Welcoming the Capitalmind Mutual Fund!Welcoming the Capitalmind Mutual Fund!

Our company, Capitalmind Financial Services has just received the final approval to launch the Capitalmind Mutual Fund. This is incredible news, and allows us to serve retail investors in managing their wealth for the long term. At the Capitalmind PMS, we've done a good job, reaching 2,000 cr. in assets with 5 year past returns of over 26% annualized (on average). We hope to be able to create as much wealth for our customers in a much bigger format: the Capitalmind Mutual Fund.

The journey this far is probably worth a mention. When I started Capitalmind in 2014, it was a leap of faith. Even for me. That people would pay for research. They did. And I thank every one of them for that. Over this time, a few key people joined - Venki on the initial tech, and Vashistha as our COO. We learnt along this process that there are things we could really be good at. Options strategies for one. Bond market opportunities for another. Smart, short-term trades. Arbitrage. Long term portfolios. Back-tested data-oriented quantitative strategies.

We realized we couldn't do them all. So we chose the path to excellence - the last two, our fund management approach being to build long term portfolios backed with our experience, and with a rich focus on data and analysis. The PMS then allowed a minimum of Rs. 25 lakh per account (new SEBI rules: 50 lakh), which we then started, as Shray joined in and became a co-director and indeed, co-founder.

The PMS needed 100 cr. to "justify itself" in our minds. It took about a year to get there. The government introduced taxes on equities, which was a bummer for PMS investors, because when we sold, they'd pay tax. Then there was a debt crisis - the IL&FS issue. Interestingly, we had chosen IL&FS as our custodian precisely because they would add a strong institutional trust in the PMS - and now, that layer of trust had become questionable. We moved over to ICICI Bank as our custodian, while constantly investing in tech.

We used a lot of in-house technology. We build it from the ground up. The back-office, the customer front ends, the reporting. As we saw it, was because we would make investing goal based. So you could target a goal, like retirement, or your child's education. And because the goals needed a certain debt:equity allocation, your monthly investment - we were among the first PMSes to take monthly investments - could be automatically redirected to equity or debt.

We build what is still a brilliant planning tool: https://plan.capitalmindwealth.com where you could build a financial plan, with multiple goals. You'd see how much you would need (including the impact of inflation). For instance, someone who was:

• 35 years old
• wants to retire at 55
• spends 2 lakh a month today
• has Rs. 50 lakh to start
• has appetite for 80% equity, 20% debt
• inflation of 5% a year
• assumed rates of growth for equity/debt are 12% / 7% a year

Such a person will need Rs. 14 crores by the age of 55.

He will need about 90,000 rupees additionally per month to get there. And we'd plan it so he could get there and map his progress. I did it for my son's education in my own account and wrote a long-ish post about it. It's been three years since, and my son goes to college this year. We've changed things substantially - the cost will be nearly 4x more - but the plan allowed me to save for it properly.

Doing something like this with standard industry tools was a nightmare. And many of them were like who is this Capitalmind, why should we bother. Anyhow, we wrote our tech ourselves, to manage daily trades, reconciliations, tradesheets, allocations, brokerage, bank-balances, compliance and a bunch of other things. In the process, we learnt hugely how the process really functions, on the inside. How different custodial trading is from the stuff you regularly do. The fact that money gets to us one day after we sell, so we can't just sell one thing and buy the same day. The fact that every customer gets a different accounts, so some customers will have more of some stocks and less of others, and no one's exactly the same. The tax calculations, the automated balance sheet creations and all that.

Eventually, we ended up coding our own automated trade manager - which bought or sold stocks over the entire day, rather than placing large orders. SEBI would eventually create rules saying all PMS folks should consider getting such software, but we had already done this - primarily because it was not very easy to trade larger quantities as the PMS got bigger. And then, we would automatically avoid crazy front-running issues where the knowledge of a large trade could prompt someone to front-run us. Our algorithm would simply work slowly, on limits we specified, and just stop trading if prices went beyond.

The process was sound, and Anoop stepped in to manage the Momentum portfolio in 2019. That portfolio's done very well, with a 26% annualized return over five years. Surge India, our fundamental portfolio, had a shaky start but after learning from our mistakes, has also done about 26% annualized returns in the last five years. It's a confluence of technology, investing aptitude, discipline, rigor and process that helped us grow.

Why am I going on about this?

All of this comes to much greater use as a mutual fund. We couldn't use derivatives (futures/options) in the PMS, even though we had a deep understanding of how it all worked. Why? Because PMS customers are taxed as high as 39% if we made profits using derivatives, and many of them would curse us. Still, we had a lot of expertise in it - our research arm had an "Uncle Theta" set of articles talking deeply about options, downside protection and so on.

We couldn't buy bonds, even if they were at juicy prices, because the interest would be taxed, again at 39% or so. It was difficult to justify this taxation and so we kept it off the plate. Most of our customers were retail/HNI, meaning they were individuals - not corporates or institutions. So taxation was a real problem. (We also created "Bond Baba" in our research, to understand bonds better)

Which meant one thing: we didn't do bonds. We didn't do derivatives. not in the PMS.

As we step into the world of mutual funds, we get to harness all that we did, and even all that we decided not to do.

The deeper understanding of the technology and the business allows us to automate a lot of tasks and keep on top of the much higher compliance requirements that the regulator needs. We'll probably use a lot of third-party tech, but we know how to craft it so that it's most efficient for us (and therefore, to our investors).

As a strategy, we have strongly believed in the use of data, quantitative techniques and rigorous testing plus cross validation. Our strong focus on this, plus the use of home-built technology to back-test, refine and analyze strategies will allow us to build robust and scalable investment strategies. We'll reveal more as we prepare to launch our first fund offer.

The PMS will continue to serve investors as we have an excellent team managing the show, through the process and I will have oversight as Group Chairman. We will greater things in portfolios.

Mutual funds allow tax-efficient use of derivatives, bond markets and even commodities like Gold. The space is very strongly competitive and enough mature technology is being used to help better execution, smarter trading and more diversified portfolio management. This allows us to harness the best of what we've done this far, and to build solid schemes that allow you to do the one thing you probably really want to do: have the ability to ignore all the random buzzwords in the above paragraphs.

Investing is a skill and an art, but we glorify it too much, perhaps. Most people just want to live their lives in peace, and want someone smart, alert and hardworking to manage their money, while they do what they really want to do. Our goal is simply to enable people to do so.

Your long term story isn't about the money you make. It's about the life you live while you are earning it. And it's the life you want when it reaches a certain size.

No one else is going to care about your retirement. No one. You're on your own. Your children will love you, but you don't want to depend on them. You educated them, and they'll likely take care of themselves. You don't have to leave the wealth to them - you can spend it or donate it, to the level of your happiness.

I've said this many times - money's only objective is to be spent. While we, as investment managers, tend to extol the virtues of investing, I think the best thing that people can do is stop thinking of money as a destination. It's part of your journey, and helps you get to a better place, but you need to live your life all the way through, with the comfort that your future is also getting more secure every day. The balance between spending and investing is a good thing - save too much and you forego your today for a tomorrow. Spend too much and you'll regret it hugely tomorrow. A middle ground - knowing how much to save, investing that much, and then freely spending the rest, is a much better way to live.

There's a lot that will come at you from the financial world. Save early, they'll say, because too late takes you out of the game. Don't spend on that nicer car, after all the roads suck. All good advice, and probably entirely wrong. Investing in yourself, to upgrade your skills, is probably better than investing in the market. You would rather be stuck in a traffic jam in a nicer car than one where either the accelerator works or the A/C, not both. You're out there to secure your future, not to prepare it for all of the insane possibilities, like World War 3.

You're out there to make your life better. You're out there to discover your dreams and live them. You're out there to win, but not against everyone else; you're out there to Win at Living. To Win At Life.

That is our tag-line.

We've welcomed the new Fund which is "Coming Soon" , which is where you can register for future updates as we unveil our schemes as they go through the compliance and regulatory processes. Be sure that the mutual fund industry in India is now far more trustworthy, strong and customer centric than ever before. We join them with folded hands, and welcome you towards building for the better. Register here!

Cheers and Best,

Deepak and the Fantastic Team at Capitalmind Mutual Fund

 

The official press release is here:

PRESS RELEASE

Capitalmind Gets Final SEBI Nod to Launch Mutual Fund, Bringing Proven Data-Driven Strategies to Retail Investors

BENGALURU, India – April 14, 2025 – Capitalmind Financial Services Private Limited (Capitalmind Financial Services) today announced it has received final approval from the Securities and Exchange Board of India (SEBI) to commence its mutual fund operations under the name Capitalmind Mutual Fund. This landmark approval empowers the investment manager, known for its quantitative strategies and transparency in Portfolio Management Services (PMS) and Alternative Investment Funds (AIF), to offer its distinct investment philosophy to a broader retail audience across India.

Capitalmind, which manages over ₹2,000 Crores in assets for more than 1,400 PMS and AIF clients, has built a strong reputation on disciplined, data-centric investing. The firm pioneered factor-based investing for Indian High Net-worth Individual (HNI) investors with its PMS strategies like Adaptive Momentum, which delivered a post-fees Time Weighted Rate of Return (TWRR) of 27.06% over five years ending March 31, 2025. Its commitment to transparency is uniquely demonstrated by publishing daily equity curves for its strategies, calculated per SEBI norms – a practice uncommon among PMS providers.

"Receiving SEBI's final nod is a watershed moment, validating our commitment to bringing an investor-first, transparent, and data-driven approach to the wider investing public," said Deepak Shenoy, Founder and CEO of Capitalmind Financial Services. "For years, we've focused on simplifying investing through disciplined strategies. Launching Capitalmind Mutual Fund is the natural evolution of our mission, enabling us to empower millions more Indians to achieve their financial goals with accessible, rules-based investment products."

The newly established Capitalmind Asset Management Private Limited (Capitalmind AMC) will introduce actively managed funds designed for differentiation. It plans to leverage proven frameworks from its successful PMS strategies, including Adaptive Momentum and Surge India (which delivered a 28.35% post-fees TWRR over five years ending Mar 31, 2025). The AMC’s offerings will be rooted in robust quantitative research, disciplined processes, rigorous risk management, and clear investor communication.

"We always envisioned mutual funds as the ideal vehicle to deliver sophisticated, rules-based strategies efficiently to retail investors, offering distinct operational and tax advantages," stated Vashistha Iyer, COO, Capitalmind Financial Services and Board Member, Capitalmind AMC. "Our journey, from building our research platform to developing our PMS and AIF operations entirely in-house, including proprietary technology for everything from fund accounting to automated trading, has uniquely prepared us. Securing the final mutual fund registration just over seven months after the in-principle approval highlights our team's execution capability and readiness to serve investors."

Capitalmind enters the concentrated Indian mutual fund industry (fewer than 50 players) as a dynamic, tech-forward AMC poised to challenge the status quo. Its entry coincides with significant market growth, with industry AUM surpassing ₹65 Lakh Crore and serving over 5.3 crore unique investors. Capitalmind is well-positioned with its established track record and significant existing reach – having served over 20,000 investors across its research platform (Capitalmind Premium), in addition to its PMS/AIF clientele.

Furthermore, the firm boasts a large, engaged digital community exceeding 4 lakh subscribers across YouTube, LinkedIn, newsletters, and X (formerly Twitter), and its finance podcast has garnered over 8.5 lakh downloads. This established ecosystem provides a powerful launchpad for Capitalmind Mutual Fund.

Anoop Vijaykumar, Head of Equities at Capitalmind AMC, added, “Investing can seem complex, but our philosophy is built on clarity and evidence. We combine statistical rigour with a deep understanding of market context, embedding risk awareness into every step. The mutual fund structure offers the privilege and responsibility to serve a vast investor base. We are committed to being worthy stewards of their trust by continuously refining our quantitative methods and prioritizing long-term investor outcomes.”

Capitalmind plans to launch its initial suite of active equity mutual fund schemes in the coming months, with intentions to gradually expand its offerings to include debt, hybrid, and multi-asset funds.

About Capitalmind

Capitalmind Financial Services Private Limited (formerly known as Wizemarkets Analytics Private Limited) is a SEBI-registered investment management firm based in Bengaluru, India. It operates as a Portfolio Manager (INP000005847) and manages Capitalmind Select India One, a Category III Alternative Investment Fund (IN/AIF3/23-24/1357). Research services are provided by Capitalmind Research LLP, a SEBI-registered Research Analyst (INH000014003). Capitalmind AMC is a wholly-owned subsidiary of Capitalmind Financial Services and will act as the investment manager to Capitalmind Mutual Fund (MF/084/25/10).

Disclaimer

Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not indicative of future results. The information contained herein is only for informational purposes and should not be construed as an offer or solicitation to buy or sell any securities or make any investments.