75% of HNI-preferred PMS funds beat mutual funds over last decade

Wealthy back PMS: As much as 75 per cent of Portfolio Management Services (PMS) funds, favoured by high net worth individuals (HNIs), have demonstrated superior performance over a 10-year period when compared to mutual funds, according to a recent report released by PMS Bazaar. The study evaluated the performance of 335 PMS funds alongside 388 regular mutual funds, spanning different time frames, such as 1, 3, 5, and 10 years.

Mutual funds trail behind

The findings reveal that PMS investment approaches consistently exceeded their benchmarks by an average of 70 per cent across all timeframes and categories, while mutual funds achieved a 48 per cent outperformance. Specifically, in the 5-year period, 59 per cent of PMS investment approaches outperformed their benchmarks compared to 46 per cent of mutual funds.

The trend continued over 3 and 10-year periods, with PMS consistently delivering superior returns compared to mutual funds. The report also analysed the performance of PMS and mutual funds based on market capitalisation categories such as large, mid, small, large-mid, flexi cap, multicap, and thematic.

Thematic funds lag

In the 3-year window, PMS outperformed both benchmarks and mutual funds across all categories, except for the thematic category. Notably, PMS small-cap approaches excelled, surpassing the benchmark by 91 per cent, compared to mutual funds' 41 per cent. Midcap PMS also outshone, surpassing the benchmark by 84 per cent, compared to mutual funds' 17 per cent.

This dominance extended to the large, large-mid, multi, and flexi-cap categories in the 3-year time frame. However, in the thematic category, mutual funds outperformed both benchmarks and PMS investment approaches by 59 per cent.

Large-mid leadership 

Over the 5-year period, PMS investment approaches dominated in five out of seven categories, including large, mid, small, flexi, and multi-cap categories. However, mutual funds had the upper hand in the large-mid and thematic categories.

The standout observation from PMS Bazaar was that over the 10-year period, all PMS investment approaches consistently outperformed mutual funds and benchmarks.