![Performance matters: why PMS may not be a great investment](https://cdn.magzter.com/1525334298/1677546660/articles/WHafzcw511677550975893/PERFORMANCE-MATTERS-WHY-PMS-MAY-NOT-BE-A-GREAT-INVESTMENT.jpg)
The portfolio management services (PMS) industry, which caters to the investment needs of high networth individuals (HNIS), in India grew by about 14.5% last year, compared to a mere 5.7% growth witnessed by mutual funds (MFs) in the same period. The assets under management (AUM) of both PMS and the MFs stood at ₹26.9 trillion and ₹39.9 trillion, respectively, as of December.
However, the growth in the PMS industry that mandates a minimum investment of ₹50 lakh comes against the backdrop of its poor return performance compared to MFs, considered a mass product for retail investors (see graphic). This analysis is based on data from PMS Bazaar, a portal providing information about PMS funds in India.
There are about 400 asset management companies (AMCs), each offering numerous PMS strategies in the market today.
Over a 5-year period, only 30% of small-cap PMS funds could outperform the average return delivered by MFs in the same category. That is, only three out of 10 small-cap PMS funds delivered a 5-year return higher than 11.5% compound annual growth rate (CAGR), which is the average category return of small-cap MFs. Similarly, only 36% of large-cap PMS funds and 44% of multi/flexi-cap PMS funds outperformed the average return delivered by corresponding categories in the MF space over the said period.
Does this mean investing in MFs has a higher probability of earning better returns? After all, MFs are highly regulated with a tax-efficient structure and low minimum investment limit compared to PMS funds.
The answer depends on the intent of individuals investing in PMS and their ability to pick the right portfolio manager, according to experts.
This story is from the February 28, 2023 edition of Mint Mumbai.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the February 28, 2023 edition of Mint Mumbai.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
![Yes, the world is hotter than it has been in 2,000 years or so](https://reseuro.magzter.com/100x125/articles/17006/1705058/yO5NsU74S1716446405484/YES-THE-WORLD-IS-HOTTER-THAN-IT-HAS-BEEN-IN-2000-YEARS-OR-SO.jpg)
Yes, the world is hotter than it has been in 2,000 years or so
A scientific study of tree rings confirms global warming is for real
![As a non-resident, is there a tax liability on exiting Indian MFs?](https://reseuro.magzter.com/100x125/articles/17006/1705058/OrU6UKi_41716446192356/AS-A-NONRESIDENT-IS-THERE-A-TAX-LIABILITY-ON-EXITING-INDIAN-MFS.jpg)
As a non-resident, is there a tax liability on exiting Indian MFs?
I have been investing in mutual funds for the past four years. Last year, I moved to Dubai and am currently a non-resident Indian NRD). Say, if] exit all my mutual fund investments now, would I have zero tax liability? —Name withheld on request.
![Mergers off but PSB privatization still on](https://reseuro.magzter.com/100x125/articles/17006/1705058/JqNiTyLaQ1716444098212/MERGERS-OFF-BUT-PSB-PRIVATIZATION-STILL-ON.jpg)
Mergers off but PSB privatization still on
T 'he Centre doesn't have any plan to merge public sector banks (PSBS) in FY25, though it will not ditch plans to privatize PSBs during the fiscal, two people aware of the matter said.
![Think Tesla Is In Trouble? Pity Even More Its Wannabe EV Rivals](https://reseuro.magzter.com/100x125/articles/17006/1660517/4p0A9dX7d1712639940705/crp_THINK-TESLA-IS-IN-TROUBLE-PITY-EVEN-MORE-ITS-WANNABE-EV-RIVALS.jpg)
Think Tesla Is In Trouble? Pity Even More Its Wannabe EV Rivals
The combined market value of six prominent wannabes hit 400bn in 2021, but today they are worth 65bn
![Has The Growth Of Our Economy Translated Into Domestic Jobs?](https://reseuro.magzter.com/100x125/articles/17006/1660517/acrQLFeHx1712641007610/crp_HAS-THE-GROWTH-OF-OUR-ECONOMY-TRANSLATED-INTO-DOMESTIC-JOBS.jpg)
Has The Growth Of Our Economy Translated Into Domestic Jobs?
While the covid shock and other setbacks got in the way, data indicates that employment in India is on a firm recovery path
![Financial Sector Reforms Plan To Be Unveiled Post Elections](https://reseuro.magzter.com/100x125/articles/17006/1660517/FeYoak4Zx1712636495187/crp_FINANCIAL-SECTOR-REFORMS-PLAN-TO-BE-UNVEILED-POST-ELECTIONS.jpg)
Financial Sector Reforms Plan To Be Unveiled Post Elections
The govt will cut its stake in five PSBs this fiscal to comply with Sebi’s listing guidelines
![Generative AI Is Not Ubiquitous In The Business World-Not Yet](https://reseuro.magzter.com/100x125/articles/17006/1660517/HTPWeZM-E1712640222148/crp_GENERATIVE-AI-IS-NOT-UBIQUITOUS-IN-THE-BUSINESS-WORLDNOT-YET.jpg)
Generative AI Is Not Ubiquitous In The Business World-Not Yet
While some AI tools racked up users, some firms are proceeding with caution, or not at all
![Wipro’s CEO switch was not about its share price](https://reseuro.magzter.com/100x125/articles/17006/1660517/WA2T5UEHi1712640886829/WIPROS-CEO-SWITCH-WAS-NOT-ABOUT-ITS-SHARE-PRICE.jpg)
Wipro’s CEO switch was not about its share price
Shareholder value data does not explain the firm's change on top. In a flux-filled field like infotech, business performance counts for more and Wipro's challenge still seems quite steep
How not to blow a major chunk of your travel budget on visas
Rejection of visas can impact your travel costs, especially when you have to cancel flight and hotel bookings
Wheat output at 106 mt to fall short of govt estimate: Survey
This decline in output comes at a time India confronts rising food inflation