FAQs

Portfolio Management Services (PMS) is a personalized investment service offered by asset management firms, where professional fund managers create and manage an investor's investment portfolio. It aims to align investments with the investor's financial goals, risk tolerance, and time horizon. PMS involves active management, with regular performance reporting and transparency.

PMS may be offered in the following categories:

• Discretionary

• Non-Discretionary

• Advisory

Discretionary: Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager.

Non-Discretionary: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However, the execution of trade is done by the portfolio manager.

Advisory: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor.

Portfolio Management Services (PMS) are primarily suited for high-net-worth individuals (HNIs) or institutional investors. Those who prefer expert guidance and active management of their portfolio, with a personalized approach.

In general, PMS is designed for those who prefer hands-on, professional management of their investments and are willing to meet the higher investment thresholds. As per SEBI regulations, the minimum investment amount for PMS is INR 50 lakhs per client (per Portfolio Manager).

Yes. Portfolio Management Services (PMS) in India are regulated by the Securities and Exchange Board of India (SEBI) under the SEBI (Portfolio Managers) Regulations, 2020, as amended from time to time.

Only entities registered with SEBI as Portfolio Managers are permitted to offer PMS in India.

Portfolio Management Services (PMS) offer several benefits, including:

Personalized Investment Strategy: Custom-tailored portfolios aligned with individual financial goals, risk tolerance, and investment horizon.

Expert Management: Professional fund managers with expertise in market research and analysis actively manage the portfolio, making informed decisions.

Active Portfolio Monitoring: Continuous tracking and adjustment of the portfolio with an endeavour to capitalize on market opportunities or mitigate risks.

Transparency & Reporting: Regular, detailed reports on portfolio performance, transactions, and asset allocation provide investors with clear visibility.

Time-Saving: Investors save time and effort, as professional managers handle all aspects of portfolio management, from research to execution.

With Discretionary Portfolio Management Services, all control over the portfolio and associated decisions is handed to the portfolio managers. The Investors choose the investment strategy/ approach in line with the investors objectives their risk appetite and other relevant factors, while the Portfolio Manager has the discretion to make investment decisions discreetly, without seeking the approval of the investor.

Non-Discretionary Portfolio Management Services on the other hand, require the Portfolio Managers to provide investment ideas in line with the investor's vision. The investors make the final decisions when choosing from the multiple ideas suggested to them. The Portfolio Manager cannot make any investment decisions of their own accord.

Alchemy currently offers only Discretionary Portfolio Management Services.

As per regulation, the minimum ticket size applicable at the time of opening a new account is INR. 50 lakhs. Investors can bring in funds /securities to meet the minimum investment criteria.

The High Water Mark (HWM) is a performance benchmark used in investment management, particularly in PMS (Portfolio Management Services). It refers to the highest value that a portfolio has reached. In the context of performance fees, the HWM is used to ensure that a portfolio manager only earns a performance fee on gains that exceed the previous highest value. This prevents the manager from earning a fee on the same gains more than once.

Example: If an investor invests INR 1 crore, the HWM will be INR 1 crore.

If the value in the 1st year drops to INR 90 lakhs, the portfolio manager will not receive a performance fee. Next year if the portfolio value becomes INR 1.2 crores the manager will get the fee only on the gain of INR 20 lakhs i.e. INR 1.2 crore minus INR 1 crore (HWM) and not INR 30 lakhs (INR 1.2 crore minus INR 90 lakhs).

The HWM ensures fairness by protecting investors from paying for gains that were already achieved.

TWRR or Time-Weighted Rate of Return is a measure of the compound growth of an investment irrespective of money flows. In order to calculate TWRR an investor needs to know when investment contributions or withdrawals were made, how much they were, and where the portfolio was valued at the time. Returns must be calculated for each period between contributions or withdrawals and then all the periods are multiplied together to get the compounding effect of the return. If the investment is for more than one year, the geometric mean of the annual returns is taken to find the time-weighted rate of return for the measurement period. Beginning value is the account value at the beginning of a set period. Ending value is the account value at the end of a set period. A simple rate of return is calculated by subtracting the beginning value from the ending value and then dividing by the beginning value.

XIRR or extended internal rate of return is a measure of return which is used when multiple investments have been made at different points of time in a financial instrument. It is a single rate of return when applied to all transactions (investments and redemptions) would give the current rate of return.

TWRR is the methodology prescribed by SEBI and is used by the investment industry to measure the performance of funds investing in publicly traded securities. By contrast, XIRR is normally used to gauge the return of funds that invest in illiquid, non-marketable assets-such as buyout, venture or real estate funds.

Yes, Income from PMS shall be taxable in the same manner as if the investor had dealt with the investments directly. However, the investor is well advised to consult his/her tax advisor for the same.

Portfolio Management Services (PMS) and Mutual Funds are both investment options, but they differ in several key aspects:

1. Customization:
PMS: Provides a personalized investment strategy, tailored to the investor's financial goals, risk tolerance, and preferences. Each investor has a unique portfolio.
Mutual Funds: Investors pool their money into a common fund, and the same portfolio is shared by all investors. The strategy is standardized for the entire fund.

2. Investment Amount:
PMS: Generally, requires a higher minimum investment of INR 50 lakhs or more.
Mutual Funds: Have lower minimum investment requirements, making them accessible to a wider range of investors (e.g., INR 500 or INR 1,000).

3. Transparency & Control:
PMS: Offers greater transparency and direct control over the portfolio. Investors receive detailed reports and can often interact with the fund manager.
Mutual Funds: Investors have less direct control over portfolio management. They receive periodic updates, but may not have as much input into the investment decisions.

4. Ownership of Securities:
PMS: The investor is the owner of the securities. The securities are held in a dedicated demat account owned by the investor.
Mutual Funds: Mutual funds are set up as trusts. Investors don't directly own the securities but own units of mutual fund schemes thereby owning the portfolio securities indirectly.

The Portfolio Manager provides the Disclosure Document prior to entering into an agreement with the investor. The Disclosure Document contains the product features/details of investment approaches, quantum and manner of payment of fees payable by the investor for each activity, portfolio risks, complete disclosures in respect of transactions with related parties, details of conflicts of interest related to services offered by group companies or associates of the portfolio manager, the details of investment of investor's funds by the portfolio manager in the securities of its related parties or associates , the details of diversification policy of the portfolio manager , the performance of the Portfolio Manager and the financial performance of the portfolio manager for the immediately preceding three years.

Disclosure Document is available under the regulatory section in the 'Compliance Documents / Disclosure' tab.

AIF stands for Alternative Investment Fund. It is a private investment vehicle that collects funds from investors, whether Indian or Foreign, for investing it in accordance with a defined investment objective as detailed in its respective fund documents for the benefit of its investors.

The Securities and Exchange Board of India (SEBI) has categorized AIFs into three categories, Category I, Category II and Category III, based on their investment strategies, eligibility criteria, and regulatory requirements.

- Category I AIFs invests in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable. This shall include venture capital funds, SME Funds, social impact funds, infrastructure funds, special situation funds and such other Investment Funds as may be specified by SEBI from time to time.

- Category II AIFs includes real estate funds, private equity funds (PE funds), debt funds, etc.

- Category III AIFs includes hedge funds, PIPE Funds, etc. that employ diverse or complex trading strategies and may employ leverage including investments in listed or unlisted derivatives.

Source: SEBI

Alchemy currently offers its schemes under Category III Alternative Investment Funds (AIFs), as defined under the SEBI (Alternative Investment Funds) Regulations, 2012, as amended from time to time.

Minimum investment of INR 1 crore is required for investing in an AIF.

Yes, Alchemy Alternative Investment Trust (Trust) is registered with SEBI as a Category III – Alternative Investment Fund vide registration number IN/AIF3/17-18/0381 with effect from October 24, 2017. The Trust has launched various schemes which are managed by Alchemy Capital Management Private Limited as Investment Manager.

No. AIFs are privately pooled investment vehicles that raise funds only through private placement by issuing Private Placement Memorandum (PPM)

Category I and Il AIFs are required to be close ended and have a minimum tenure of three years, while Category III AIFs may be open ended or close ended.

Investments in AIFs in India is open to institutional investors, high-net-worth individuals (HNIs), NRIs, Accredited Investors, Corporates, HUF, Firms, Trust and Family Offices.

Yes, NRIs are eligible for investments subject to offer document allowing their participation.

An AIF may accept the following as joint investors for the purpose of investment of not less than INR 1 crore:

• i. an investor and his/her spouse
• ii. an investor and his/her parent
• iii. an investor and his/her daughter/son

With respect to the above investors, not more than 2 persons shall act as joint investors in an AIF.

In case of any other investors acting as joint investors, for every investor, the minimum investment amount of INR 1 crore shall apply.

Alchemy Capital Management Private Limited offers a range of AIFs schemes across market capitalisation. Please click here to learn more about our
AIF offering. You can also write to us at contactus@alchemycapital.com for more details.

Alchemy offers both open and closed ended Schemes of AIF. Currently there are 5 Schemes which are open to subscription for investors namely, closed ended - Alchemy Leaders of Tomorrow - Closed Ended Fund, Series 3, Alchemy Long Term Ventures Fund, Series 2 and Alchemy Long Term Ventures Fund, Series 3; open ended - Alchemy Leaders of Tomorrow and Alchemy Smart Alpha 250 Fund.

Alchemy Leaders of Tomorrow focuses on companies best equipped to take advantage of emerging domestic and global opportunities through innovation. The fund aims to identify and invest in companies that are good at adapting to market changes, technological disruptions and evolving eco-system.

Alchemy Emerging Leaders of Tomorrow is a Mid and Small cap focused fund that endeavours to invest on ethical entrepreneurs and management teams with robust, time-tested business models poised to benefit from India's broader based economic recovery.

India is at the cusp of a multi-year growth cycle, and expect strong earnings recovery across sectors such as consumption, manufacturing, capex, over the next 3-5 years despite inflationary pressures. These sectors may drive the next phase of the market growth. >Alchemy Long Term Ventures Fund focuses on opportunities within the small and midcap space.

Alchemy Smart Alpha 250 Fund aims to deliver long-term capital appreciation through a strategy, predominately focusing on listed large and mid-cap investments.

AIFs typically may have a lock-in, depending on the category and the investment approach. In case of further information, write to us at contactus@alchemycapital.com to learn more.

Closed-ended funds cannot be redeemed during the lock-in period. Open ended funds may have an exit charge, but can be withdrawn at any time. Write to us at contactus@alchemycapital.com to learn more.

Investor can subscribe directly by contacting us at contactus@alchemycapital.com or through our empanelled distributors.

Alchemy Alternative Investment Trust ('the Trust') is a contributory determinate trust set up under the Indian Trusts Act, 1882. The Trust is registered with the Securities and Exchange Board of India ('SEBI') as a Category III Alternative Investment Fund ('AIF') under the SEBI (Alternative Investment Funds) Regulations, 2012 ('AIF Regulations'). All the AIF strategies offered by Alchemy are setup as a scheme of this Trust.

Currently, there are no provisions under the Income Tax Act, 1961 ('ITA') that specifically govern the taxability of Category III AIFs. In such a scenario, the Trust would be taxed as per the general principles of taxation of trusts.

As per the provisions of sections 161-164 of the ITA, the Trustee shall be assessed as a "representative assessee", thus, the Trustee of the Fund will compute and discharge the tax liability on the share of Contributors in the income of the Fund on behalf of such Contributors in its capacity as a representative assessee. As such, the income generated from the investment in the AIF in the hand of the contributor is tax assessed.

If you have invested through a channel partner, please write to us at: clientservicing@alchemycapital.com.
If you have invested directly with us, please write to us at: clientsupport@alchemycapital.com.