and, that too, only in direct plans which have no commissions. Our equity PMS strategy for instance will have around six funds covering different market segments and investing styles,” said Jethwani.

Apart from MFs, Dezerv also offers direct bonds to its investors and deals for angel investing. The firm is also in the early stages of setting up an angel fund. A PMS has a minimum ticket size of 50 lakh.

The new PMS has a hurdle rate of 15%. In other words, Dezerv will not charge any management fees or performance fees unless it generates a CAGR of more than 15% over a period of 3-4 years.

Equity markets have corrected strongly over the past 3-6 months but Jethwani is convinced of their long-term potential. The PMS will be all equity, although the firm is offering low-risk asset allocation strategies for more conservative investors. The firm’s existing portfolios for MF investors have completed around 1 year. They have generated returns ranging from 4% (for the conservative investor) to around -2% for the aggressive investor, said Porwal. Dezerv plans to offer a discretionary PMS where it takes all the decisions rather than seeking customer approval for every transaction. However at the initial stage, investing in a PMS needs multiple signatures on physical documents (wet signatures) under current rules, a time consuming process.

According to Jethwani, alternative investment funds (AIFs) which have a higher minimum ticket size than PMS at 1 crore also have an online onboarding process, leaving only PMS investors with a need to give wet signatures.

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