Frequently Asked Questions
How do I sign-up with Capitalmind Wealth (Portfolio Management Service)?
You can start the sign up process at https://signup.capitalmindwealth.com/. This is an online process for putting your details in a web form, and the PDF forms will be automatically generated for you with your details, so all you need to do is print, sign and send it back to us.
What is the minimum corpus I need to invest in Capitalmind Wealth ?
25 lakhs — that’s the SEBI rule for all Portfolio Managers like us. This needs to come when you get started and we can’t stagger this investment amount. Subsequently, you can invest as much as you like.
Can I invest more than 25 lakhs?
Is applying on the Capitalmind Wealth Website (www.capitalmindwealth.com) an expression of interest or a confirmation of joining Capitalmind Wealth?
If you sign up on the website, we’ll send you updates about our business and reach out to you. It is not a confirmation for joining Capitalmind Wealth.
Can I open a joint account with my wife or son/daughter or father/mother?
Yes you can. The maximum number of account holders is 3. If you prefer a single holder, you can have one person as your nominee.
Is the service available to NRIs?
We are working to get a handle on NRI paperwork. NRIs have to open two bank accounts (NRO accounts, where the money can’t easily taken out of the country, or “repatriated”) and there is PIS reporting required. We’ll have this available soon.
If you want to take your profits out of the country, that’s more complex because you need a NRE account. There is an onerous amount of extra reporting for us, especially for U.S/Canada NRIs. Taxes are involved because when we sell securities, there is a tax deducted at the source, etc.
In all cases, NRIs may not be allowed to invest in certain debt funds, and in certain stocks. This will keep your portfolio a little different from those of residents.
If you become an NRI after you have opened the PMS account, then you will have to do some changes to your account. We can clarify this when it happens on a case-by-case basis.
Are non US/Canada NRIs eligible to participate at this stage?
Yes, on a non repatriable basis.
I’m just starting to invest my money and have no prior investing experience, should I invest in your PMS?
We would say: No. You should try out mutual funds for a year or so (and Value Research Online has adequate research). Indian equity funds are fairly decent and if you buy direct plans, the expense ratio is very acceptable. We suggest you take stock of what’s working and what isn’t after a year and then see if we make sense for you.
Do I need to open a Capitalmind Premium account also if I wish to invest in your PMS?
Not at all. Capitalmind Premium and Capitalmind Wealth (PMS) are separate offerings. Capitalmind Premium is for people who have the time, interest and commitment to do DIY investing. Capitalmind Wealth (the PMS) is for people who do not have the time to do DIY investing with the requisite diligence.
Can HUF (Hindu Undivided Family) open a PMS account? I have a PAN, bank account and Demat account for HUF.
Yes, HUF can have a PMS account. From the PMS point of view, there’s only some extra paperwork for an HUF but we can treat it like a resident individual. Having an HUF is tax-efficient in any case, especially if the government introduces things like inheritance tax etc.
Can we exit from the PMS anytime?
Yes, you can. There are no exit loads or lock-in periods. However, the only thing is that when you exit, it may take up to T+5 to get the funds out of equity. Also, exits might result in some taxes for you
When can we start transferring funds to you?
As soon as our custodian, brokerage and bank accounts are fully set up. By our estimates, all of those will be completed around one week after you submit your forms.
After creating my account, do my future investments also have to be in multiples of 25 lakhs?
Not at all — any amount works. We’ll suggest a minimum additional amount that makes sense for your goals.
What form of documentation will you guys need to open my PMS account?
We ask for PAN and Aadhar in addition to CKYC, for the Know-Your-Customer process.
We will need to open a demat account in your name, for which the Power-of-Attorney (PoA) will need to be given to our custodian (IL&FS). This requires a form to be filled and signed.
We also have an agreement that contains details of our fees, our services, redressal procedures etc. This must be signed (a SEBI requirement) before we can start to manage your money.
The process will take about 4–5 days, and we’re working hard to reduce this for you.
Do I need an Aadhar to open my account?
For now it’s not mandatory.
If and when a statutory requirement comes in place, you will need it then.
What is onboarding process and how long will it take?
We expect the process to take about 4 to 5 days for the documentation to be complete. It involves:
Agreeing together on the goals and strategies that you will start with
Opening a demat account for you
Bank transactions to load the initial capital
Once this is complete, we will be able to start the management.
When can we get access to your Capitalmind Wealth website?
This is ready now, and you will receive a mail to access it through our progress reporting site. This will provide online access to the account.
Will the website have a tool/tab to capture my goals?
The current beta is at https://plan.capitalmindwealth.com. We take you through this as we speak with you on the phone.
I have received the getting started email including a digital version of the disclosure document and the client agreement, what comes next?
We’ll email you to set up a call and then take you through the next steps.
What fee do you charge?
We charge 1% of the money we manage. This is the Assets Under Management (AUM) fee, where we calculate your portfolio values every day, and charge you the 1% on the average assets over the year.
Including other charges, the total fee comes to just less than 1.4% of AUM in the first year and just under 1.3% in the subsequent years. Breakdown as follows:
Management fee — 1.00% (as mentioned above)
GST — 0.18%
Security Transaction tax — 0.12%
Brokerage (Zerodha) — 0.01%
Custodian charges (IL&FS) — 0.04% – 0.05% (inclusive of transaction charges)
Other miscellaneous charges — up to 0.04%
At what frequency will the fees be charged?
Management fee — per quarter
GST — per quarter
Security Transaction Tax — per transaction
Brokerage — per transaction
Custodian charges — per quarter (along with management fee)
Other miscellaneous charges — mostly per quarter
Are there entry and exit loads? Are there any lock-in periods?
No and No. You can leave anytime you like. You can add money any time you like.
Will you charge any performance fees?
No. We will not charge any performance fees for clients who sign up in the first three years. For customers who sign up after that, performance fees may apply. Even if we do, we will not charge performance fees for anyone who has signed up earlier. (The zero-performance-fee is in the agreement which does not change as long as you have an account with us)
Mutual Funds charge their fees as an average of daily end-of-day AUM. Will your PMS do the same?
Yes. Daily end-of-day AUM averaged.
How has your portfolio done in the past?
Here are a few examples of our equity portfolios and their returns since inception:
Long-term portfolio (since Sep 2014) — 87% absolute return
Dividend yield portfolio (since Jan 2016) — 57% absolute return
Momentum portfolio (since Nov 2016) — 44% absolute return
EV portfolio (since Sep 2017) — 26% absolute return
Do I have to do an SIP? Can I just do one lump sum investment?
For goal based investing, we encourage systematic investment plans (SIPs) or regular investments. The SIP or regular investment amount for each goal will get allocated between equity and debt to keep you in sync with the goal target.
However, you can always choose to do a lump sum investment without any SIP, e.g. for people who are retired/retiring and want to invest their retirement savings with us.
Will you have a portfolio for each type of goal (retirement, holidays, child’s education, etc.), or is it one portfolio that serves multiple goals?
Currently, we have one equity portfolio with around 30 stocks and a one debt portfolio with 3 debt funds. Using our models, your risk parameters, and the cash flow requirements for each goal, we determine a final allocation of equity and debt for each goal.
You will always have the option to override the suggested equity and debt mix for each of your goals in case you wish to be more aggressive or conservative. We suggest you stick with our recommendations unless you’re really confident of your approach
Will you invest all the money into debt now, even the equity portion?
Based on your goals, our models provide an ideal mix of equity and debt for each goal in order to meet the goal within the provided timeframe. We will invest your money into equity and debt accordingly.
For customers in the initial phases, debt allocation will take place on Day 1 in its entirety. However, the equity allocation will be phased in.
As markets are at extreme valuations, buying all of your equity allocation right now may be less efficient. We’ll allocate the money to stocks over a 2–6 month timeframe instead. Meanwhile, you will earn liquid fund returns on the unallocated money.
Let’s explain using an example. Suppose your goals require you to have an equity/debt mix of 60/40. 40% of your money will be invested in debt instruments on Day 1. But your equity portion on Day 1 might be 20% and the remaining 40% will be parked in liquid funds.
Gradually we will move the amount parked in liquid funds to equity (over 2–6 months)
This method will change if the markets were to correct substantially.
Can I choose to park my entire money in debt for a super low risk profile?
In general, investing entirely in debt makes sense for only a small subset of customers. We recommend having a small equity portion for tax efficiency and to help outpace inflation.
We can park your entire corpus in debt if your goal is to have a steady and safe cash flow with super low risk. This might be a reasonable goal for retired/retiring people.
If you choose this option, you will be charged a lesser management fee. How much less? Instead of charging 1.0% management fee, we will charge somewhere between 0.25–0.50%.
Fees components related to taxes, brokerage and most of custody charges remain as is.
If you’re reasonably familiar with investing, you could also become a Capitalmind Premium subscriber and invest in debt funds on your own with our suggestions. It will work cheaper this way if your corpus is greater than 50 lakhs.
What if I want to invest all my money into equity? Will you have such a “goal”?
Yes, there is an option/goal to invest your entire corpus into equity. But then, you do not really get the advantage of re-balancing and some other features.
We would suggest this “all-in” option to investors who have a higher risk appetite with the primary ambition to grow wealth without any short-to-medium term cash flow needs.
Do I have a say on which equities and debt instruments/funds to invest in?
Based on your goals, our models suggest a personalised equity/debt % mix for you. However, you still have some control. You can choose to change that mix if you wish to be more aggressive or conservative. Within the equity and debt allocations, we do the stock or fund selection.
We have our own model portfolios (for equity and debt) which have been built over the years with careful analysis at our end.
Think about it. It’s a waste of your time to try and figure out which stock to buy more of, which stock to sell, how to take out money, and so on. We’ll take care of that for you.
What will the risk profile of your equity portfolio be?
By definition, all equity is somewhat risky. We manage the overall risk profile through debt. So if you want to dial down risk, you get a higher allocation of debt.
That being said, our equity portfolio will roughly start with 75% midcaps, 20% large caps and 5% small caps. The idea is that in the longer term, the mid-caps of today will be the large caps of tomorrow.
What would be the strategy similarities between Capitalmind Premium and Capitalmind Wealth? Would your Momentum and Long-Term portfolios factor into the PMS?
Momentum and Strat-options/Experimentals won’t figure in the PMS. There is likely to be an overlap with the Long-term portfolio. We will clearly indicate to Capitalmind Premium members if we mention a stock that we own in the PMS portfolio.
The returns of your momentum portfolio are great! Why won’t it feature more in the PMS portfolio?
We’re not considering Momentum as an option in 2017 and early 2018. However, we might well add it as a strategy later. The problem really comes from the higher tax outflow from shorter term investment horizons of a typical momentum strategy, and for the inevitable transaction costs from churn that such a portfolio requires. We’ll consider adding it at a later point.
Will you invest in F&O and commodities?
No, we won’t for now. We do expect to build F&O mechanisms in the future, for hedging or income generation, but it will apply to customers who agree to have it, and not others. F&O creates business profits or losses, and may require you to get your accounts audited, so it’s not something we’ll just do without proper consultation.
FYI —A PMS can do F&O but we don’t plan on it. A PMS can’t do Commodities.
Do you guys optimize for tax?
In some ways, we do. One of our value propositions is to optimize taxation for your investments. We attempt to sell or rebalance only when taxation is in your favour. We will have very low churn and will use appropriate tax-loss harvesting approaches wherever possible.
Because an order for a stock might get filled at different prices, what will be the mechanism to allocate quantity and price to various customer accounts?
Prices used for allocation will be the Value Weighted Average Price of each day. This way all customers get the same price for any buy or sell actions on any given day.
This will be general practice and no discretion is allowed. This is fair for all customers as well.
What is the minimum amount one can redeem at a time from the PMS? Does the AUM always need to be 25 lakhs? Suppose I put in 25 lakhs and it becomes 26 lakhs in sometime, can I withdraw 2 lakhs at that time?
No, you can’t. In this example, you can only withdraw 1 lakh. SEBI regulations require 25 lakhs of invested capital. So, in this example, if you withdraw 2 lakhs and your invested capital falls below 25 lakhs, we will have to redeem all the money.
If my corpus of 25 lakhs becomes lower (say 23 lakhs) due to market downturn, do I need to top it up?
No, you don’t need to top it up. Minimum invested capital needs to be 25 lakhs, not the mark-to-market value of your invested capital.
Is there any kind of referral bonus?
Yes, but allow us some time to plan out the details. We will have some kind of referral bonus that we can sustainably commit to.
If I already own stocks that you intend to buy in the PMS, then will you be able to take them into my PMS account, or do I need to clear out my positions and transfer full amount? In case it’s the former, will it form a part of the 25 lakhs corpus?
Portfolio transfer is possible if the stocks you intend to transfer are part of the PMS equity portfolio.
And for the second question, stocks or cash are both part of the corpus. But if you have held the stocks for more than a year, you might as well sell and have us re-buy clean.
Why have you chosen Zerodha for the trading account and IL&FS for the demat account?
All the accounting for trades etc. is handled by IL&FS. The demat through IL&FS works out cheaper because they are also our custodians. We picked Zerodha because they are the transaction intermediary with the lowest cost.
I have a trading account with Zerodha and a demat account with IL&FS. So I have the combo that you guys are using. Will you open separate Zerodha and IL&FS accounts if I opt to invest in your PMS?
You trading account won’t help since you are not trading. All trades happen via our Zerodha account (Only the shares that are purchased will go into your own demat account)
IL&FS will be a separate demat account. It has to be so for the Power of Attorney.
I have a PMS with XYZ and the account is with IL&FS. Does it make it easier to join your PMS?
We have to open a new account and unfortunately, we still need the same documents.
My corpus is currently distributed over different types of investment such as Fixed Deposits, equities, Mutual Funds. I now wish to consolidate all this under one agency and let it be handled by someone like Capitalmind Wealth. Would you encourage such a request? Will you charge a separate consultation fee for this?
This is what we will do as part of the onboarding process. Our job is to remove your worries about managing your money. We want you to focus on doing the things you love and leave the investing and managing to us.
And of course, there will be NO separate consultation fee.