FAQs – Buoyant Capital AIF

 

ABOUT this FAQ document

The Buoyant Opportunities Strategy (BOS) is the first scheme of the Buoyant Capital AIF. This document contains a list of FAQs around BOS. This document is for information purposes only and is NOT meant to solicit investments into the Buoyant Capital AIF. Nor is it meant to provide an exhaustive source of information about the Buoyant Capital AIF, which is available in the Private Placement Memorandum of the AIF (available on request, at the discretion of Buoyant Capital Pvt Ltd).    

 

  • BASICS:
    What is BOS?
  • INVESTMENT MANAGER:
    Who is the Investment Manager of BOS? How good are they?
  • REGULATORY:
    Does Buoyant have SEBI approval to run a scheme (such as BOS) under a category III AIF?
  • OPERATIONAL SETUPWhat other entities are involved in the operations of the Buoyant Opportunities Strategy (BOS)?
  • ELIGIBILITY: Who can invest in BOS? 
  • FUND STRUCTUREWhat kind of structure does the BOS follow?
  • COMPARISON with MFHow is a Category III AIF different from a Mutual Fund?
  • PMS INELIGIBLE FOLKS CAN INVESTCan senior managerial employees (including Directors) of entities in sectors such as banks, investment banks, brokers, legal firms, audit or accounting firms invest in the BOS and still adhere to their internal code of with respect to investing in listed entities (where their employer organisation has a business exposure and may thus be in possession of private price sensitive information)?
  • FEE STRUCTUREWhat are the fund management charges and other expenses for this AIF?
  • FUND MANAGEMENT STRATEGYWhat kind of investment strategy / philosophy is the Buoyant Opportunities Strategy based on?
  • TRACK RECORDWhat is Buoyant Capital AIF’s performance or track record so far?
  • BENCHMARK: Is there any benchmark index that the Buoyant Capital AIF will be measured against?  

 

What is BOS? 

  • Buoyant Opportunities Strategy (BOS) is the first scheme of the Buoyant Capital AIF (Category III Alternative Investment Fund).  

 

Who is the Investment Manager of BOS? How good are they?

  • Buoyant Capital Pvt Ltd (BCPL) is the Investment Manager of BOS. 
  • BCPL has a stellar track record of managing a SEBI-registered PMS (portfolio management service) in India over June 2016 to August 2022. The Buoyant Opportunities Strategy (PMS) is among the top 10 PMS schemes in India over this period. For details of our track record pls see our latest Factsheet here: https://www.buoyantcap.com/wp-content/uploads/2022/09/Buoyant-Factsheet-2022-08-1.pdf
  • Buoyant has now entered the AIF vertical, where it aims to garner investments, esp. from professionals who face statutory and legal constraints while investing in a PMS structure. It will also be a convenient investment vehicle for families, HNIs and corporates who don’t want to track (and pay) their income tax liabilities relating to investments (entrusted to us via PMS) every quarter.  

 

Does Buoyant have SEBI approval to run a scheme (such as BOS) under a category III AIF?

  • BCPL has got due approval to be the Investment Manager for BOS, as specified in the Private Placement Memorandum (PPM) filed with SEBI for approval. Approval wrt this PPM has been granted to BCPL by SEBI on 5 Sep 2022 and registration no. IN/AIF3/22-23/1125 has been granted to Buoyant Capital AIF to commence its business. 

 

What other entities are involved in the operations of the Buoyant Opportunities Strategy (BOS)?

  • HDFC Bank is the custodian and banker to the AIF
  • Credentia Trusteeship Services Pvt Ltd is the Trustee  
  • IC Universal Legal is the Legal Advisor
  • Kamdar, Desai & Patel LLP are the Statutory Auditors and Tax Advisors 
  • Srujan Alpha Capital Advisors LLP is the Merchant Banker
  • NSDL Database Management Ltd (NDML) is the Registrar & Transfer Agent   

Note: As mentioned earlier, Buoyant Capital Pvt Ltd is the investment manager of the Buoyant Capital AIF    

 

Who can invest in BOS? 

  • BOS is a scheme of a Category III AIF. Hence, any entity in India or overseas (with a valid tax status) can invest in BOS.

 

What kind of structure does the BOS follow? 

  • The BOS (Buoyant Opportunities Scheme) is the first scheme of a Category III Alternative Investment Fund named as the Buoyant Capital AIF
  • A Category III AIF scheme is exactly like a scheme of a Mutual Fund in the way it pools investments from many investors, issues them units and invests in the stock market. 
  • Importantly, all investments are held in the name of the scheme and all investment decisions are taken by the Investment Manager.  
  • The AIF is housed in a Trust, which then issues units of various schemes that it launches to investors who choose to invest in these schemes. 

 

How is a Category III AIF different from a Mutual Fund?

  • It is an HNI product, so the min. ticket size is Rs 1 cr as per law
  • The risk reward proposition is also more aggressive – we intend to have a relatively more concentrated portfolio (~25 stocks at the higher end, which may fall to under 20 when we get more aggressive in our ways)
  • The fund pays taxes on your behalf. This is a crucial difference vs. a Mutual Fund, which is essentially a tax pass through structure. It is true that we will lose some dry powder when we pay income tax, but we aspire to make up for it via performance so that on a comparable (post tax) basis, we are able to beat most Mutual Funds. Usual disclaimers apply! 
  • The other advantage is that this tax payout feature (oppressive as it may seem), makes the accounting effort absolutely zero at your end, even when you exit (no further tax provision or payment at your end)…   
  • The entry gates for our AIF open ONCE a month, on the last day. So, if you want to invest, it is best that you do it at least 3-4 clear working days BEFORE the end of any month. 
  • Similarly exit is also a monthly affair. There is NO exit load (after all it’s YOUR money) but you will exit on the last day of the month that you decide to exit. So do let us know at least a week before the end of the month about your intent to exit. 

 

Can senior managerial employees (including Directors) of entities in sectors such as banks, investment banks, brokers, legal firms, audit or accounting firms invest in the BOS and still adhere to their internal code of with respect to investing in listed entities where their employer organisation has a business exposure (and may thus be in possession of private price sensitive information)? 

  • Yes, there is no restriction imposed on holding units of a Category III AIF such as the Buoyant Opportunities Strategy. This is driven by two considerations.
  1. The shares (of sensitive companies, if any for the professional concerned) are held in the name of the investment scheme and not in the name of the professional.
  2. The decision to buy and sell the shares is made entirely by the Investment Manager of the Scheme and the investor (or professional person) has no prior information about this decision or ability to influence this decision.

 

What are the fund management charges and other expenses for this AIF?

  • Fees and expense structure of the BOS (Cat III AIF scheme) is identical to that for our Opportunities PMS
  1. Fixed fee option: 2.00% of AUM p.a. This falls to 1.50% for investments of Rs 5 cr and above in a single name.  
  2. Variable fee option: 20% profit-share above 7% p.a. hurdle return (with hi-watermarking). This falls to 15% profitshare for investments of Rs 5 cr and above in a single name. 
  • For all four options above, GST is extra, exit load is nil (as always, we will not charge you to withdraw your OWN money) and additional expenses (audit, custody, fund accounting, etc.) are capped at 0.25% p.a. beyond which we will chip in from Buoyant.  

 

What kind of investment strategy / philosophy is the Buoyant Opportunities Strategy based on?

  • BOS will be characterised by the same broad fund management framework or investing style as our signature PMS scheme of the same name (Buoyant Opportunities Strategy) viz. cross-cycle investing. Broadly speaking it is premised on the fact that virtually all phenomena, whether human or otherwise, are subject to cycles. And that no single or golden rule works across all cycles. Investing is at best challenging and slippery terrain where the investor (or investment manager) has to understand and weigh in the cycle at play before investing as per any pre-defined and rigid or set principles. 
  • For more details, please mail us at info@buoyantcap.com or just call us at +91-22-6667-0655 or +91-22-6667-0656 or +91-22-6667-0657

 

What is Buoyant Capital AIF’s performance or track record so far? 

  • The Buoyant Capital AIF (and its first scheme the Buoyant Opportunities Scheme) are being launched, so there is no past performance for you to refer to. 
  • However, Buoyant Capital has managed the Buoyant Opportunities PMS Scheme for more than six years now. Performance details of this scheme and other aspects of how we manage the PMS are detailed in our factsheets
  • Naturally, our performance so far on managing the PMS scheme is NOT necessarily a promise or any indication whatsoever about future performance. Please ensure you read our disclaimer before you take any decision to invest with us. 

Is there any benchmark index that the Buoyant Capital AIF will be measured against?

  • No, the Buoyant Capital AIF (or its first scheme, the Buoyant Opportunities Scheme) does not get measured against a benchmark as of now. 
  • We will, however, adopt a benchmark and keep investors informed in due course.  

 

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