The majority of portfolio management services (PMS) schemes outperformed the benchmark Nifty 50 and BSE 500 in financial year 2024 amid a rally in mid and small-cap stocks. As much as 80 per cent, or 264 of the 324 schemes, were able to beat the returns generated by Nifty, data from PMS Bazaar show. The schemes delivered average returns of 45.2 per cent, higher than the 30.1 per cent delivered by Nifty.

As much as 56 per cent of the schemes outperformed the BSE 500, which returned 40.2 per cent. Only 30 schemes, however, were able to beat the returns of 70 per cent given by Nifty Smallcap 100 in FY24.

Invasset’s Growth Pro Max Fund, a multi-cap strategy, was the top performer in FY24 with returns of 128.5 per cent, followed by Green Lantern Capital’s Growth Fund (110.8 per cent) and Asit C Mehta Investment Intermediates’ Ace -Multicap (102.7 per cent).

Worst performers

Marcellus’s Little Champs, a small-cap strategy, was the worst performer with returns of 0.3 per cent. Ambit Investment Advisors’ Emerging Giants and Eklavya Capital Advisors’ Long Term Value were the other two schemes near the bottom with returns of 11.5 per cent and 13.4 per cent, respectively.

Most of the PMS schemes tend to adopt concentrated portfolios, which can work both ways. If a few of the calls go wrong, it can hit the overall performance. In 2018-19, a number of wealthy individuals migrated from mutual funds to PMS in search of alpha. Many of the PMS schemes, barring the top-performing ones, had struggled to deliver alpha in the following years.

PMS investors are at a little disadvantage vis-a-vis mutual funds on the taxation and fees front. Investors have to pay an additional tax of 0.6-0.8 per cent on the PMS schemes vis-a-vis equity MFs since all transactions happen on their respective trading accounts. In certain cases, they have to shell out profit shares to the manager if returns are over a certain hurdle rate.

PMS schemes managed ₹26.9 lakh-crore under the discretionary portfolio, ₹2.6 lakh-crore under the non-discretionary portfolio, and ₹2.7 lakh-crore under advisory, latest regulatory data showed. The PMS segment invests money on behalf of well-off individuals. The minimum investment that regulations allow is ₹50 lakh.