Rich man's need: A personal fund manager

R Shah, a high net worth individual, has been investing in the Indian stockmarket for more than 10 years.

He has invested in shares through public offers, secondary markets and mutual funds, and till recently was being served by a domestic brokerage's portfolio management scheme.

"I am a working professional and the portfolio management scheme was convenient as I did not have to keep track of the market on a day-to-day basis. Recently, however, I opted out of it. I manage my portfolio on my own now."

He says he has hired an analyst, who also doubles up as his portfolio manager.

This is not an isolated case. High net worth individuals, broadly defined as investors with more than Rs 50 lakh (Rs 5 million) in investible funds, are putting out advertisements in newspapers for recruiting market and sector analysts.

Says Shah, "I moved out of the scheme because the market is now more mature and regulated. It has become easier for me to understand and manage my portfolio. Besides, it is turning out cheaper to hire my own fund manager."

But those who run portfolio management schemes are sceptical. "The cost of hiring a good fund manager is high. Also, the infrastructure required to manage one's own portfolio is expensive and in the long term being with a professionally-run portfolio management scheme works out cheaper and safer," says Raamdeo Agarwal, joint managing director at Motilal Oswal Securities.

Adds another fund manager: "Portfolio management schemes have the advantage of having a larger fund to leverage from. This gives them the advantage of playing the market better. Individuals cannot do this."