Portfolio Management Services or PMS managers have greater freedom to run concentrated portfolios, although sustained benchmark outperformance has varied across strategies. A bl.portfolio analysis of 554 active PMS strategies shows that category-average returns beat the relevant benchmarks in three of the six equity categories examined over five years. Mid-cap stood out as a challenging segment, as no strategy in the sample managed to surpass the Nifty Midcap 150 TRI. Multi- & Flexi-cap was the standout, with both the category average and about 2 out of 3 strategies in the sample beating the respective benchmark.

The wide gap between category averages and the best-performing managers carries a second message. PMS investing is primarily a manager-selection decision, not merely a choice between large-cap, mid-cap or small-cap strategies. A concentrated portfolio can produce exceptional alpha when the manager is right, but it can magnify stock-specific losses, drawdowns and tax costs when the calls go wrong.

As of June 2026, India had 530 SEBI-registered portfolio managers. The industry served about 2.2 lakh investors and managed ₹8.9 lakh crore (excluding EPFO assets) across discretionary, non-discretionary and advisory portfolios. This is a broad industry figure, covering different client segments and mandates. For individual investors, the entry threshold remains substantial, with the minimum investment in a PMS being ₹50 lakh.

How the performance analysis was done

The Association of Portfolio Managers in India (APMI) lists about 1,570 PMS strategies, including active and inactive offerings. This bl.portfolio analysis uses PMSBazaar data covering 554 active model portfolios or primary strategies across 15 categories.

Equity strategies were assessed on five-year returns ended June 30, 2026. Debt, multi-asset, MF-PMS and arbitrage strategies were ranked on three-year returns because only a few offerings in these segments had a five-year track record. Performance is reported using the Time-Weighted Rate of Return (TWRR), which is designed to separate the manager’s investment performance from the timing of client cash flows.

Category averages are calculated using a simple average. The findings should be read as a snapshot of the active strategies represented in the database, not as a census of the entire PMS market. Inactive or discontinued strategies are outside the sample. The number of qualifying strategies also differs across categories. Category labels may reflect a strategy’s mandate even when its current portfolio has moved materially away from that label.

Published performance is net of management fees. Investor-level capital-gains tax is not captured by TWRR.

Cost and tax hurdle

Before we delve deep into PMS performance, investors should understand three important things.

One, the total cost of investing may go beyond the headline management fee. PMS providers commonly use one of three fee structures: Fixed, performance-linked or hybrid. Fixed annual fees generally range from 0.25 per cent to 2.5 per cent of the portfolio value. A performance-fee structure pays the manager a share of gains above a pre-defined hurdle rate. A hybrid structure combines a fixed charge with an incentive fee.

The quoted fee is not necessarily the investor’s full cost. Brokerage, custody, audit, demat, fund-accounting and other operating charges may also apply, along with GST on applicable fees. Under a performance-fee arrangement, investors should examine the hurdle rate, the high-water-mark provision, catch-up clauses and the conditions under which the fee calculation resets.

Two, portfolio churn can create tax even without a withdrawal. In an equity mutual fund, purchases and sales undertaken within the scheme do not create an immediate tax liability for individual unitholders. Tax generally arises when the investor redeems units. In a PMS, securities are bought and sold in the client’s own account. Portfolio churn can, therefore, crystallise short- or long-term capital gains even when the client has not withdrawn money. Brokerage and transaction charges are also borne at the client-account level. Two strategies reporting similar pre-tax returns can consequently deliver different post-tax outcomes, depending on turnover, the holding period of realised gains and the investor’s own cash-flow pattern.

Three, flexibility creates opportunity and concentration risk. Mutual funds operate within standardised category rules. A large-cap mutual fund, for instance, must invest at least 80 per cent of its assets in the top 100 companies and cannot invest more than 10 per cent of the scheme’s corpus in a single stock. PMS managers have greater freedom to build concentrated portfolios, with some strategies allocating 20-30 per cent to one company and holding only 10-25 stocks. That flexibility can help a skilled manager express high-conviction ideas and avoid benchmark-like portfolios. But it also makes outcomes more dependent on a small number of decisions.

Where PMS strategies delivered, where they didn’t

Here is how different categories performed:

Large-cap: The average edged ahead, but outperformance was uneven

Large-cap PMS strategies produced a mixed result. The category delivered an average annualised return of 10.4 per cent over five years, only 0.1 percentage point ahead of the Nifty 100 TRI’s 10.3 per cent. Yet, just 44 per cent of the strategies beat the benchmark. The category average, therefore, does not indicate broad-based alpha.

Tulsian PMS topped the category with 25.2 per cent, followed by ACE Bluechip at 16.8 per cent and ICICI Prudential Large Cap Strategy at 16 per cent. Tulsian’s current portfolio illustrates both sides of the PMS proposition: Nearly half of the portfolio was concentrated in its top five holdings — Suzlon, HAL, Tata Motors Passenger Vehicles, Mazagon Dock and Vodafone Idea (as of June 2026).

Large- and mid-cap: A small average shortfall concealed strong winners

The large- and mid-cap category returned an average 13.4 per cent a year, trailing the Nifty LargeMidcap 250 TRI’s 14.3 per cent. About half of the strategies outperformed the benchmark, suggesting a wide split between successful and unsuccessful managers rather than uniform category weakness.

Green Lantern Capital’s Alpha led with 24.8 per cent, followed by Care Portfolio’s Large & Midcap Strategy at 17.3 per cent and Samvitti Capital’s LT Growth Strategy at 15.8 per cent. Care Portfolio follows a growth-and-value approach with 15-20 high-conviction stocks, with Zydus Lifesciences, UltraTech Cement and Larsen & Toubro among its major holdings. Samvitti Capital’s strategy is led by positions in TD Power Systems, Hitachi and Laurus Labs.

Mid-cap: Not one strategy beat the benchmark

Mid-cap was the weakest equity PMS category in the study. Its average annualised return of 12.6 per cent trailed the Nifty Midcap 150 TRI’s 18.3 per cent. None of the qualifying strategies outperformed the index.

Sundaram Alternate Assets’ SELF Portfolio topped the category with 17.4 per cent, followed by Right Horizons’ Super Value at 17 per cent, Nippon India AMC’s Emerging India at 16 per cent and NAFA Asset Managers’ Emerging Bluechip Portfolio at 15.7 per cent. Even the leader remained below the benchmark.

Sundaram’s SELF Portfolio follows a high-conviction growth strategy focussed on identifying emerging leaders, with exposure to the power value chain supporting returns over the past year. NAFA Emerging Bluechip Portfolio invests in high-quality mid- and small-cap companies with long-term growth potential. Key holdings include Hitachi Energy, Quality Power Electrical Equipments and Precision Camshafts

Small- and mid-cap: Some exceptional managers

The small- and mid-cap category delivered an average return of 16 per cent a year, 0.8 percentage point below the Nifty MidSmallcap 400 TRI’s 16.8 per cent. About one-third of strategies beat the benchmark.

Green Lantern Growth Fund, nevertheless, generated 33.7 per cent, followed by Wallfort Diversified Fund at 25.8 per cent and Asit C Mehta Ace Ten Trillion Opportunities at 24.6 per cent. The long distance between the leaders and the category average is telling.

The Asit C Mehta strategy runs a concentrated portfolio of 15-25 stocks, focussing on growth, management quality and industry tailwinds. Its top holdings include DIVGI TorqTransfer Systems, EPack Prefab Technologies and Quess Corp.

Small-cap: Coin toss

The small-cap category returned an average 19.1 per cent a year, beating the Nifty Smallcap 250 TRI’s 16.8 per cent by 1.6 percentage points. About 50 per cent of small-cap strategies in the sample outperformed the benchmark.

Aequitas Investment Consultancy’s India Opportunities Product led with 33.1 per cent, followed by Counter Cyclical Investments’ Diversified Long Term Value at 31 per cent and Green Portfolio’s Super 30 Dynamic Fund at 26.9 per cent.

Multi-cap and flexi-cap: A broader pattern of outperformance

Multi-cap and flexi-cap strategies delivered an average annualised return of 13.4 per cent, outperforming the Nifty 500 TRI’s 12.3 per cent. Around 61 per cent of the strategies beat the benchmark, making this one of the more broadly successful categories in our analysis.

New Berry Capitals’ Seeking Alpha led with 27.3 per cent, followed by Stallion Asset’s Core Fund at 24.6 per cent and Samvitti Capital’s PMS Active Alpha Multicap at 24.2 per cent. New Berry uses a value-conscious quality approach, combining market-leading businesses with selective contrarian and special-situation opportunities.

Beyond pure-equity PMS

Multi-asset: Good returns

Multi-asset PMS strategies can move dynamically across equities, debt, gold and silver exchange-traded funds, and permitted overseas funds. Unlike multi-asset mutual funds, they are not required to maintain at least 10 per cent in each of three asset classes. That flexibility also makes a single benchmark less meaningful because two strategies can carry very different equity, commodity and credit exposures.

Based on three-year returns, Asit C Mehta’s ACE Multi Asset led with 24 per cent, followed by ithought Financial Consulting’s SPHERE at 21.8 per cent and Moat Financial Services’ UpperCrust Growth Fund at 19.9 per cent. SPHERE currently has a large equity allocation, led by large-caps, alongside commodity and commodity-linked exposure (15 per cent) and smaller allocations to mid- and small-caps and debt.

Debt: A higher return may reflect higher credit exposure

Debt PMS strategies may pursue capital preservation, regular income or yield enhancement, with materially different levels of interest rate, credit, concentration and liquidity risk. Comparing returns without examining the risks taken can therefore be misleading.

Dezerv’s Dynamic Debt Strategy and Karvy Capital’s Excel topped the three-year ranking with 10.4 per cent each, followed by Scient Capital’s Aries PMS at 6.8 per cent. Dezerv and Karvy allocated roughly half their portfolios to single-A-rated bonds and maintained average maturities of about 1.5-2 years. The higher yield must be viewed alongside the additional credit risk rather than treated as cost-free alpha.

Debt PMS strategies are also not bound by the same issuer- and sector-level exposure limits as debt mutual funds. Investors should examine issuer concentration, portfolio credit ratings, yield to maturity, duration, liquidity and any history of credit events before comparing headline returns.

Only one arbitrage strategy qualified in the PMSBazaar universe, so no category-level conclusion can be drawn. Estee Advisors’ I Alpha delivered an annualised return of 10.7 per cent over three years.

Like an arbitrage mutual fund, the strategy seeks pricing gaps between cash and derivatives markets through simultaneous long and short positions. Estee also uses quantitative algorithms across cash, futures and index-component trades.

MF-PMS: The layered structure

MF-PMS offerings manage portfolios made up entirely of mutual funds for affluent investors who want professional asset allocation, fund selection and rebalancing. PMSBazaar data shows Dezerv’s Alpha Focus Strategy leading the category with a three-year annualised return of 21.6 per cent, followed by Valtrust Partners’ Equity Hybrid Funds at 17.7 per cent and Kotak AMC’s Pioneer Model Strategy Aggressive at 15.5 per cent.

Investors need to bear in mind that they will incur the expense ratios of the underlying direct plan funds as well as the PMS manager’s fees and account-level charges. Performance should, therefore, be compared with a simple, low-cost asset-allocation portfolio, not only with other MF-PMS offerings.

How investors should evaluate a PMS

Here are five simple rules with which PMS returns can be assessed.

* Start with the return that remains after every cost: Compare performance after management fees, performance fees, operating expenses and transaction charges. A strategy that marginally beats an index before these deductions may leave the investor worse off than a low-cost passive alternative.

* Prefer consistency over one point-to-point CAGR: A five-year CAGR can be dominated by the starting and ending dates. If possible examine rolling three- and five-year returns, the proportion of periods in which the strategy beat its benchmark and whether outperformance persisted under the same portfolio manager and investment process.

* Measure the pain taken to earn the return: Maximum drawdown, downside capture and recovery time reveal risks hidden by an annualised return. A concentrated strategy may outperform over a full cycle yet expose the investor to losses that are difficult to tolerate or recover from.

* Check concentration, turnover and category drift: Study the top-five and top-10 holdings, sector concentration, cash allocation and annual portfolio turnover. Also check whether the present portfolio still resembles the stated strategy. A product labelled small-cap, multi-asset or debt may have materially changed its exposure over time.

* Assess the manager, not just the strategy name: Confirm who generated the historical record, whether that person still manages the strategy and whether the investment process is repeatable. A top ranking becomes less relevant after a manager change, a sharp rise in assets or a significant alteration in the mandate.

With inputs from Kumar Shankar Roy

Published on July 25, 2026