"Should I stop my SIPs and move to PMS?" is one of the most common questions we hear from HNI investors. The honest answer is almost always: no, you should run them in parallel — with different roles.
The core difference
Mutual funds — pooled investment, AMC owns the stocks, you own units. Cheap (Direct plans 0.5-1% expense ratio), accessible (₹500 minimum), diversified, regulated tightly.
PMS — managed account, you own the stocks directly in demat. Expensive (2-3.5% total fees), high minimum (₹50L), concentrated (15-25 stocks), more customisable.
When mutual funds win
For most investors and most goals, mutual funds win on simplicity, cost, and behavioural friction:
Investing under ₹50L — PMS isn't an option
Index strategies — passive index funds at 0.1-0.2% expense ratio are unbeatable for broad market exposure
Tax-efficient base allocation — MF internal churn doesn't hit your tax bill
Diversified core holdings — flexi-cap MFs give you 60+ stock diversification at minimal cost
Goal-based investing with SIPs — automated, disciplined, perfectly suited to mid-career professionals
When PMS adds value
PMS adds value at the edges, not as a substitute for the base:
Concentrated alpha bets — well-run PMS strategies can outperform benchmarks meaningfully over 5+ years (though most don't)
Style-specific exposure — value, quality, small-cap focused — that mutual funds in India often don't offer cleanly
Customisation needs — sector exclusions, ESG preferences, conflict-of-interest avoidance with employer holdings
Tax efficiency on exit — particularly important for very long-term holdings; no portfolio churn cost on exit
The typical HNI blend that works
For investors with ₹5 Cr+ equity allocation, a blend like this often makes sense:
50-60% in index + flexi-cap mutual funds (the boring base)
20-30% in 2-3 carefully selected PMSs (style or theme bets)
10-20% in AIFs / unlisted / international (for diversification beyond listed Indian equity)
This structure gives you broad market participation at low cost, concentrated alpha bets with managers you trust, and diversification beyond the Indian listed universe.
The decision framework
Ask yourself, honestly:
Do I have ₹50L+ to commit to a single PMS strategy?
Have I already built a diversified MF base?
Can I name a specific reason this PMS strategy will outperform Nifty 500 over 7+ years (not just last 3)?
Am I comfortable with concentration risk and 30%+ drawdowns?
Have I read the actual fee structure and understood my net-of-fee expected return?
If you can't say yes to all five, stay with mutual funds. If you can, PMS is a legitimate tool — but pick the manager carefully.
One five-minute read every Friday.
Practical wealth notes for Indian and global investors.
Col Ashish Bhardwaj
Founder of Auris Wealth. Ex-Indian Army (20 years). NISM-certified Investment Adviser. Writes about wealth management for Indian and global investors.