PMS vs. Mutual Funds: Which Investment Avenue Suits You Best?
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Key Takeaways: Difference Between PMS and Mutual Funds
● PMS offers customized investment strategies while mutual funds provide pooled investments.
● The minimum investment for PMS is significantly higher than mutual funds, making it ideal for HNIs (High Net-Worth Individuals).
● Mutual funds are more accessible and liquid; PMS offers more control and transparency.
● Portfolio Management Services in India are better suited for investors seeking personalized equity exposure on a long-term basis..
● Aequitas’ PMS stands out with its performance-led, research-backed, and low-churn investment approach, catering to sophisticated investors.
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Understanding PMS and Mutual Funds
Once you've decided to enter the equity markets and entrust your money to professional fund managers, a key question arises: Should you go with a mutual fund or a Portfolio Management Service (PMS)?
For high-net-worth individuals (HNIs) in India, the answer isn’t always obvious. Mutual funds are regulated, low-cost, and accessible. PMS, on the other hand, offers customisation and control but comes at a premium.
Let’s break down both options and see which one suits your investment journey.
Mutual Funds pool money from multiple investors and invest in a common portfolio. Investors own units of the fund, not the underlying stocks. Mutual funds are ideal for diversification, ease, and liquidity. The fund manager adheres to a fixed investment mandate.
Portfolio Management Services (PMS) offer customized portfolio strategies to individuals. In a discretionary PMS, the manager has full control to take investment decisions on your behalf. You own the underlying securities directly, and the strategy is tailored to your goals.
While PMS typically requires a minimum of ₹50 lakh, mutual funds can be started with as little as ₹500. PMS is meant for investors seeking a more personalised, high-touch investment experience.
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PMS vs Mutual Fund: A Detailed Comparison
Parameter | PMS (Portfolio Management Services) | Mutual Funds |
Customization | Fully customized based on investor goals and risk profile | Standardized investment strategy for all investors in a scheme |
Minimum Investment (as per SEBI) | ₹50 lakhs | As low as ₹500 |
Ownership of Securities | Direct ownership of stocks and assets | Investors own units; fund owns the underlying assets |
Transparency | High – Detailed reporting and visibility into every transaction | Moderate – NAV and portfolio disclosed periodically |
Control | High – Decisions tailored by your portfolio manager | Low – Fully managed at the fund house’s discretion |
Taxation | Taxed as per individual transactions (STCG, LTCG, Dividend Tax) | Taxed at redemption based on fund type and duration of holding |
Liquidity | Relatively Moderate – Depends on portfolio holdings | High – Open-ended funds can be redeemed anytime |
Ideal for | HNIs seeking tailored equity strategies through the best portfolio management services | Retail investors looking for passive and diversified exposure |
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Why PMS Appeals to HNIs
PMS makes sense when you’re managing larger portfolios and want deeper involvement in strategy.
● Custom Strategy: PMS portfolios are built to your risk appetite, sector preferences, and financial goals. Want to exclude sin stocks? Prefer mid-cap focus? A PMS can do that.
● Concentrated Bets: Unlike mutual funds that hold 30-50 stocks, PMS may go concentrated with 15-20 high-conviction bets. This opens potential for higher alpha — though also with higher risk.
● Tax Planning: Since stocks are held in your name, you can coordinate trades for tax efficiency — harvesting losses, timing gains, or deferring sales. Mutual funds don’t offer this flexibility.
● Transparency & Control: You know exactly what you hold, and when trades happen. PMS reporting is more detailed and investor-specific.
● Direct Ownership: You own the actual stocks. This allows for estate planning flexibility and shareholder rights.
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When Are Mutual Funds the Better Option?
Choose mutual funds if you:
● Are starting your investment journey
● Need liquidity and flexible withdrawal options
● Want passive investment without customizing portfolios
● Prefer regulated and easily accessible schemes
● Are looking for SIP or lump sum routes with low capital
Mutual funds are ideal for retail investors with smaller corpus, or those looking to diversify across debt and equity.
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How To Begin Your PMS Journey
Before selecting a Portfolio Management Service (PMS), it’s essential to evaluate the long-term track record of the fund manager — ideally over 10+ years. Markets go through cycles, and only a seasoned manager with consistent outperformance across both bull and bear phases can truly demonstrate skill.
Next, look closely at the investment philosophy. Are they value investors in the spirit of Warren Buffett, patiently buying undervalued businesses? Or do they lean towards high-growth opportunities, with a more aggressive stance? Understanding this alignment is critical, especially when you're trusting someone with a significant part of your net worth.
Aequitas Investment’s PMS stands out as India’s top-performing fund house with a sharp, value-oriented approach rooted in discipline, research, and a deep margin of safety. Over the years, Aequitas has been recognized with multiple awards, including being ranked the #1 wealth creator by CRISIL and PMS AIF World in multiple categories — a testament to its consistency and outperformance.
Why should a HNI choose Aequitas?
1. Proven 10+ year track record of market-beating returns
2. High-conviction, concentrated portfolios designed for alpha generation
3. Transparent, client-first approach with direct access to portfolio managers
4. Investment strategies rooted in fundamental research and long-term wealth creation
If you're exploring PMS services in India with a results-first mindset, Aequitas is consistently listed among the best PMS in India for HNIs.
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Conclusion: PMS or Mutual Fund – Which One Is Right for You?
The difference between PMS and mutual funds lies in the level of personalization, investment size, transparency, and investor control. For HNIs seeking performance-led, customized investments, PMS provides a compelling choice.
Mutual funds, on the other hand, are well-suited for retail investors, or those who want hassle-free diversified investing.
Ultimately, choosing the right investment vehicle should depend on your:
● Capital base
● Risk appetite
● Long-term goals
● Need for customization
If you’re a discerning investor looking for the best portfolio management services in India, and prefer a focused, disciplined approach with direct equity ownership, Aequitas PMS—might be your ideal fit.
