Established in 2010, Edelweiss Private Wealth was a step behind some of its counterparts which started in 2007. But it has made up for lost ground by growing faster than almost all its competitors. At an AUA figure of USD 15 billion, it’s among the top three in the industry. In 2020, private equity firm PAG acquired a ~38.5% stake in Edelweiss Private Wealth with the option to increase it further to up to ~44%.
Parent’s aggressive culture
Founded in 1995 as an investment bank, the parent Edelweiss Capital has grown into a diversified financial services firm with over 40 lines of businesses grouped together in 4 broad businesses – Credit including Housing Finance, Financial Markets, Asset Management, Commodities and Insurance. It appears the founders have a love and devotion for growth, a far cry from the German white flower, after which the firm was named. (According to legend, suitors would climb the Alps and bring edelweiss back as a gift to their beloved, signifying deep love and devotion).
Edelweiss has its own broking firm, research, financing arm, investment banking which can help the clients and M & As, institutional equity arm that could assist the customers in raising capital whether it be on the debt side or the equity side and insurance within the group which can help the clients address insurance related problems not only for their personal life, but also general insurance for the employees.
Journey from distribution to advisory to discretionary
The firm offers four formats for engagement, representing all different stages of evolutions of the wealth management market –
- First one is the distribution format where the good products are showcased from time to time, underlying trends are identified, decisions regarding what shall play out over the course of the next decade and what will benefit the clients in generating maximum returns on their portfolios.
- The second format is the advisory format in which the IPS model is followed where the firm has confidence in setting out the investment policy statement for the customer, illuminating the do’s and don’ts and the dangers that the customer is prepared to take and what his return assumption is.
- The third practice is of the family office where the client has appointed the company as his family office guy so the firm has a 360 degree view of the portfolio.
- The fourth and the latest thing dispatched is the discretionary factor called Infinity. Thus, the customer can connect with the firm on the Infinity stage where he gets the capacity to have the institutional counsel coming to him bundled in a short-sighted way, in the most expense proficient model with thorough, hazard the board controls being set up.
A major initiative that saw the light of day in 2019 is the new and trend-setting Edelweiss ‘Infinity’ offering, which is a digital, flat fee platform solution aimed at cutting the costs of wealth management services by up to 25%.
“Infinity is at the cutting edge of our aim to be a one-of-a-kind wealth management solution, and to do so we began with listening, then offering unbiased advice, unbiased products. This is why we created our Infinity offering, designed to provide a holistic perspective and numerous possibilities rather than just offering a series of products that purportedly added up to a portfolio,” said Anshu Kapoor, the previous Head of Private Wealth Management in 2020.
Investment philosophy caters to separating risk
Edelweiss sensitize clients to primarily 3 types of risk and have in-built robust, time tested, quality processes to manage them. Product risk or the danger of recommending the inappropriate product is minimized by a thorough understanding of the client’s needs. The client experiences innovation at various levels of interactions, like, reporting new age product design and various customized solutions
“We would like to always take contrarian calls in the extreme so we don’t believe in the huge amount of trading and churning in our clients portfolio. But when there are extremes, we would like to take the contrarian call so that we can add that as the percent of alpha to appliance portfolios.” said Saurabh Rungta, CIO.
While researching on the portfolio both quantitative as well as qualitative filters are used. In the quantitative piece, the history of the portfolio is taken into consideration. For what time period has the manager been running the portfolio, and the company tends to take the monthly or the quarterly snapshots. The company goes through the newsletter of past three years or four years of these fund managers and tries to understand what was the call that the fund manager had really spelled out in his newsletter at various points in time and how has he played that in those calls in his portfolio.
“The most important thing is you need to identify what problem of the client you’re trying to solve. What asset or what part of his wallet are you wanting to target? You have to clearly spell it out. And once you spell that out, you have to clearly lay down the strategy how you will achieve it. What risk are you going to take to generate the return that you’re promising that you will be able to achieve? And the last piece, once you have clearly framed this figure out who are the players in the market who are already offering this. Are you just a me-too to them, or do you really have a distinguished feature philosophy strategy, which will stand out over the course of a period of time. So, you have to really meet this entire framework, you have to clearly define what is the problem of the client you’re solving. How are you going to solve that problem, prove that you’re not going to take excessive risks to generate the returns that you’re promising? And lastly, to differentiate yourself from the peers who are already offering similar products” said Rungta.
Catering to the future
“Over the course of the last decade we have come across numerous families where the patriarch has encouraged their better halves to also form part of the decision making, as well as they have started getting the younger generation, on to the decision table, quite early so that they start understanding the basic roots of what is resulting into a financial decision making. So, especially when the younger generations tend to come in we have seen that the ability to take risks tends to increase.” said Saurabh Rungta (Managing partner and CIO)
As mentioned earlier, Edelweiss now has its own part owner PAG which enables the firm to have access to its international counterparts a lot more easier because the firm will take the benefit of the international experience that its partners bring on the table and it also helps to strengthen the firm’s balance sheet.
Edelweiss began its journey in 1995 as an Investment Bank, and has diversified into over 40 lines of businesses grouped together in 4 broad businesses – Credit including Housing Finance, Financial Markets, Asset Management, Commodities and Insurance.
Edelweiss’ Wealth & Asset Management business started in 2010. The wealth business ranks amongst top 3 wealth management businesses in India, in terms of Assets Under Advice (AUA).
Over 10000 people are employed by Edelweiss Private Wealth. As of 2019, there are 151 relationship managers onshore. (Source) The assets under management are $15.6 billion (Source)
They serve HNI, corporate and institutional clients.
Number of RMs – 151
Assets under Advice – $15.6 billion
Cost to income ratio – 49.25%
ASHISH KEHAIR- PRESIDENT & HEAD, WEALTH MANAGEMENT – Nearly 2 decades of experience in Banking & Financial Services. Strategic leadership roles across wealth management, private banking, asset management, private equity and treasury. Drives strategy and expansion at Edelweiss. Qualified Chartered Accountant & Cost Accountant. LinkedIn: https://www.linkedin.com/in/ashish-kehair-3670189/
ALOK SAIGAL- HEAD, PRIVATE WEALTH MANAGEMENT – Over 18 years of experience in Investment Advisory, Investment Banking and Capital Markets. Formerly with Darashaw and HDFC Bank. Masters in Economics from Delhi School of Economics. LinkedIn: https://www.linkedin.com/in/aloksaigal1/
AMIT SAXENA- SR. MANAGING PARTNER, PRIVATE WEALTH MANAGEMENT – Over 20 years of experience in Wealth Management. Formerly with Bank Sarasin, DSP Merrill Lynch & Standard Chartered Bank. ACWA & Postgraduate in Management from Symbiosis. LinkedIn: https://www.linkedin.com/in/amit-saxena-99abb013/’
ANSHU KAPOOR- HEAD, INVESTMENT MANAGEMENT – With over 20 years of experience, 10 out of these with Edelweiss Private Wealth, graduated from Delhi University with a Bachelor’s in Business Management. LinkedIn: https://www.linkedin.com/in/anshukapoor/
Edelweiss Private Wealth Management offers a “subscription-based” wealth management platform – Infinity. Infinity combines customized investment strategies with a fee structure aligned to client interests.
- Family Governance and Wealth Structuring
- Asset Protection and Asset Transfer Strategies
- Investment Management- Capital Markets, Real Estate,
Currencies and Alternatives
- Investment Banking
- Risk Management
- Insurance Advisory
Investment Philosophy (for firm)
Edelweiss Private Wealth Management describes their philosophy and approach in delivering solutions as being oriented around the customer’s needs:
- MULTI ASSET CLASS EXPERTISE- The Edelweiss Group has the expertise and knowledge honed from operating across several markets, across different market cycles and conditions, across different asset classes. All this expertise and learning is available to the Edelweiss Private Wealth Management team to draw upon in their effort to enrich and bolster the business offerings. They offer research, investment ideas, themes and actionable strategies and opportunities across: Equity Commodities Agri & Metals Real Estate Fixed Income Currencies
- RISK MANAGEMENT- Their approach to risk resonates with clients keen on building upon opportunity but at the same time conscious of the need to manage the environment. Managing risk is of utmost importance at Edelweiss Private Wealth Management. They sensitize clients to primarily 3 types of risk and have in-built robust, time tested, quality processes to manage them. Product risk or the danger of recommending the inappropriate product is minimized by a thorough understanding the client needs. They recommend customised products that maximize returns while respecting the individual’s risk appetite.
- INSTITUTIONAL APPROACH- Edelweiss is a large diverse business house with a structured, transparent and proven approach to business. Edelweiss Investment Committee is one such unique platform that has evolved from its practice and is much appreciated by the clients of Edelweiss Private Wealth Managements. The committee of senior Edelweiss Experts from the related business deliberates and debates to provide valuable advice for the client. The Financial Advisor is thus empowered to advice the client through a comprehensive investment advisory process.
- 360 DEGREE SOLUTIONS- Edelweiss Private Wealth Management is popular with the new age entrepreneur as he finds value in their ability to address both sides of his balance sheet. Be it for his personal or enterprise wealth. The company’s strong understanding of capital markets addresses client’s investment needs while their ability in understanding risk and credit help address his financing and debt structuring needs
- INNOVATION- Bold, ‘out-of-the-box’ thinking has contributed significantly to their growth. They share this attribute at work and put it to practice. The client experiences innovation at various levels of interactions, like, reporting, new age product design and various customized solutions. The commitment to understanding the client’s need and structuring a differentiated solution that works is put to test every day at work here.
- GOVERNANCE AND TRANSPARENCY- The company looks at business as a partnership. Clarity of thought and action governs their practice. The client is sensitized to his investments, disclosures like risk factors, suitability besides applicable fees, etal. They believe that their clients are super achievers, experts in their field, and must also understand the approach that they have taken recommended for their investments.
- Anshu Kapoor Edelweiss Private Wealth Mgmt ET Now The Newsroom 20 Aug 2020
The interview provides insights regarding the new world order and abundant liquidity along with low interest rates. He provides insights regarding the industry and entrepreneurs and says that capitalisation of businesses is integral. He talks about how it is important to be well capitalised from the perspective of equity. He then goes on to say that cost efficiency has prevailed in the industry. The high and ultra high net worth clients prefer buying bonds directly rather than a mutual funds structure. Within sectors, there is a reallocation from say industrial to telecom, etc.
- Mutual Fund Corner: Here are some investment strategies from Edelweiss Private Wealth Management, 28 July 2020
Head, Investment Management, Edelweiss Private Wealth points out how the economic conditions and financial impacts of those are in a state of divergence. He further says that investors need to be extremely cautious due to the liquidity situation that is prevailing. Economic cycles come and go, and investors must not be in a hurry to invest their money, timing and proper research is extremely important. He suggests that the market might be entering into a downward interest rate scenario and so investors need to review their portfolios. He then elaborates on the fact that it is important for the companies and individuals to be aware of the composition of their portfolio.
- What are some of the innovative approaches you have applied while catering to a client’s needs?
- Can you summarise your investment philosophy in 3 sentences?
- What is the most important aspect of your investment philosophy?
- When you say ‘subscription based’ wealth management platform in terms of the product Infinity, what do you mean?
Prepared by- Medha Mehta, February 2021, Peer Reviewed by- Adza Vajime, March 2021
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