Soft option

Mumbai, Jan. 17: Think of portfolio management services and it is the sight of stocks that come alive in your mind. That vision is about to change for the well-heeled, who have the cash to spare for a bet on the bourses.

High net worth investors, whose options ended at shares, will soon have commodities on their menu. An innovative breed of brokerages is lining up commodity-based portfolio management schemes, similar to those in the equity market, yet different in ways not seen before.

Regulators have not flashed the green light, but the likes of Sunil Ramrakhiani, head of commodities at IL&FS Investsmart, say they are ready with their products.

Many mutual funds are waiting in the wings to launch portfolio management services in commodities, even though Sebi is still drawing up a framework of laws for it. SBI Mutual Fund has sought approval for such a scheme. Market watchers expect the budget to show the way.

?We will offer commodity-based portfolio management schemes to affluent clients and financing to those who hedge in commodities. We will leverage our parentage and tie-up with banks,? Hemang Raja, CEO of IL&FS Investsmart, said.

Experts say while portfolio management services in commodities are a norm in the developed countries, customised service for clients requires two basic elements ? a cutting-edge research team and a dynamic dealer desk.

According to Ramrakhiani, IL&FS will strive for a good mix of research analysts and dealers. He is aware that commodities research in India is still a nascent area.

Stock brokerages with a large pool of cash under management and an army of sharp researchers are also warming up the idea of churning clients? cash in commodities. One of them is Motilal Oswal, a Mumbai equity brokerage that branched into commodity futures recently.

The firm known for its stock-pickers and a research team racing to new frontiers acknowledges the need for a team of alchemists specialising only in commodity futures. Says Manish Shah, head of retail products at Motilal Oswal: ?Research has to be stabilised and markets developed before we offer commodity portfolio management schemes.?

There are commodity brokerages that provide tips on what to invest in, a service they offer for a fee or a percentage of the profits accrued from clients? investments.

Ramrakhiani plans to set up dedicated teams of researchers, dealers with a finger on trends in the local and international markets, besides business development mavens cued in to different commodity segments.

IL&FS Investsmart, for one, has drawn up plans to tap into its network to cater to rich farmers, trading houses and companies.

One of the leading financial services organisations venturing into commodities, the company will run the new initiative under the umbrella of IL&FS Investment Commodity Brokers (IICBL).