Investor Awareness

Portfolio Management Services (PMS). A SEBI-registered portfolio manager manages a portfolio of securities on your behalf. The securities are held in a demat account in your own name. PMS can be:

• Discretionary — the portfolio manager decides what to buy and sell;
• Non-discretionary — the portfolio manager recommends, and acts only on your approval; or
• Advisory — the portfolio manager advises, and you execute the transactions yourself.

Alternative Investment Funds (AIFs). Privately pooled investment vehicles registered with SEBI, in three categories:

• Category I — funds investing in areas such as start-ups, small businesses, infrastructure and social ventures;
• Category II — funds such as private equity and debt funds that do not fall into Categories I or III; and
• Category III — funds that may use complex trading strategies, including leverage and derivatives.

GIFT City funds are regulated by the International Financial Services Centres Authority (IFSCA) and are generally denominated in foreign currency such as US dollars.

Unlisted and pre-IPO shares are shares of companies that are not yet traded on a stock exchange. They are typically illiquid and can be difficult to value.

Regulations set high minimum investment amounts for these products — currently ₹50 lakh for PMS and generally ₹1 crore for AIFs. These thresholds exist because the products are complex and can carry significant risk. Do not stretch your finances to meet a minimum; these products are not suitable for every investor.

Every investor must complete Know Your Customer (KYC) formalities. Your KYC records are held by KYC Registration Agencies and the Central KYC Records Registry. Keep them current: update your address, contact details and bank account whenever they change.

Register a nominee for your demat account and investments, so that your assets pass smoothly to the person you choose.

• PMS securities are held in a demat account in your own name, and AIF units are allotted in your name.
• Make payments only through banking channels, from your own bank account, directly to the account designated by the product provider in its official documents.
• Never pay in cash, and never transfer investment money to an individual’s personal account.

For PMS, read the Disclosure Document and the client agreement. For AIFs, read the Private Placement Memorandum and the contribution agreement. Make sure you understand each of the following before you commit:

• Management fee — the fixed annual charge for managing your money;
• Performance fee, and the hurdle rate that must be beaten before it applies;
• High-water mark — whether performance fees are charged only on new gains above a previous peak;
• Catch-up clauses, operating expenses and other charges;
• Exit loads, lock-in periods and how and when you can withdraw; and
• for AIFs, capital calls — how and when committed money will be drawn down.

You have the right to know what any distributor earns from recommending a product. Ask for it in writing before you invest. IndiaHedgeFunds discloses its commission on every product in writing before you invest. Remember that many portfolio managers and funds also offer a direct route that does not involve a distributor at all.

Before you invest, check that everyone involved is properly registered:

• Portfolio managers and AIFs — on the website of the Securities and Exchange Board of India, sebi.gov.in;
• PMS distributors — on the website of the Association of Portfolio Managers in India, apmiindia.org; and
• GIFT City entities — on the website of the International Financial Services Centres Authority, ifsca.gov.in.

IndiaHedgeFunds is registered with APMI under registration number APRN04329.

Be cautious — and walk away — if you encounter any of the following:

• promises of guaranteed, assured or fixed returns from market-linked products;
• pressure to decide or invest quickly;
• unsolicited investment tips through social media, messaging apps or chat groups;
• requests for your passwords, one-time passwords (OTPs) or PINs;
• requests to pay an individual or an account unrelated to the product provider;
• entities that cannot show a valid registration with SEBI, APMI or IFSCA; or
• returns that seem too good to be true.

Fraudsters sometimes impersonate legitimate firms. IndiaHedgeFunds sends email only from the indiahedgefunds.com domain. If you receive a message, call or social-media contact claiming to be from us that seems unusual, do not share any information or make any payment — contact us directly at info@indiahedgefunds.com to confirm it is genuine.

• Review the periodic statements and reports you receive from your portfolio manager or fund.
• Check your Consolidated Account Statement from the depositories, which shows the securities held in your demat account.
• Compare performance against the stated benchmark, after all fees.
• Report any discrepancy promptly to the product provider and to us.

Tax treatment differs between products. In a PMS, you own the underlying securities, so capital gains arise on each sale made in your portfolio. The taxation of AIFs depends on their category and structure. Tax laws change, and your position depends on your own circumstances — take independent tax advice before investing.

• Investments by non-resident Indians are governed by the Foreign Exchange Management Act, 1999 and must be routed through the appropriate NRE, NRO or other permitted accounts.
• Understand the repatriation rules that apply to the account you invest from.
• Tax treaties between India and your country of residence, and that country’s own reporting rules, can significantly affect your returns — take advice in your country of residence as well as in India.

If something goes wrong, follow these steps and keep a record of every communication:

1. Contact our Grievance Officer, Roshini Kumari, at compliance@indiahedgefunds.com with the details of your complaint.
2. Contact the product provider through its own grievance-redressal mechanism, set out in its documents.
3. Escalate to SEBI through its complaints platform, SCORES, at scores.sebi.gov.in, where applicable.
4. Use Online Dispute Resolution through the securities-market ODR portal at smartodr.in, where applicable.

• SEBI investor education — investor.sebi.gov.in
• Securities and Exchange Board of India — sebi.gov.in
• Association of Portfolio Managers in India — apmiindia.org
• International Financial Services Centres Authority — ifsca.gov.in