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Portfolio Management Services are offered by investment experts to grow your money and achieve financial goals by investing it in stocks, mutual funds, bonds etc. These investment experts are known as portfolio managers.
Despite being managed by experts, Portfolio Management Services have historically underperformed comparable mutual funds and benchmarks. The primary reason for the underperformance is the high fees Portfolio Management Services levy.
Today, we will talk about Dezerv, a PMS industry disruptor that charges a 0% management fee and a super low performance fee. But first, let’s look at the types and quantum of fees and penalties Portfolio Management Services typically levy.
Understanding PMS fees
There are 3 types of fees in PMS service:
1. Fixed management fee
2. Variable performance fee
3. Early exit penalty
Fixed management fee
Portfolio managers charge a fixed management fee for managing investor money. This is usually very high, in the 1.5-2% range.
Fixed management fee is the biggest drag on returns because the PMS will charge it even if they generate subpar and even negative returns!
Variable performance fee
Portfolio managers levy a variable performance fee for generating returns on investments. A variable performance fee is usually in the range of 10-20% on returns.
Let’s say you invest Rs. 100 and the PMS turns it into Rs. 120: Rs. 20 profit. Suppose the PMS performance fee is 10%. The PMS will collect Rs. 2 (10% of Rs. 20) for generating 20% returns for you.
Early exit penalty
Portfolio managers charge an early exit penalty if investors withdraw within a certain timeframe, generally up to 3 years.
Typically, PMS early exit penalties are 1-2% if investors exit within 2-3 years of investing.
These fees and penalties add up over time. Hence, most Portfolio Management Services underperform mutual funds and benchmarks by considerable margins.
Dezerv PMS charges a 0% fixed management fee Dezerv, a wealth tech startup, has disrupted the Portfolio Management Service industry with a 0% fixed management fee.
Further, Dezerv charges a performance fee of just 5% and has no early exit penalty.
Such low fees in the PMS industry are unheard of, and it is no wonder that Dezerv has been outperforming mutual funds and benchmarks.
Features of Dezerv Portfolio Management Service While super low fees are a compelling enough reason to consider Dezerv PMS, here are a few more reasons why you can trust them with your money.
Started by veterans of the investment management industry Dezerv was started by veterans who held senior positions and built business verticals ground up at companies like Anand Rathi Wealth, Kotak Wealth and IIFL Wealth.
Using direct mutual funds as the building blocks
Most Portfolio Management Services that invest in stocks exclusively end up underperforming comparable mutual funds and benchmarks. Hence, Dezerv uses direct mutual funds to build investment portfolios instead of engaging in active stock picking.
The mutual funds used are a mix of passive equity funds, active equity funds and debt mutual funds. The investment team at Dezerv actively manages the mutual fund portfolio.
Alignment with investor interests
While most PMS levy hefty management fees (~1.5-2%), Dezerv charges a 0% management fee because they believe they should make money only when their investors do. Hence, they only charge a 5% performance fee which is again lower than most other Portfolio Management Services.
Personalized asset allocation
Dezerv, unlike most other PMS, helps you identify your risk profile and financial goals. As per them, they recommend the right asset allocation for you. Asset allocation refers to how much money you should invest in equity and debt.
Invest for financial goals or wealth creation
Because Dezerv lets you personalize your investment portfolio through custom asset allocation, you can invest for specific financial goals or just wealth creation. Most other PMS help clients create wealth only and do not allow customized asset allocation.
Unlimited access to a relationship manager
At Dezerv, you get unlimited access to an investment expert who will not only help you create a personalized portfolio but also answer your questions and help you stay invested even when the market is volatile.
Frequently Asked Questions about Dezerv PMS
Q. 1 When did Dezerv PMS start?
Ans. As a company, Dezerv started operations in April 2021. Their PMS strategy began in August 2022.
Q.2 Does Dezerv have any physical offices?
Ans. Dezerv has 3 physical offices. One each in Mumbai, Bangalore and Delhi. If you are from a city other than these, then they help you understand their strategy and invest in it via phone calls or video calls. Client comfort is Dezerv’s top priority.
Q.3 What are the returns generated by Dezerv’s PMS strategy?
Ans. Dezerv’s Equity Revival Strategy (ERS) has generated returns of 16.42% CAGR against NIFTY 50 returns of 14.5% from March 2017 to December 2022. Please note that a mix of backtested and real-world performance has been used to answer this question.
Q.4 What is the minimum investment required to invest in Dezerv PMS?
Ans. Like all other Portfolio Management Services, the minimum investment required is Rs. 50 lakh. But you don’t need fresh Rs. 50 lakh to invest. Dezerv will help you shift your existing investments to their PMS.
Q.5 How can Dezerv PMS help me achieve financial goals?
Ans. Dezerv’s wealth managers help you plan financial goals and recommend the most optimal asset allocation and investment plans that will help you achieve financial goals like retirement and your child’s education.
Q.6 What are the other investment products offered by Dezerv?
Ans. Dezerv aims to become a full-stack investment solutions provider. They have mutual fund portfolios for retail investors, PMS for affluent investors and an AIF (Alternative Investment Fund) that enables investors to invest in growth-stage startups. Dezerv also offers curated bond investments privately to clients who have invested in at least one of their strategies.
