ASK Investment Managers is a PMS/alternative assets specialist. It manages money across several ‘discretionary’ portfolios (where the manager takes decisions without needing your approval at every step). The company has done incredibly well over the past five years, seeing its Assets Under Management (AUM) shoot up from Rs 1500 crore in 2013 to Rs 10,000 crore in March 2017.
Much of this growth was driven by the performance of the company’s key portfolios delivering an average CAGR of 29% from FY 2013-18 and outperforming their benchmarks. On the flip side, the company charges an ‘entry fee’ of 2.5% in addition to management fees on AUM and profits that are standard in the industry. This can make a dent in your returns.
What is a PMS?
For the uninitiated, a PMS manages a portfolio of stocks on your behalf. It is similar to an equity mutual fund but there are key differences. A mutual fund pools money from several investors and issues units in lieu of its assets. These units have a Net Asset Value or NAV which is declared on each business day. A PMS does not pool your money with other people’s and does not issue units.
The stocks in the PMS are held in your own name and your money in the PMS is held separately from that of other investors. Unlike a mutual fund, you can also transfer your existing stocks to a PMS. In other words, you give your existing stock portfolio to the PMS manager to manage.
PMS services have a minimum ticket size of Rs 25 lakh.
The themes and benchmarks for different ASK portfolios
|Growth Portfolio||Businesses according to ‘size of opportunity’ – quality businesses at a reasonable valuation.||Nifty 50|
|Eagle Portfolio||To concentrate on 12 undervalued ideas representing quality and compounding potential||Nifty 50|
|Strategic Portfolio||Focus on ‘margin of safety’ and the gap between price and intrinsic value of stocks||BSE 200 and Nifty 50|
|Life Portfolio||Companies with low capital intensity, capital efficiency and high-quality management||BSE 200 and Nifty 50|
|Indian Entrepreneur Portfolio||Indian entrepreneurial businesses of superior quality and high growth at fair valuation||BSE 500 and Nifty 50|
|India Select Portfolio||Focus on size, opportunity, earnings growth and quality of business||BSE 100 and Nifty 50|
|Structured Product Portfolio||Specific needs that cannot be met by standardized financial products||N/A|
|Managed Funds Portfolio||Invests in mutual funds based on client’s risk profile.||Equity and debt indices|
|Conviction Portfolio||Stocks passing strict filters, ROCE more than 25%, compounding growth prospects over 20%||Nifty 50|
|GEMS Portfolio||Quality stocks with returns driven by EPS compounding and catch-up to fair value||Nifty 50|
|High Conviction Portfolio||14-16 undervalued ideas representing quality and superior compounding potential||Nifty 50|
We have omitted the Real Estate Special Opportunities Portfolio due to lack of data
For the vast majority of its portfolios, ASK Investment Managers charges two types of fees:
- 2.5% upfront fee
- An ongoing fee of 2.5% fee of daily NAV or 1.5% on daily NAV along with 20% of profits over a 10% return (hurdle rate)
The PMS also imposes an exit load of 3% in the first 12 months and 2% in the next 12 months. The Eagle strategy has another 1% charge in case of exit from the 24th to the 36th month after entry.
The vast majority of ASK portfolios have performed very well. Portfolios with a five-year history have an average CAGR of 29%. The comparative figure for the Nifty 50 was 21%, for the BSE 200 was 22%. However, note that actual returns are likely to be a little lower once you factor in the effect of taxes. Unlike mutual funds, you have to pay taxes on realised gains in the fund regardless of whether you have redeemed the fund. It is also unclear whether the reported returns factor in the effect of fees.
|India Entrepreneur||30%||5 years|
|India Select||31%||5 years|
|High Conviction||7%||1 year|
Source: Disclosure Document of ASK Investment Managers submitted to SEBI for the half year ending September 2017. The returns are for the financial years.
ASK Investment Managers have managed their PMS offerings well with an average CAGR of 29% over the past five years on key strategies. However, these have been the years of a bull market and several mutual funds have also outperformed. As mentioned earlier, the entry fee of 2.5% in addition to management fees and/or profit sharing is unusual in the industry. It will act as a drag on your returns. Taxation also remains an irritant with all PMS products with you having to pay the tax without having redeemed your money.
That said, if you think the PMS returns are more than adequate compensation for the fees, ASK is not a bad choice.