Nikhil Kamath, India’s emerging poster boy of start-ups and stock trading, will be betting on a significant chunk of investors from the Middle East to make his soon-to-be-launched second hedge fund another success.
True Beacon Global is expected to go live by the end of April and will be an open-ended fund in which subscribers can enter or exit anytime after the fund is launched.
Unlike the uber-rich from the region who account for about one-fifth of Kamath’s existing alternative investment fund (AIF) – True Beacon Fund One, this time around, the co-founder of India’s unicorn equity trading platform Zerodha will be wooing Gulf millennials to be part of his new fund.
True Beacon’s new fund will also have a minimum investment level of $1 million for participation, similar to its existing one.
“Our existing fund has about 20 percent participation from the Middle East – both non-resident Indians (NRIs) and local investors combined. We will be targeting a similar participation, if not more, from the region in our new fund also,” Nikhil Kamath, co-founder and chief investment officer of Zerodha and True Beacon, told Arabian Business in an interview.
“Considering the track record on the return from the True Beacon Fund One, we expect that the participation from the Gulf region could even go up to around 30 percent in our new fund,” added Kamath.
Kamath dropped out of school at 14 to pursue his passion for playing chess nationally and his love for derivatives. The 34 year old co-founded Zerodha, a retail trading start-up with his brother Nithin in 2010, and the start-up rose to unicorn status without external capital participation.
True Beacon’s Mauritius-registered AIF has reported a year-to-date (YTD) return of a little over 40 percent as of the end last year.
“A lot of interest has already been generated from the Middle East [for participation in the new fund] from both individual and institutional investors,” Kamath said.
True Beacon Global is currently under the registration process at GIFT City (Gujarat International Finance Tec-City), Ahmedabad – India’s first international financial services centre (IFSC).
India’s federal budget for the new financial year commencing from April has proposed a tax exemption on derivative trading for funds registered with IFSC.
“The zero taxation will be an additional proposition for global investors looking to grow capital,” Kamath said.
As for plans to rope in more millennials in his new fund, Kamath said: “My reckoning is that millennials around the world, including the Middle East, have begun to understand wealth creation and at the same time developed the temperament for it.
“The lethargic performance of other asset classes is an added tailwind to the process,” added Kamath.
“In the UAE, with as much as $1 trillion is estimated to pass from one generation to the next within a decade, capital markets will be considered alternative income for many of this generation who are tasked with handling large amounts of family money.”
Kamath said emergence of ventures like Baraka in the UAE, which has launched a commission-free, mobile-based trading platform, is also helping popularise equity trading in the region.
“It is fantastic that ventures such as Baraka are making markets more accessible to the UAE millennial. The stock market participation in the Middle East is (currently) modest and there is scope for multiple players to increase the market share.”
The celebrated Indian start-up entrepreneur and equity trader, however, has a word of advice for millennials.
“This age group tends to have a greater affinity for brand loyalty and supporting founders they admire as opposed to focusing on fundamentals.
“It is very difficult to predict the markets, and a lot of discipline is required to preserve capital and make it grow. With many millennials being short term investors, they need to exercise caution. The volatility that will ensue globally will require active management, and it is more important than ever that millennials are not rigid. In short, decide on a set of rules and play by it,” Kamath said.
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