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Dwaith PMS caters to High Net-Worth Individuals (HNI) and corporate clients based in India, as well as Non-Resident Indians (NRI) and Overseas Citizens of India (OCI) residing outside India. It operates under SEBI PMS registration number INP000008561 and specializes in a value investment strategy. Additionally, Dwaith PMS holds a SEBI Investment Advisory license with registration number INA000017329. Please note that all new clients will be exclusively managed under the PMS framework.
- The objective of Dwaith Funds is to outperform major indices—including the S&P 500, MSCI Emerging Markets, Russell 2000, Barclays US Aggregate, Nasdaq Composite, and Sensex (India)—over a five-year period. Achieving this goal would position us to surpass the performance of over 90% of hedge funds currently in the market. Our focus is on capital endurance and permanence, combined with reasonable growth.
- Harsha achieved a CAGR of 37% in his personal portfolio from 2013 to 2021, demonstrating a strong track record.
- Since 2022 as a SEBI-registered Investment Advisory (IA), our returns have been as shown here.
Year
Return
Dwaith
Advisory
Sensex
India
2022²
16.5%
-4.8%
2023³
103.2%
24.9%
² Starting dates for comparison when initial investments were made: Nov 11, 2022 (Sensex India) to March 31, 2023
³ Returns from April 2023 to Mar 2024 post fees
- Long-Term Focus:
- Invest in companies for 3-5 years, aiming to hold positions until they reach their intrinsic value.
- Limited Transactions:
- Typically, around a dozen or fewer transactions per year, avoiding frequent trading.
- Investment Criteria:
- Companies should be trading well below their intrinsic value.
- Emphasis on high-quality management with integrity and commitment.
- Target companies at key inflection points (e.g., due to regulatory changes, management shifts, or evolving consumer behavior).
- Long-Term Focus:
- Growth Potential:
- Identify young companies with the potential to become large-cap stocks.
- Exceptional Economics:
- Invest in companies with strong economic fundamentals and long-term growth prospects.
- Inflection Points:
- Focus on companies undergoing significant positive changes that could drive future growth.
- Growth Potential:
- Integrity, commitment, and quality of management are critical factors.
- In India, where management quality is paramount, it is a primary criterion for investment.
Dwaith Funds will never be an open-ended, large partnership with thousands of partners. Likely, Dwaith Funds will have a few dozen member partners and manage a few hundred million dollars with the partners invested for the long term. Word of mouth will likely be the biggest growth marketing strategy of Dwaith Funds.
We will focus excessively on setting the right processes (taxation, auditing, banking, custodian relations). We have excellent banking, auditing, and custodian partners. UBS in the USA, HDFC in India as Bankers and Custodians, Rashmin Sanghvi Associates as FEMA/FERA/SEBI and taxation experts, Tjong & Hsia as SEC, fund management & taxation advisors and lawyers.
Further growth will largely depend on the investment returns and the stewardship attitude shown by Dwaith Funds towards its limited partners.
The operational agreement and limited liability agreements are very clear. Upon dissolution, the partners will get the equivalent amount of shares of underlying holdings. They can be distributed as-is or sold by a designated liquidator to distribute equivalent money.
Absolutely. K-1s and detailed equity statements will be issued annually that disclose investors’ tax liability. Also, most investments will be made with long-term (LT) gains in mind. If a position warrants to be sold for short-term (ST) gains due to some compelling reason (growth, gets quickly over-valued, etc) – such actions will be promptly made. Audited statements will be provided.
There will be no entry or exit loads. However, administrative charges or legal charges will be collected as and when they arise (at actuals). There will be no penalty fees or punitive charges.
A notice of 60 days is recommended for withdrawal and annual withdrawals would be the best way to withdraw. Fresh investments can be made monthly or at the discretionary approval of the managing partner per the operational agreement.
Performance fees (25% of returns over 6% hurdle rate) are billed annually to Dwaith Partners and Dwaith PMS. They will only apply with standard high-water marks (i.e., funds will need to be always at all-time highs for any performance fees to become applicable). If for a given year (or multiple years until high water mark is achieved), the returns are sub 6%, no performance fees will be payable to the managing partner.
Today, Indian tax laws do not permit Indian citizens to invest in funds based outside of India that invest into India (roundtripping under Reserve Bank of India guidelines: Link). However, if these laws change, the managing partner will have a large (>50%) percentage of his wealth in Dwaith Partners in the US. Dwaith PMS holds a large of the managing partner’s money.
All of the managing partner’s investments are made in the same manner as Dwaith Partners and the interests of partners are 100% aligned as he will not be paid unless he meets the minimum 6% returns threshold. Asset gathering will not give him extra money as no percentage of AUM (Assets Under Management) is charged as fees. Typically Hedge Funds charge 1-2% of AUM as fees and typically drive their interest in asset accumulation.
Since 2018 (when he moved back from the US), Harsha has been financially independent. He is not dependent on Dwaith Funds. He will never draw a remuneration from Dwaith Funds.
He hates the idea of countries controlling skilled people working/living freely. He held permanent residency permits in Germany (Niederlassungserlaubnis) and the USA (Green Card) previously. He gave up the residency permits, not to hold-up slots for other skilled workers who might benefit from the same, and more importantly to simplify his taxes.
One of his main ideas for the next decade and beyond is the democratization of capital taking place across the world. This will lead to growth in parts of the world that were limited due to the lack of opportunities/capital. Physical boundaries are becoming less relevant in the world as technology is linking the world in interesting ways. Some of his thoughts are explained in the 2020 investment letter written during the Covid pandemic.
India will remain the principal destination for investments. Investments will be made based on two factors: 1) Comfort in Return ‘of’ Investment vs. Return ‘on’ Investment. If the country or company offers stability of the investment and has sufficient risk to reward offering and 2) Opportunity cost (versus existing investments) and the relative discounts at which the stocks are trading and the likely tax implications for switch-over
Likely, a portion of the portfolio over the years will find itself in countries outside of India (emerging and frontier markets). The managing partner’s general view on this as well as the concept of endurance and permanence are explained in his 2018 investment letter.
Money will be returned to the partners in such a scenario. This situation is likely to happen in the next decade or two and we will be prepared to right size or close the funds under such circumstances.
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Invest with Dwaith PMS and be part of India’s growth story. Let your capital work harder and smarter in one of the world’s fastest-growing economies.
*Note: Dwaith Advisory was a SEBI RIA until March 2024. All investments are now managed under our Portfolio Management Service (PMS).*
