Indianivesh PMS shuts down - What should investors do?
The PMS had a size of ₹60 crore and 190 clientsThe firm shut after critical staff was not able to reach office for carrying out its operations
PremiumIndiaNivesh, a financial services group with broking and PMS arms has announced the closure of its Portfolio Management Services (PMS). This is on account of the Covid 19 driven volatility, said a statement from the group. The PMS had a size of ₹60 crore and 190 clients. IndiaNivesh clients on the broking side have also faced delays in getting payouts. However, this is due to critical staff not being able to reach the office for carrying out the smooth operations, said the statement. IndiaNivesh also denied rumours of any association with corporate groups affecting its operations.
“IndiaNivesh Investment Managers Private Limited, SEBI registered PMS arm has decided to close its current strategy which is Small Cap (Sprout) due to recent market turmoil and difficult economic circumstances due to ongoing Covid19 issues," said the statement released by the PMS manager. An email sent out by IndiaNivesh to its clients allowed them to either transfer the shares to a demat account in their name or have the PMS manager sell shares and credit their bank accounts.
Responding to a Mint questionnaire about how to effect these withdrawals in a lockdown environment, Sandeep Jain of IndiaNivesh clarified that PMS can transfer shares to client’s individual demat accounts by using scanned copy of CMR (Client Master Report). “This can be procured on email from the broker. There is no need of any physical copy," he said. “For customers who do not have demat accounts, PMS can sell their shares and transfer the money into client’s bank accounts. Moreover, here we would like say that the entity is not winding up and will continue till the smooth handling of assets of our clients," he added. “Return in calendar year 2020 till 27th March was -27.3% as against -29.7% for BSE Small Cap Index," he added. He did not provide figures for the performance of the PMS in March 2020, as the Covid shock hit the markets. However taking a longer term view, he clarified that PMS was launched in March 2015 and return since then is -11.1% XIRR as against -13.1% XIRR for BSE Small Cap Index (benchmark). Returns since inception are also as of 27th March 2020.
Experts have suggested that clients examine the portfolio before choosing a withdrawal option. "If the stocks are illiquid, you should take the stocks in your demat account and then deal with them after seeking professional advice. If they are liquid and you can sell them without much market impact, opt for a cash withdrawal," said Shyam Sekhar, founder and Chief Ideator, iThought Advisory. Mrin Agarwal, founder, Finsafe India Pvt Ltd and co-founder Womantra took a different view. "Unless you can manage the stock portfolio yourself, you should simply ask them to redeem the shares and take your redemption as cash. You can then redeploy the money in a mutual fund which is a simpler and better product net of costs than a PMS" she said. Investors should seek the help of a financial advisor in this matter and get the portfolio evaluated from the advisor.
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