Investing in Portfolio Management Services (PMS) has created more wealth than investing in Mutual Funds (MF), says PMS AIF WORLD, an Analytical & Services based platform for PMS (Investments) in India.
An investment of Rs 2.5 crore made in the top five Portfolio Management Services (PMS) for a period of 10 years would have generated Rs 14.11 crore more than investing in the top Mutual Funds, said PMS AIF WORLD.
The top five PMS funds have given 26-38 percent annualised returns in 10 years compared to the top five MFs, which have given annualised returns between 23-29 percent in the same period. The Rs 2.5 crore investment in PMS would become Rs 40 crore in 10 years, while the same investment in MF would become Rs 25.98 crore.
The annualised returns in PMS funds are more than MFs not for a period of ten years only, but PMS returns are better than MFs for a period of five, three, two and a year also.
PMS AIF WORLD said that it followed three steps while categorising the data. The first step it followed was to filter the top five PMS and MFs over a period of ten, five, three, two and a year and take annualised returns till September 30. The next step was to compare multi-cap PMSs with multi/flexi Cap MFs and compare mid and small-cap PMSs with mid and small-cap MFs. The third step it followed was to assume that investors invested Rs 2.5 crore in top PMSs putting Rs 50 lakh each in top PMSs. The same goes for MFs also.
While looking at a five-year period, if individuals had invested Rs 2.5 crore in top PMS funds in multi-caps, they would have earned more than Rs 2.72 crore rather than investing in top five multi-cap MFs over the same period. The Rs 2.5 crore investment in PMS would turn to Rs 8.84 crore in five years, while MF investment would be around Rs 6.13 crore in the same period.
If one had invested in the top five PMS funds which deal in mid and small caps rather than investing in the same type in MFs, investors would have generated Rs 79 lakh more than the latter investment.
As the PMS VS MF debate continues, data suggests that about 95 percent of 427 active mutual funds' corpus is invested in only 382 stocks, showing higher concentration in a few MFs.
Authored by - PMS AIF WORLD, a performance focused investment platform for high net worth individuals.
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