Strategic Investment Insights- PMS vs MF - Unveiling the Ideal Wealth Management Choice
When it comes to managing money, investing is considered very important. Two popular options for investors are Portfolio Management Services (PMS) and Mutual Funds (MF). Understanding their distinct features is crucial for selecting the investment vehicle best suited to investors’ financial goals and risk tolerance.
Portfolio Management Service (PMS)
PMSs offer a customised approach to asset management for high net worth individuals. The funds are managed by a dedicated fund manager who creates a customised portfolio according to the investor’s specific requirements and preferences.
A key strength of PMS is that it caters to specific investment goals and risk appetite. The fund is actively managed by many fund managers, who adjust it based on market conditions.
PMSs also constantly monitor and make adjustments to the portfolio based on the market. This active management approach can lead to higher returns and lower risk.
Minimum ticket size for PMS in India can be very high, starting from ₹50 lakhs. This restricts access to HNIs.
Returns are directly dependent on the skill of the fund manager. Selecting the right manager is critical for achieving investment goals.
Mutual Funds (MFs)
Mutual funds are a pooled investment option for a broader range of investors. They pool funds from multiple participants and invest across various areas like stocks, bonds, and commodities.
Mutual funds are also managed by designated fund managers who research, select, and manage investments within the fund's objective.
A wide range of MFs look at different investment goals, risk tolerances, and investment styles. Investors can choose from equity funds, debt funds, hybrid funds, and sector-specific funds.
Owing to their low ticket size and operating fees, mutual funds attract a wide range of investors from retail to institutional. They are open to all who wish to invest as low as 100 rupees.
Due to problems like passive management, having limited control and flexibility over investments mutual funds do have some limitations.
Conclusion:
The PMS/MF industry has grown rapidly over the past few years, despite higher expenses compared with mutual funds, as high-ticket investors prefer the comfort of having more direct access to their investment advisors/fund managers than being seen as one of the millions of investors invested in a mass product.. According to a report by PMS bazaar, PMS investment has outperformed their benchmarks by an average of 70% while MFs has an average of 48%. Currently, PMS funds have a total corpus of Rs 29 crore versus Rs 53.4 crore of equity assets under management under equity mutual funds.
Blog By: Ishwar Yadav, Assisted By: Megh Jadhav