Many Glaring Errors in SEBI PMS Data; Misleads Investors

Moneylife Digital Team 27 June 2017

Investor Interest

The Securities and Exchange Board of India (SEBI) is putting out absurdly wrong numbers and data full of mistakes with regard to data for portfolio management services (PMS).

SEBI has always been reluctant to share the data, which is key to helping investors choose the right portfolio manager. Earlier, the market regulator had stonewalled our queries on the grounds that PMS results were fiduciary information. In fact, Moneylife fought a hard battle with SEBI to get the data out in the public domain by filing Right to Information (RTI) applications and taking our appeal to the Central Information Commission (CIC), which ordered SEBI to put out the data in the first place.

This finally forced SEBI to put out PMS performance data, but even that was done grudgingly and in a very difficult to access manner. It has now taken things to an irresponsible new low by putting out horrendously wrong data, as is established by some painstaking work by one of our readers. Take a look.

For October 2016, SEBI’s website shows that Anvil Wealth Management generated a return of 138% in one month.

The data also shows highly erratic returns – after showing returns of 113% to 130% for every month between May 2016 to November 2016, the return suddenly dips to 0% in December 2016 and shoots up to 126% in January 2017 and drops to 0% again in February 2017. How does one make sense of this?

Another company, Moneybee Securities Pvt Ltd, in shown to have generated a return of 42.63% in December 2016, when the market was down after demonetisation.

Kotak Mahindra Asset Management Company reported a return of 113.07%, in October 2016 when the market was flat. In August 2016, when the market was sharply down, the Kotak Mahindra AMC managed a return of 65%.

Another PMS, NJ Advisory Services Pvt Ltd, reported return of 55.92% for July 2016, which was another flat month for the index.

These returns are way too high to be generated in a period of one month even if the overall market is rising (bull market). Interestingly, some PMS schemes reporting very high returns show no increase assets under management (AUM). Our reader points out that “it is hard to believe that managers who has been doubling money every month is not able to attract a higher AUM”.

The only conclusion one can draw is that the returns mentioned by SEBI’s website are wrong.

What makes this particularly questionable is that SEBI’s website provides no details about how these returns were calculated and whether they are gross or net returns. Unless returns are properly calculated in a standardised format, it is likely to mislead investors into choosing the wrong scheme, and the source of the misinformation would the market regulator, whose mandate is to protect investors from such mistakes.

By publishing such information about all PMS regulated by it, SEBI is expected to serve two objectives. One, help the investing public to access all information at one place and not have to visit 50 different websites and, two, eliminate the need for seeking such information under RTI, from time to time”. But the regulator seems extraordinarily reluctant to do so.

However, SEBI had continued to openly defy this order for a long time. In May 2013, we wrote how SEBI was not ready to share PMS data despite CIC order SEBI now provides this data but it is not easily accessible. And the data turns out to be wrong!

The data on most other schemes is also highly erratic and provides no clue to the ordinary investors as to the relative performance of each scheme.

We sent an email to SEBI’s Communication Department and will upload their response as and when we receive it.

Comments

User

Ajay Parker

8 years ago

please add me on facebook my contact no is 9764003999

Ajay Parker

Replied to Ajay Parker comment 8 years ago

I am investor from Goa

Vinay Chaudhari

8 years ago

I guess that SEBI will probably say that data is "as provided" by PMS and they don't vouch for accuracy of data as stated in their disclaimer -
"Disclaimer: The performance of the PM has not been approved or recommended by SEBI nor SEBI certifies the accuracy or adequacy of the Monthly Report. The monthly report of the Portfolio Manager (PM) has been prepared by the individual Portfolio Manager as required by SEBI circular on " Monthly reporting by Portfolio Managers" dated October 08, 2010 and filed with SEBI. The monthly report, inter-alia, contains 'performance of the PM during the month'. It may be noted that the relationship between the PM and the client is contractual in nature and the PM mainly provides customized service taking into consideration the need of customers, their preferences, risk profiling, suitability etc. Further, no pooling is allowed and no units are issued as in the case Mutual fund. Therefore, the performance of one portfolio manager may not be comparable with the performance of another."

MAYURESH M CHOUDHARI

8 years ago

Kindly share the Link for PMS on the SEBI website, so that anyone can check for their Information.

Vinay Chaudhari

Replied to MAYURESH M CHOUDHARI comment 8 years ago

http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doPmr=yes

vikram chinmulgund

8 years ago

What would have been most useful is a linke to where SEBI has published this data online but this article doesnt seem to have the link.

Suryakant Acharya

8 years ago

Good initiation for investors

Suketu Shah

8 years ago

I am surprised how so so many people continue being fooled on and on into PMS inspite of so much awareness.

Gurudutt Mundkur

8 years ago

Congratulations for taking up a good cause. SEBI and other statutory bodies cannot affort to fool the public.
Raghram Rajan said that in PSUbanks, the lower levels are overpaid and the top are grossly underpaid.
So also in SEBI [I do not have any kith and kin working there] and hence hose working at the lower level play all the mischief.

Mr Jitendra

8 years ago

Moneylife can publish and provide the format in which the PMS data should be presented by SEBI. Probably SEBI does not know how to present the day and what data should be presented?

Akshat Jain

8 years ago

Cant find the link to the data. Can you please help me out with the link to the data in the maze of Sebi's website.

Vinay Chaudhari

Replied to Akshat Jain comment 8 years ago

http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doPmr=yes