Ours is a discretionary Portfolio Management. In discretionary scheme , the portfolio manager has the absolute discretion to make all the investment , reinvestment and other decisions relating to the management of the portfolio. We do not offer non-discretionary services ( where the portfolio manager consults the investor before making investment and reinvestment decisions).
Hurdle rate is the rate of return (annualized return) below which the profit sharing is not applicable. The objective of hurdle rate is to ensure that the profit sharing is carried out only if the annual return (post fixed fee expenses ) exceeds the hurdle rate . Refer the working shown in the next question to understand more on this.
For example , Let us assume , the initial capital is Rs 100, Hurdle Rate is 12% , Ist year return is Rs 30 ( including unrealized gains), Fixed Fee is 1% and Profit Sharing Fee is 20% , then the working of expenses is ;

Total Returns ( including realized and unrealized gains) = Rs 30.00
Fixed Fee Charges = Rs 1.00
Returns net of Fixed Fee = Rs 29.00 ...........A
Less Hurdle Rate = Rs 12.00
Returns net of fixed fee & hurdle rate = Rs 17.00
Profit Sharing @ 20% to TrustLine = 20% of Rs 17.00 = Rs 3.40 ...........B
Net Returns to the Investor = A-B = Rs 25.60
NAV stands for Net Asset Value.
It represents the sum total of the current value of the securities plus the bank balance plus receivables less payables less PMS fees.
Fixed Fee is charged at the applicable percentage ( based on the options chosen by the investor) quarterly on the average NAV (daily NAVs averaged over the quarter) for that quarter and is charged at the end of the quarter. This will be charged at the end of every financial quarter irrespective of the joining date. If the joining date is not same as the beginning of financial quarter , it will be charged on pro-rata basis for the Ist quarter alone to make sure that it is aligned with the financial quarter from thereon.

For e.g , if average NAV is Rs 100 for the quarter and the annual fixed fee is 1% , then at the end of the quarter , 0.25% i.e. 0.25 Rs is charged and debited to the investor.

* GST & other statutory taxes will be charged extra
It is charged at the end of every 12 months or at the time of withdrawal of funds (in the interim period) based on the return structure explained above. Profit sharing is aligned with the client year , not financial year. Client year refers to the every 12 month period from the date of joining.

* GST & other statutory taxes will be charged extra
As mentioned earlier , profit sharing fee is charged at the end of every client year ( refer above definition) or at the time of withdrawal of funds. Annual returns are computed after taking into account the corpus inflows and outflows.
We have a well defined reporting process that has been put in place for periodic sharing of reports to clients. The periodicity and the nature of reports are as under : -

Transaction Statements - Sent on monthly Basis.
Performance and Holding Statements - Sent on a Quaterly Basis (Financial Quarter)
Quarterly Gain Statements* - For Advance Tax Purpose
Annual Gain Statements* - for Final Tax Computation.

* This reports would cover Income and Expense Statement, Equity Gain / Loss Statement, Mutual Fund Gain / Loss Statement, Dividend Statement.
Under the portfolio management scheme , the responsibility of the income tax payment on the income earned from PMS activities is on the investors. It will be primarily capital gains tax. However ,TrustLine will provide adequate statements ( capital gains reports etc ) to the investors periodically or on a specific request basis.
Let us take the example shown above for fixed & profit sharing fee working. As per that,

Net Returns (Pre-Tax) to the Investor = A-B = Rs 25.60
Add back Management & Performance Fee expenses = Rs 25.60 + Rs 4.40 = Rs 30.00
Our experience shows that about 70% of the gains in our portfolio is of long-term nature and the rest arises from short-term gains. Assuming the continuity of this trend,

Long-term gains = 21 00 (70% of Rs 30.00) (taxed at 10% rate)
Short-term gains = 9.00 (30% of Rs 30.00) ( taxed at 15% rate)
Tax incidence = 3.45
The net post tax returns (estimate) = Rs 25.60 minus 3.45 = Rs 22.15*

This example shows that the tax incidence is likely to be very small relative to the expected annual returns.

Note: * For simplification, the above illustration doesn't include GST on fee expense.

* Also we have not facted fee expenses in the computation.

The sign-up procedure is simple. Once the investor makes up his mind to go ahead with the TrustLine proposition, TrustLine will send / handover following set of documents:

  • TrustLine Disclosure Document (as per SEBI Compliance).
  • TrustLine Docket containing Client Registration Form , DMAT form and Portfolio Management Agreement.
  • This docket is provided with a complete check list for documentation.
  • Investor will fill the registration form with required supporting documents (basically ID, Aadhar and Address Proof) and execute the agreement.
  • Investor to send back the docket to TrustLine (alongwith the cheque/DP slips as the case may be) after keeping a photocopy for his records. DP slip is required in the case of investor transferring securities as his initial investment.
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6/13, 3rd Floor, Equinox Building, Eastern Wing, North Avenue, Kesava Perumalpuram,
R.A. Puram, Chennai - 600 028.
SEBI Registration No
PMS : INP000002254
AIF : IN/AIF3/18-19/0580
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