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Nikhil Kamath’s financial services venture, True Beacon, on Wednesday added Portfolio Management Services (PMS) to its business, marking its entry into wealth management. 

The Bengaluru-based venture, founded by Zerodha Co-founder Nikhil Kamath and former Vice Chairman of Standard Chartered Private Bank, Richard Pattle, in 2019, operates as an Alternative Investment Fund (AIF Category-III) and caters to Ultra High Net Worth Individuals (UHNIs), enabling them to invest in the diverse asset class. 

Operating under SEBI’s (Securities and Exchange Board of India) PMS (Portfolio Management Services) licence, the company will now manage wealth across all asset classes, particularly alternative assets, for leading entrepreneurs, individuals, families, and institutional investors. It aims to offer a more personalised wealth management service. 

“It (PMS) was a natural extension of what we wanted to do. We always knew at some stage that True Beacon will not just be a fund house but also a wealth manager,” said co-founder and CEO Richard Pattle while speaking to YS.

Typically, AIFs are pooled investment funds, where the money is collected from many different investors, and invested in the above-mentioned asset classes. However, allow for some personalisation of PMS, which True Beacon will now be adding to its current offering.

True Beacon will focus on families which have total investable assets greater than Rs 10 crore (the minimum requirement is Rs 50 lakh). Under PMS, a portfolio manager acts on your behalf and invests your capital across diverse asset classes, including stocks, fixed income securities, and other structured products, with the aim of generating high returns.

The firm will evaluate offering cryptocurrencies and NFTs (Non-Fungible Tokens) as the regulation evolve, besides bringing pre-IPO (initial public offering) sales and global stocks in line with the offered products, added the co-founder. The company said it is not looking at placing emphasis on a particular asset class but will offer a wide range of products, including government securities.

Alternative investments include asset classes or financial investments not commonly accessible and which do not fall under traditional investment categories. These include venture debt, private equity, hedge funds, structured products like sovereign gold bonds/Gold ETFs, Market Linked Debentures (MLDs), Real Estate Investment Trusts (REITs) or real estate linked debentures, Infrastructure Investment Trusts (InvITs), as well as pre-IPO securities, and offshore investments. More recently, cryptocurrency and NFTs have also come into the fold.

True Beacon is planning to offer a portal, allowing clients to network with each other—a facility which is currently available to the clients of True Beacon One AIF.

“At True Beacon, we want to add value to our clients, not only through our long-term comprehensive investment approach but also through access to our strong, collaborative, global community of leaders. We hope to make the industry more transparent and competitive, and enhance client service levels through deep and lasting relationships. Having launched three AIFs over nearly three years, True Beacon Wealth is the natural next step,” said co-founder Nikhil Kamath. 

Taking a conservative approach 

Given the market conditions, True Beacon has taken a conservative approach when it comes to investing across asset classes. 

“We were worried about inflation as it was becoming a global issue back then, besides the geopolitical issues. We took a conservative approach from the second half of 2021; being quite conservative has always been our DNA. We want to safeguard wealth—our clients appreciate that,” said Richard. 

He said that the demand for personalised portfolio management across new-age assets has been on the rise in India, and so has the emergence of sophisticated PMS houses. 

“There is a greater acknowledgement among investors, particularly entrepreneurs, to have a diversified portfolio. They are now open to taking high exposure and looking at wealth generation. The adoption of platforms like Zerodha in the Indian market solidifies the rising trend,” he added.

“For India, the challenge remains to transform the way individuals look at wealth management overall and stress the importance of diversifying across asset classes,” Richard noted. 

True Beacon operates on a “zero-standing fee model” and claims to serve over 500 UHNIs and HNIs, with 40 industry professionals between its head office in Bengalureu, a branch office in Gujarat International Finance Tec-City (GIFT City) serving global clients, and representative offices in Mumbai and Delhi. It charges a flat 10 percent of the profits that it makes for the clients, with no entry, exit or hidden fee. 

It currently claims to have Rs 1,500 crore in Assets Under Management (AUM), and aims to add Rs 750 crore by next year. 

“We are aggressively scaling our tech and product capability and hiring across the board, including investment and legal,” the co-founder adds.