MAKING THE RIGHT CHOICE

PMS SCHEMES ARE IDEAL FOR THOSE WHO INVEST IN LARGE TICKET SIZES, UNDERSTAND EQUITIES, AND DON'T PANIC AT THE FIRST SIGHT OF MARKET VOLATILITY. HERE ARE SOME TIPS ON HOW TO PICK THE SCHEME THAT SUITS YOUR GOALS BEST

- NAVNEET DUBEY

FIRST PERMITTED IN 1993, portfolio management services (PMS) have seen their popularity grow. This is no doubt thanks to the stellar returns their schemes have generated, especially in recent years.

These schemes-oriented towards high net-worth individuals (HNIS) with a minimum investment size of ₹50 lakh― invest directly in securities. Investors' assets are not pooled into one large fund, as is the case with mutual funds, but are maintained separately.

A recent report bears testimony to this investment avenue's good performance. According to the portal PMS Bazaar, 79% of PMS schemes outperformed their benchmarks over a 10-year period, while only 49% of mutual funds bettered the returns generated by their benchmarks. As a result, perhaps, the number of clients has increased from around 106,000 to about 147,000 in just the last five years since 2019, according to PMS Bazaar. And this despite the fact that the minimum investment size has doubled from ₹25 lakh to ₹50 lakh.

But despite such good returns, investors must exercise caution while choosing PMS schemes. The choice must account for the needs, risk tolerance, and objectives of the investor. And it must depend on a careful consideration of the credentials and track records of the PMS providers, and a comparison of the fees and service structures.

This is definitely not a scheme for the faint of heart. It is ideally suited to those who invest in a large ticket size, understand equities, and don't panic at the first sign of market volatility.