Can candour be a good sales strategy? You just have to hear Nikhil Kamath. “Complexity, in my opinion, is not good for a fund… We grow at 10% month-on-month. And have outperformed the markets by 20%. Our clients like it that we don’t bullshit, and we don't try to sell [them] some superior intelligence.”
This is Kamath on the business philosophy of True Beacon, his new hedge fund. In just two years, it finds itself managing about $200 million in wealth for nearly 400 ultra high net worth individuals (HNIs). At least 15 out of 50 billionaires in India have trusted Kamath with their investments.
As the ‘silent’ co-founder of India’s largest stock broking company Zerodha, Kamath’s role there was largely to make sure the broker never ran out of capital in its early years even as his elder brother, Nithin Kamath, ran the show.
At True Beacon, his pitch to the wealthy is he’d “protect” their wealth, more than grow it. Projecting himself as the conservative, “glass half-empty” kind of a guy who doesn’t like too much risk, Kamath’s hedging is winning him clients.
Zerodha turned stock broking on its head in India by simplifying the free structure for retail investors. When that business vaulted them into the billionaires club, Kamath understood the pain point of (if it can be called so) the wealthy. He calculated that funds slap a mix of fees that, in twenty years, could be equivalent to half your principal investment. True Beacon eliminated all of it, instead charging a straight performance-based fee—10% on returns.
Kamath is truly shaking up investors’ idea of what a fund manager should look like—no fancy degrees, no fancy fees. Eventually, he’d get to retail via the rich but for now, his fund is busy wooing the HNIs. Thanks also to his co-founder Richard Pattle, who was once a royal aide to the UK’s Prince Charles.
Still, pulling a Zerodha in this space will be far more difficult for Kamath.