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In our last blog, we have explained the basic characteristics and benefits of “Portfolio Management Services”. In this blog, let’s understand the PMS in more detail and its Returns part.
As mentioned in our previous blog, PMS i.e. portfolio management service is nothing but an investment option that offers customized and tailor-made investment solutions to investors as per client’s investment objective and risk appetite.
Basically, an investment in PMS is suitable for high-net-worth individuals (HNIs) as it requires minimum Rs. 50.00 Lakhs.
When we talk about higher or lower returns, it is always in comparison with some other product. If we want to know whether PMS is the key to generate Higher Returns for Investors, then we should compare it with other investment. And the most common alternative Equity Investment is “Mutual Funds”.
There are various types of Equity Mutual Funds, such as “Large-Cap”, “Mid-Cap”, “Small-Cap”, “Multi-Cap” etc.
These types are also available in PMS, however, there are mainly two types of PMS:
- Discretionary PMS: You can figure out by name that in Discretionary PMS, the portfolio manager can make investment decisions at his discretion. In this case the approval from the client is not required.
- Non-discretionary PMS: On the contrary, here the role of portfolio manager is to advise the client, however, the client makes the final decision regarding his investments.
Comparison: Mutual Funds vs PMS:
Here’s a comparison of Mutual Funds vs PMS. The table highlights key differences in approach, risk, investment types, portfolio size, and suitability for different types of investors, helping you choose the right option.
|
Mutual Funds |
PMS |
|
Standardized Approach |
Personalized & Customized Approach |
|
Diversified Portfolio (can consists of 50-60 or more stocks) |
Concentrated Portfolio (generally invests in 25-30 stocks only) |
|
Mutual Funds in general most of the money in invest in Stocks, bonds, debentures, and commodities. |
PMS can invest money in Stocks, bonds, debentures, commodities, startups, private equity, or hedge funds |
|
Cannot invest in Unlisted companies/ securities |
Can invest in Unlisted companies/ securities |
|
Minimum Investment can be as low as Rs 100 per month |
Rs 50.00 lakhs |
|
Suitable for all types of investors especially, for small investors |
Suitable for high-net-worth individuals |
|
Less Risky |
Riskier than Mutual Funds |
Comparison of Returns: Mutual Funds vs PMS:
As stated in the above table, PMS is riskier than Mutual Funds due to high investments and concentrated portfolio. It means PMS has a potential to deliver higher returns than Mutual Funds but with a higher risk. Volatility in PMS is higher.
Let’s see some Returns Comparison:
PMS (Portfolio Management Service) & Mutual Funds (Regular & Excl. IDCW-P Option)
|
Large-Cap Oriented Top 3 PMS |
Returns % 10 Years |
Large-Cap Oriented Top 3 Mutual Fund |
Returns % 10 Years |
|
as of 31.01.2025 |
as of 31.01.2025 |
||
|
Narnolia Financial Services Ltd |
13.93% |
Nippon India Large Cap Fund - Growth |
12.70% |
|
ICICI Prudential AMC Ltd |
13.11% |
Invesco India large cap Fund Growth |
11.45% |
|
Standard Chartered Securities India Ltd |
12.43% |
PGIM India Large Cap Fund Growth |
9.26% |
|
Mid-Cap Oriented Top 3 PMS |
Returns % 10 Years |
Mid-Cap Oriented Top 3 Mutual Fund |
Returns % 10 Years |
|
as of 31.01.2025 |
as of 31.01.2025 |
||
|
Master Portfolio Services Ltd- Master Trust India Growth |
21.27% |
Sundaram Mid Cap Institutional Growth |
19.68% |
|
Right Horizons - Super Value |
15.02% |
Motilal Oswal Midcap Regular Growth |
17.30% |
|
Emkay Investment Managers Ltd – Pearls |
14.40% |
HDFC Mid-Cap Opportunities Fund Growth |
16.65% |
|
Small Cap & Mid/Small Cap Oriented Top PMS |
Returns % 10 Years |
Small-Cap Oriented Top 3 Mutual Fund |
Returns % 10 Years |
|
|
as of 31.01.2025 |
|
as of 31.01.2025 |
|
Aequitas Investment Consultancy - India Opportunities Products |
26.30% |
Nippon India Small Cap Fund - Growth |
19.81% |
|
Accuracap – Picopower |
17.71% |
Quant Small Cap Fund Growth |
18.70% |
|
Nine Rivers Capital Holdings - Aurum Small Cap Opportunities |
17.30% |
SBI Small Cap Fund Regular Plan Growth |
18.04% |
|
Care Portfolio Managers - Growth plus Value |
15.36% |
HSBC Small Cap Fund Regular Growth |
17.80% |
Source: https://morningstar.com/
Source: https://pmsbazaar.com/
You can clearly see that PMS has delivered higher returns in various cases. However, please remember that PMS can be a suitable option for investors with a high net-worth, longer time horizon and a greater risk appetite.
For more details about Portfolio Management Services (PMS) and how it can benefit your investments, feel free to get in touch with us at +91 83900 40100 or email support@bonvista.in. We're here to assist you!
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