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Bengaluru-based investment management company Capitalmind Financial Services has received in-principle approval from market regulator SEBI to launch a Mutual Fund. This milestone coincides with the company's 10th anniversary.

As a Portfolio Manager, Capitalmind currently manages over Rs 2,200 crores in Assets Under Management (AUM) for more than 1,150 clients, boasting a strong annual client retention rate of 98%. Since its inception, the company has doubled its AUM every financial year, driven by robust portfolio performance and steady inflows. This growth has resulted in wealth creation exceeding Rs 1,000 crores for clients in less than seven years.

According to data from the Association of Portfolio Managers of India (APMI), Capitalmind ranks as the 25th largest Portfolio Management Service (PMS) by AUM in discretionary equity strategies. Two of its flagship investment approaches have demonstrated exceptional performance:

* Surge India, managed by Capitalmind’s founder and CEO Deepak Shenoy, has delivered a post-fees CAGR of 29.14% over the past five years ending July 31, 2024.

* Adaptive Momentum, managed by Anoop Vijaykumar, has achieved a post-fees CAGR of 31.78% during the same period.

Capitalmind's journey began as a blog when Deepak Shenoy started sharing insights on investing and personal finance. It expanded its offerings to include equity research, model portfolios, and a thriving investing community before eventually launching a PMS in 2017, and an AIF in 2024. Throughout its history, Capitalmind has served over 20,000 retail investors and 1,350 PMS clients, including hundreds of High Net Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs).

Deepak Shenoy, CEO of Capitalmind, commented on the approval: "Receiving SEBI's in-principle approval for a mutual fund is both an honor and a privilege. We are grateful for this opportunity and remain committed to building long-term wealth while maintaining the highest standards of regulatory compliance. Our team has established a solid reputation for excellence in performance, service, communication, and research. We plan to leverage technology, partnerships, and distribution channels to capitalize on India's robust growth story. We look forward to establishing Capitalmind Asset Management Company to meet SEBI's final approval requirements."

Capitalmind was among the early adopters of factor investing and quantitative methods in the portfolio management industry. Its Adaptive Momentum investment approach, launched in early 2019, predates the popular factor indices. The scheme's strong returns (31.78%) with over Rs 1,000 crores in AUM and relatively lower volatility over a five-year period demonstrate the quality of its process and ongoing research.

Unlike most industry players who rely on third-party vendors, Capitalmind developed its entire PMS operations in-house, including back-office, front-office, and fund-accounting systems. The company built proprietary technology for quantitative research, portfolio management, fund accounting, customer service, automated trading, and compliance. This approach allows for rapid adaptation to changing requirements. Notably, Capitalmind is the only PMS to publicly publish daily-updated equity curves (like MF NAVs) for all its schemes, setting new standards for transparency and disclosure.

Vashistha Iyer, COO of Capitalmind, emphasizes the company's client-centric approach: "Our commitment to technological and operational improvements has been instrumental in establishing Capitalmind as an industry benchmark for transparency and client-centricity. By building our systems in-house, we've ensured that our processes are not only agile but also highly aligned with the evolving needs of our clients. This approach has enabled us to deliver unparalleled service, set new standards in transparency, and maintain the highest levels of regulatory compliance. Our focus on technology has allowed us to stay ahead of the curve, ensuring that our clients receive the best possible outcomes."

Deepak Shenoy outlines Capitalmind's vision: "We are excited to introduce innovative investing approaches tailored to the evolving needs of Indian mutual fund investors. Our goal is to serve the rapidly growing cohort of 4.5 crore mutual fund investors with exceptional products and services while contributing to the growth of the overall Mutual Fund Industry. We look forward to playing a key role in the financialization of India by adding value to the rapidly growing Rs 64 lakh crore mutual fund industry."

As of March 31, 2024, India has 74.6 crore PAN card holders, while unique Mutual Fund investors number just 4.5 crores, indicating significant untapped potential. The industry has shown rapid growth, with AUM increasing at a 24% CAGR over the last five years. "The trifecta of increased investor participation, inflows from active investors, and a booming economy provides strong growth tailwinds to the mutual fund industry," adds Shenoy.

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