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Nilanjan Dey

Kolkata, Aug. 30

IF there is one group of investors that has clocked super-normal profits this bull season, it is the high net worth individuals who have opted for privately-run portfolio management schemes (PMS).

The PMS is alive and kicking, thanks to what seems to have become a hip destination for some of the country's moneybags.

Schemes run by the likes of Prudential ICICI and Birla Sunlife are doing well, given the number of clients that have come into their fold and the returns that have been generated for them. While the fund houses are not willing to divulge much in terms of actuals, indications put out by the two are common in spirit.

The situation, say sources, stems from the latest developments in the market, more specifically from the rise that has been witnessed in the last few months.

Returns from equities have been going up, which in turn have led to better results from the schemes. The fund managers concerned have also tried hard to shore up performance.

The growth witnessed in the stock market has in fact, turned the private portfolios towards more equities than ever, as the current trend is keeping many from making fresh investments in debt options.

The corpus handled by Pru ICICI is by far bigger than what is managed by Birla Sunlife. Sources with the former claim that a number of HNIs (high net worth individuals) have started considering the PMS actively.

"We had started out earlier and currently cater to clients who have varied needs and risk profiles," they point out.

Birla MF, on the other hand, has a smaller set of investors, most of whom are now tuned towards equities. However, Mr S.K. Mitra, head of Birla MF, said that the fund would rather advise them to stay diversified, particularly by taking exposure to simple fixed-income securities and even derivatives, than concentrate on a single asset class. The latter increases the underlying risk.

"What makes the PMS different is the personalised service that can be provided to individual clients, depending on their profiles. Mind you, a PMS is especially relevant in a bearish market, when it is not easy to perform well. That's when clients really need professional advice," he maintains.

The PMS as a concept is likely to find takers in the days ahead, especially if the market continues to do well, feel investment circles. However, there remain a few contrary opinions in the form of questions on the relative efficacy of the PMS as a means of capital formation.

Mr Prakash Diwan, CEO of Way2Wealth (a Bangalore-based intermediary), feels that MFs have the capacity of doing more than what they normally do for the common investor - that is, one who has not opted for a PMS.

"Despite all constraints and the relative lack of freedom associated with investment in a common pool of assets, an ordinary investor would probably like his mutual funds to work equally well," he said, adding that professional fund managers must constantly optimise returns for all classes of investors, big and small.

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Portfolio management schemes — the in-thing

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