Frequently Asked Questions

We advocate for a long-term perspective when it comes to equity investments. We advise clients interested in investing with us to plan for a minimum investment horizon of 3 to 5 years, and the longer the horizon, the better. For those with an investment timeline shorter than 3 years, we recommend seeking alternative investment opportunities better suited to their timeframes.

No, each client’s portfolio is unique.

We tailor and adjust the portfolio based on the individual client’s start time with us, as well as any subsequent funds added or withdrawn. While incrementally we take similar decisions for our clients, for a new client, their portfolio at the time of entry may appear quite different from that of an existing client. This difference is also influenced by the current valuations of the companies we are looking to invest in. If valuations are attractive, we invest more promptly; however, if they are less so, the process of becoming fully invested may take longer, sometimes even several months.

With this approach, our clients don’t need to concern themselves whether the current environment offers good timing from an investment point of view. We at Banyan Tree will allocate money to stocks when they offer a good reward to risk ratio. So clients only need to consider whether the money they are investing with us, are long term in nature and not about whether the current environment is favourable to invest or not.

Our firm provides a single investment offering. It’s important to understand that equity investing inherently carries risk. We do not create portfolios that are more concentrated or carry a higher risk based on individual client requests. Our service is a discretionary Portfolio Management Service (PMS), where we are responsible for all investment decisions concerning the portfolio.

The minimum corpus of ₹50 lakhs needs to be brought in at one go once the account is set-up.

As per Securities and Exchange Board of India (SEBI) regulations, you must invest a minimum corpus of ₹50 Lakhs by way of funds or listed equities or a combination thereof to start a Portfolio Management Services account.

Absolutely. To initiate the onboarding process, please complete the ‘Contact Us’ form on our website. Following that, we will arrange a call with you to proceed further.

Your bank and demat accounts will be opened at HDFC Bank, which serves as the designated custodian for client assets.

To set up an account for a resident Indian client, we assist in opening both a bank account and a demat account. For Non-Resident Indians (NRIs), we additionally open a trading account alongside the bank and demat accounts. These accounts are established under the client’s name, and the client grants a Power of Attorney (PoA) to operate and manage these accounts on the client’s behalf. Clients have the flexibility to open accounts either individually or jointly, and also appoint nominees for both bank and demat accounts.

Once all documents are signed and the Know-Your-Customer (KYC) verification is complete, it will take approximately 5 to 7 working days to set up the account.

Our variable fee structure aligns with our core philosophy that we should earn our fees only when our clients achieve financial gains. This approach motivates us to avoid complacency or excessive risk-taking. If the portfolio suffers a significant and permanent decline, it impacts not just the client, but also our eligibility for fees.

Our fee structure is based solely on performance. We charge a performance fee of 10% on all gains in the portfolio NAV (Net Asset Value). There is no fixed annual fee, and no threshold or hurdle rate applies.

If the portfolio experiences a negative return in any given year, the shortfall must be fully recovered before any performance fee can be charged in subsequent years. This ensures that we only earn fees when your portfolio achieves net positive growth.

Clients are billed annually for this fee. Importantly, there are no entry or exit loads, and clients are not subject to any lock-in period with our services.

Clients have the flexibility to opt for either partial or full redemptions from their account. For partial redemptions, it’s important to note that the remaining balance post-withdrawal must comply with SEBI regulations, which currently mandate a minimum of ₹50 lakhs. The process of redemption can be initiated by sending an email to us from your registered email address.

For a partial redemption, if your account holds sufficient cash, the transfer is usually completed within 1 working day. Should equities need to be sold, the timeline extends to 2-5 working days.

In the case of a full redemption, we will liquidate the entire portfolio, and the majority of the funds will be transferred to your personal account, typically within 3-7 working days. A certain amount is reserved to cover any pending charges and fees. You will be required to sign the closure forms, and after a period of 30-45 days, once all charges have been fully reconciled and settled, any remaining funds will be transferred to your account. Finally, we will handle the submission of account closure documents for bank, demat, and trading accounts (as applicable) to the relevant institutions, and send you a closure report.

Clients are free to add funds to their account at any time after the initial investment, and there is no minimum amount required for these additional contributions. Additionally, clients have the option to set up a Systematic Investment Plan (SIP) to regularly add funds to their Portfolio Management Services (PMS) account.

Yes, it is possible to add securities to your portfolio after opening your depository account (demat account). However, please note that we only accept listed equities for inclusion in the portfolio account. We strongly recommend that clients consult with us prior to the transfer of any such securities.

Our investment approach is rooted in a long-term perspective. We generally opt to sell a stock only when, in our assessment, it becomes overvalued or the fundamental reasons for our initial investment no longer hold true. Reflecting this strategy, historical data shows that our average holding period for a stock has been typically around 3 to 4 years.

Our investment philosophy and methodology encompass a broad range of considerations, making it a topic too extensive to be adequately covered in a brief response. We have dedicated a comprehensive section on our website to this subject, which we highly recommend for a thorough understanding of our approach. You can explore this in detail in our Investment Philosophy section.

Our firm prioritizes aligning the interests of the firm and its directors with our investors.

Our directors have a substantial proportion of their financial networth invested in the same manner as our clients. Furthermore, our fee model is structured to be performance-based, ensuring that the firm and its directors are compensated only when our clients’ investments surpass a specific threshold. Banyan Tree Advisors is solely focused on this line of business, with no other business interests or income sources. The independence of our operations is assured by partnering with external professional firms for services like brokerage, depository, custody, and auditing, where we maintain no commercial interests. This approach underlines our commitment to our clients.

Given our focus on long-term investment horizons, while we welcome your queries at any time, we recommend a meaningful review of your portfolio on an annual basis or even less frequently. This approach aligns with the long-term nature of our investment strategy.

To ensure you are always informed and up-to-date with your investments, we provide a comprehensive suite of reports and updates. Here’s what you can expect in terms of communication and reporting:

From Banyan Tree Advisors:

• Notifications for any Fund/Securities transfers to or from your PMS account.
• Monthly Reports: A detailed Portfolio statement by the 3rd working day of each month.
• Quarterly Advance Tax Data: Capital gains, Interest income, Dividend, TDS information for advance tax purposes, provided by the 12th of each quarter-ending month.
• Annual Tax Filing Report: An audited report with relevant data for India tax filing, provided by June each year, including details like capital gains, interest, dividends, TDS, securities at cost, bank statement, broker ledger, etc.
• Annual Billing/Fee Report: An audited billing report provided annually on the anniversary month of your account opening. For example, if your account was opened in January 2019, your billing period will be January 2020, and the fee report will be sent in February 2020.
• Event-based and ad-hoc communication: This includes updates related to share buybacks, IPOs, Re-KYC notifications ( if required by the bank/broker), and any other regulatory/account-related updates.

From HDFC Bank:

• Net Banking Access: Login ID & Password sent by HDFC Bank to the client’s registered address for access to savings and demat accounts.
• Bank & Demat Statements: Emailed monthly for the bank account and quarterly for the demat account.