Should I upgrade from mutual funds to a PMS for my Rs 2Cr portfolio?

Question

My equity portfolio recently crossed Rs 2Cr and my bank RM is aggressively pitching a PMS.

They claim it offers better personalization and higher returns than standard mutual funds.

I plan to hold this money for at least a 5yr to 7yr horizon.

Is a PMS actually worth the extra fees or should I stick to my regular SIPs?

Sachin Kabra · Accepted Answer

Think of mutual funds as riding a reliable public bus and a PMS as driving a private cab. While the cab feels more exclusive and acts as a badge of honor it is significantly more expensive.

When you strip away the upfront fees and profit-sharing models you realize the drag on your returns is massive. You also have to account for the continuous brokerage charges and the heavy taxation burdens that come with frequent portfolio churning in a PMS.

Research actually shows that nearly 50% of PMS schemes underperform standard mutual fund flexi-cap categories over a 5yr period. A PMS often ends up being the worst of both worlds for a retail investor. It lacks the low-cost efficiency of a simple mutual fund and it misses the high-risk high-reward structure of an Alternative Investment Fund.

Unless you have very specific structural needs staying on the mutual fund bus is the most reliable way to reach your wealth creation destination. You can build immense wealth without needing a vanity product to show you have arrived.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.

Should I upgrade from mutual funds to a PMS for my Rs 2Cr portfolio?

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