At Banyan Tree Advisors, we are committed to providing you with clear and comprehensive information to assist you in making informed investment decisions. This page is designed as a resource to answer your queries and clarify any doubts you might have about our services and processes. Our aim is to ensure that your experience with us is seamless and transparent.
General
What is the recommended time horizon for investments made with your firm?
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.
Will my portfolio be identical to that of an existing client?
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and adjust the portfolio based on the individual client’s start time with us, as well as any subsequent funds added or withdrawn.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.
Could you share details of the investment schemes or offerings you provide? Also, is it possible to tailor a portfolio to suit my preference for a higher risk profile?
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.
Do I need to invest ₹50 lakhs when the PMS account is created, or can I transfer this amount over a period of time?
The minimum corpus of ₹50 lakhs needs to be brought in at one go once the account is set-up.
What is the minimum amount required to start a Portfolio Management Service (PMS) account with Banyan Tree Advisors?
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.
Account Opening
Can I directly onboard as a client without going through an agent or distributor?
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.
Which financial institution will my bank and demat accounts be opened with?
Your bank and demat accounts will be opened at HDFC Bank, which serves as the designated custodian for client assets.
How is the account structured and set up? What is the structure and setup process for an account?
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.
How long does it take to set up my account with Banyan Tree Advisors?
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.
Fee Structure & Taxation
Why do you choose not to offer a fixed fee structure or a reduced fee for larger investment amounts?
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.
Can you share your fee structure and any additional charges that may apply?
Our fee structure is based on performance. We only charge a fee when the client’s returns exceed a threshold of 5%. Specifically, a performance fee of 20% is levied on the incremental return above this 5% hurdle rate.
If the portfolio’s performance falls below the 5% hurdle rate in any given year, we must first compensate for this shortfall and achieve the hurdle rate for the subsequent year before any performance fee can be applied. 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.
Account Funding / Redemption
How does the process of withdrawal or redemption work?
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.
When can I contribute additional funds after the initial ₹50 lakhs investment, and is there a minimum amount for these top-ups?
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.
Can I transfer securities to fund my account, and if yes, which securities can I transfer?
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.
Investment Philosophy
How often do you churn the portfolio?
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.
Does Banyan Tree have a specific strategy or methodology for stock selection and investment management?
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.
What measures does your firm take to align the interests of your firm/its directors with those of the investors?
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.
Communication
How often can I meet or speak with you to review my portfolio?
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.
What are the options for accessing the details of my portfolio?
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.
Ask your question
If you have any questions that have not been addressed by these FAQs, please use this form to ask your question. We will reply to your question as soon as possible.
