Portfolio Management Services (PMS)
Personalised portfolios for ₹50 lakh+ investors. You own the stocks directly in your demat — the manager does the picking.
In plain language
A PMS is a professionally managed investment service where the manager builds and manages a customised stock portfolio in your name. Unlike mutual funds where you own units of a pool, in PMS you own the underlying shares directly in your demat account.
Regulated by SEBI under the PMS Regulations 2020, the minimum investment in India is ₹50 lakhs. This high floor is intentional — PMS is designed for HNI investors who can handle concentration and short-term volatility for the potential of higher long-term alpha.
PMS strategies span multicap, smallcap, thematic (consumption, banking, infrastructure), special situations, and quant-based. Fees are typically a fixed annual management fee (2–2.5%) plus a performance fee (10–20% above a hurdle rate). Compared to mutual funds, PMS gives you more transparency (you see every trade), tax efficiency (no churn of underlying when you exit), and customisation.
Visualised
Illustrative typical fee structures. Performance fee component assumes hurdle achieved. Actual fees vary by manager and AUM tier.
Returns shown are historical and do not guarantee future performance.
Quick reference
Pros and cons
Pros
- Direct ownership of stocks in your demat
- Customisation — manager can exclude sectors or stocks you don't want
- Tax-efficient (no portfolio churn on exit)
- Transparent (you see every buy/sell)
- Potential for higher alpha than mutual funds when manager is skilled
Cons
- ₹50L minimum is a high bar
- Performance fees can be steep — manager wins even when you barely beat benchmark
- Concentrated (20–25 stocks) — drawdowns can be sharp
- Reporting can be opaque; comparing PMS returns across managers is non-trivial
- Most PMS underperform their benchmark net of fees over 7+ year periods
Who should consider this?
Consider PMS if you have ₹50L+ to invest in equities, want personalisation beyond what mutual funds offer, can stomach 20–30% short-term drawdowns, and have a 5+ year horizon. Don't consider PMS as your first equity exposure — start with mutual funds first.
Common mistakes
- Picking a PMS based on the last 1–3 year return chart. Mean reversion is brutal in PMS — yesterday's chart-topper often becomes tomorrow's laggard.
- Not reading the fee structure carefully. A 1.5% fixed + 20% performance fee over 8% hurdle means you give away a third of returns above 8%.
- Treating PMS as a substitute for a full plan. PMS handles one slice (your equity allocation); you still need debt, gold, insurance, and goal mapping.
- Ignoring tax implications. Every sale in your PMS triggers capital gains — high-churn strategies can quietly create big tax bills.
- Choosing a small AUM PMS purely for returns. Sub-₹500 Cr AUM PMSs can have liquidity issues and key-person risk.
Auris + this product
We help you decide whether PMS even makes sense for you (often the answer is 'not yet — keep doing mutual funds'). If it does, we evaluate managers by their actual investment process, fee structure, risk-adjusted returns over multiple cycles, and AUM stability — not just glossy decks. WealthWise tracks your PMS portfolio alongside your other assets in one view.
Frequently asked
PMS or mutual funds — which is better?⌄
For most investors with ₹50L+, a blend works best. Mutual funds give you cheap, diversified base exposure; PMS adds personalisation and potential alpha. Pure PMS-only portfolios concentrate risk in one manager's style. We typically suggest PMS as a 30–50% slice of equity, not the whole thing.
How do I evaluate a PMS manager?⌄
Look at: (1) Investment process — is it repeatable or vibes? (2) AUM stability — has it grown or shrunk? (3) Drawdowns — how did the fund behave in 2008, 2020, 2022? (4) Key-person risk — does it depend on one PM? (5) Fee structure — what does net-of-fee return look like over 7+ years vs Nifty 500?
What's the tax treatment?⌄
Each stock sale in your PMS is a separate capital gains event in your demat. Short-term (held < 12 months) is taxed at 20%, long-term at 12.5% above ₹1.25L. Unlike mutual funds where the AMC absorbs internal churn tax-free, PMS churn directly hits your tax bill — making low-turnover PMS strategies more tax-efficient.
Can I exit a PMS anytime?⌄
Yes, there's no lock-in by SEBI rules, though some managers have notice periods (typically 1 month). On exit, the stocks are either liquidated and cash credited, or transferred to your demat (lower cost). We recommend a minimum 3-year horizon to let the strategy play out.
What about AIF instead of PMS?⌄
AIFs (Alternative Investment Funds) start at ₹1 Cr minimum and cover strategies PMS can't — long-short, private equity, venture, structured credit. PMS = listed equity in your name. AIF = pooled vehicle for non-traditional strategies. We often suggest considering both alongside MFs for HNI portfolios.
How are PMS returns calculated?⌄
PMS returns are reported on a 'TWRR' (Time-Weighted Rate of Return) basis at the strategy level. Your individual return can differ based on when you invested. SEBI now requires 'aggregate' performance disclosure across all clients in a strategy — that's the number you should compare across managers.
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