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Disruption! Kamath Brothers to manage money for the ultra rich on profit share basis

Mumbai: After building India’s largest discount broking firm, Zerodha’s founders Nithin and Nikhil Kamath will now manage money for the ultra rich on a profit share basis. The asset management firm, which was launched on August 27, has already received commitments totalling Rs 100 crore.

“We thought there weren’t any products in the market that were aligned with what the client actually needs,” Nikhil Kamath said in a phone interview, pointing out that other AIFs were loaded with quite a few charges such as management fees and carry cost, among others.

“We wanted to change that. True Beacon has taken away all this. We only make money if our client makes money. If the client puts in Rs 100, all of Rs 100 goes into the fund, if Rs 100 becomes Rs 110, we charge Re 1 as the profit share,” Nikhil Kamath said, adding that the fund is one of its kind in the AIF market.

The fund is a category-III alternative investment fund (AIF). A fund is allowed to take derivatives positions and is allowed to borrow for investment purposes.

Nikhil Kamath said that around 60 per cent of the fund will be invested in Nifty stocks and balance 40 per cent in a long-short fund. He added the intention of the fund was to achieve 20 per cent return every year, and it was an open-ended fund.

After building the retail-focused brokerage, this time the focus is on the ultra-rich.

“We are trying to seek out ultra HNIs. Our margins are so little in this fund, we would not be able to service too many clients. We are going after clients who have a minimum of $2 million or Rs 14 crore to allocate to the fund,” Nikhil Kamath said, adding that he had a personal strong track record of managing money.

True Beacon is an equal partnership between the Kamath Brothers, and they also have on board Richard Pattle as Senior Advisor who will be based in Dubai. Prattle is a Senior Advisor with Zerodha as well. He was the former Vice Chairman at Standard Chartered Private Bank as senior advisor.

Source: Economic Times