While PMS is meant for high-net-worth individuals (HNIs) and mutual funds are accessible to all investors, an analysis of their return profiles shows that over 75% of PMS approaches have given excess returns than mutual funds over 10 years.

PMS analyzed 335 PMS investment approaches and 388 regular mutual funds across 1, 3, 5, and 10-year periods and found that PMS investment approaches outperformed their benchmarks by an impressive 70% on average across all timeframes and categories, while MFs managed a respectable 48%.

“Interestingly, when comparing PMS to mutual funds, PMS investment approaches consistently outperformed mutual funds across all timeframes. For example, in the 5 years, 59% of PMS investment approaches outperformed their benchmarks compared to just 46% of mutual funds. This trend continued in the 3-year and 10-year periods, with PMS consistently delivering superior benchmark-beating returns,” the study said.

During the 3-year window, barring the thematic category, PMS outperformed benchmark and mutual funds across all the categories. The PMS smallcap approaches thrived, exceeding the benchmark by a whopping 91% compared to mutual funds’ 41%. Midcap PMS also shone, surpassing the benchmark by 84% compared to just 17% of mutual funds. Similar dominance was seen in the large, large-mid, multi, and flexi cap categories in the 3-year timeframe, it said.

PMS schemes are meant for HNIs to park surplus capital as it comes with a minimum ticket size of Rs 50 lakh, while mutual fund investing begins as low as Rs 100.

PMS vs direct mutual funds

In the one-year period, PMS led with 86% outperformance compared to 60% for direct funds. But in the three-year period, both PMS and direct funds outperformed benchmarks by 58%. On the other hand, during the five-year period, direct mutual funds took the lead with 62% outperformance, while PMS lagged at 59%. And in the long-term 10 years, PMS emerged as the winner, boasting 79% outperformance against 65% for direct funds and the benchmark.

Top PMS funds
In the last year, Invasset Growth Pro Max Fund is the top gainer with a 96.6% return, followed by Aequitas’ India Opportunities Product and Shephard’s Value Magno. On a 3-year timeframe, top gainers are Counter Cyclical’s Diversified Long Term Fund, Green Lantern’s Growth Fund, and Aequitas’ India Opportunities Product.In the last 5 years, Green Lantern’s Growth Fund, Bonanza’s Edge, and Sameeksha’s India Equity Fund have performed well while the 10-year map shows Aequitas’ India Opportunities Product, Nine Rivers’ Aurun Small Cap Fund and Globe Capital’s Value Fund as top winners.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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