Two years. That’s all the time True Beacon took to go from a brand spanking new hedge fund to one that’s managing about $200 million in wealth for nearly 400 ultra high net worth individuals. And it’s got Zerodha to thank for it. Kind of.

Zerodha, India’s largest stockbroker, catapulted the Kamath brothers— Nithin Nithin The Ken The Interview: Zerodha’s Nithin Kamath on the business of money Read more and Nikhil—into the billionaires club, giving them first-hand knowledge about the investment behaviour of high net worth individuals (HNIs) and the problems they face. They founded Zerodha Zerodha The Ken For Zerodha, Covid is a ladder Read more in 2009 to solve pain points for the retail trader, especially with regards to fees, when traditional brokerages charged customers a commission of 0.5% for trading on the brokerages’ platforms.

Simplifying the fee problem was an idea the younger of two, Nikhil Kamath, translated into asset management for the ultra rich when he founded True Beacon in September 2019 along with Richard Pattle. Pattle, who is co-founder and chief executive officer (CEO), was once a royal aide to the UK’s Prince Charles, and had worked with HNIs and ultra HNIs in his previous stint at Standard Chartered bank.

“It mattered to me when I was trying to invest my money,” says Nikhil Kamath, in an interview with The Ken. Funds slap a mix of fees that, in 20 years, could be equivalent to half your principal investment, says Kamath. True Beacon eliminated all of it, instead charging a straight performance-based fee—10% on returns.

Concentrated cash

HNIs and ultra HNIs hold over Rs 1-10 crore ($135,000-$1.3 million) in investments and make up only 1% of India’s population. But they account for about 90% of the wealth.

Fees are a main part of True Beacon’s pitch, but so is its risk appetite. At a time when the market is witnessing a never-seen-before bull run, Kamath is averse to this exuberance. The Nifty 50, a benchmark stock market index composed of 50 of the largest Indian companies listed on the National Stock Exchange, first crashed by 38% from January to March 2020 during the lockdown. Since then, it has rallied by over a 100% to an all-time-high, even as people have lost jobs, and seen small and medium industries getting wiped out.

“I’m a very sceptical person, I’m always the glass half empty kind of guy. I don’t like too much risk,” says Kamath. “People have lost the plot… I think everything is so expensive, that it’s really hard for me to make up my mind to buy anything right now.”

Instead, True Beacon is preparing to protect wealth when the market eventually turns—counterintuitive when you think about how bull runs last longer than bear runs.

AUTHOR

Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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