Portfolio Management Schemes: Our online survey results
Moneylife Digital Team 12 September 2013

Moneylife online survey on PMS shows large-scale underperformance and gross mismanagement by PMS companies. While many investors may not have invested due to lack of data for making an informed decision, a majority of those who have invested, say they lost money

There are 253 portfolio management schemes (PMS) offered by various portfolio managers, brokers and asset management companies, registered with the Securities and Exchange Board of India (SEBI). Moneylife has been campaigning to bring some transparency in how PMS performance data is reported. However, we also wanted to capture the experience of the investors of PMS in our cover story, Portfolio Management Schemes: Will Your Portfolio Blow Up?, through an online Survey. Our Survey received responses from 360 participants out of which nearly one-third have invested in PMS schemes. Here is a summary of the responses.


According to the Survey, lack of disclosure and poor performance are the main cause of concern for the investors which puts them off. As many as 35% said that they were not convinced if their PMS would deliver good returns. A disturbing 45% of the respondents who have invested in PMS say that they were unable to make an informed decision because of lack of data. Just 15% respondents of our survey said that they compared various schemes before investing.


More than half of those who invested in PMS schemes said they have lost their money. When we asked to name the PMS company in which they have lost money, there was no clear poor performing fund house; the names varied from HSBC Wealth Management to JM Financial and Kotak Mahindra PMS to HDFC PMS. Similarly when we asked which was the best PMS company, there was no clear winner either. As many as 65% of the respondents, who have invested, claim that returns were below the benchmark. A mere 5% say that they got returns better than the benchmark. Nearly half the respondents, who have invested, mentioned that their portfolio was churned excessively. This gross mismanagement certainly does not go down well with investors. Nearly 60% of the participants who have invested in PMS have stopped investing altogether. An equivalent proportion of respondents say that they will never recommend PMS to others.


While one-fourth of PMS investors have invested in multiple schemes, an equivalent number of investors were not sure of what kind of service (discretionary, non-discretionary, advisory) they have opted for. Were they greedy or foolish or both? Bankers have a major role to play in selection of PMS. Many abuse the trust of the clients and take them for a ride. In our survey, one-third of the respondents who have invested got to know of PMS through their bank relationship manager or wealth manager. Nearly one-fifth came to know of a PMS through a friend or a colleague and an equivalent number got to know of PMS through advertisements.


In terms of transparency, nearly 30% say that all portfolio details, charges and returns were not disclosed adequately. As many as 60% of the respondents who have invested in PMS mention that portfolio managers did not make smart investment decisions. But still, nearly 45% of the respondents feel that their PMS will deliver a return over 15% in the next five years. Nearly 75% of the respondents, who have invested in PMS, have done so over the last five years. Despite the complaints of gross mismanagement by PMS companies, just 2% have filed a complaint with the regulator.


The survey tried capturing certain key points like, how did the respondents come to know about the scheme, the reasons for not investing, how the investors rate the overall performance of the PMS, whether they lost money on PMS, has losing money on PMS de-motivated them to not to invest further, the names of the scheme where they lost money, whether they think the loss was due to bad selection and/or excessive churning and, most importantly, whether they compared other schemes of PMS before investing in one.


Recently we also analysed the performance of PMS which have disclosed their data (PMS Performance: The Good, the Average and the Ugly) Except for a couple of PMS companies, the performance of the others was patchy.

6 years ago
pl share the best pms 2017 in india.
7 years ago
All the posts are pretty old ones. What is the latest trends and performances of various PMS scheme's ??
Satyendra Rao
9 years ago
I had a bad experience with Motiwal Oswal PMS. They charge too much. They want to share profit but not loss. They charge performance fee even when I lose money
Ajay Goel
Replied to Satyendra Rao comment 7 years ago
Hi Are you still invested with motilal oswal for pms ? Pl share your experiences. Me too looking for pms investment but am confused and afraid of choosing wrong pms as there is not enough data in open to decide which pms is the best.
Pl advice and share your experiences.
Ajay Goel
1 decade ago
I have invested in PMS named Value Strategy of Motilal Oswal & its giving fantastic returns. Moreover the stock churning is as low as zreo. PMS investments are long term and should not be churned- Keyur Mehta 9327393274
Dr Anantha K Ramdas
1 decade ago
Thank you MGT - I began my work through PMS of a leading bank when it started way back in `1985 and after a couple of years, began to pick and choose my own investment pattern. At this point of time I was an NRI so, we had lots of IPOs coming in with "exclusive" allotments for greenhorns like us. Believe me, we bought everything that was offered and maybe 3 to 5 were good out of a hundred! In the rest we lost our shirts.

On my return back to base in India, in 2007, I spent almost 6 months in reading every journal and commercial newspaper in the country, until I zeroed in on Moneylife. I still follow and maintain regular track of what I want to buy, sell, hold or increase to build a good portfolio. I take the guidance from ML as a rule as to how to avoid pitfalls and so far, I am safe and happy.

Still, I have made the mistakes of not buying on time (hestation
factor) and delays in selling when price is right (greed and stupidity) and hear the pontification by "experts" in TV
channels occasionally, but all the right and wrong decisions are mine own. Period.

To invest and let the wealth grow is an individual's personal and prime responsibility and advice that we get from anyone is to be taken with a pinch of salt!
Replied to Dr Anantha K Ramdas comment 1 decade ago
Very nicely said sir.

Team Moneylife can protect investors better, only if more people chose to follow your method & approach.

It is far better than seeking recourse after burning a hole due to ignorance, greed & folly.
amol ghule
1 decade ago
there should be some kind of ranking which is transparent so that investors can choose right portfolio mamagement companies.
Suiketu Shah
Replied to amol ghule comment 1 decade ago
Amol none of the companies are worth doing PMS with.Best is to educate one self via ml and invest wisely and not depend on "wealth management experts".
Krishnamurthy Kakaraparthy
1 decade ago
What is the tax treatment for PMS gains,if any,in Commodity futures ? Capital gains or Business income ?
nagesh kini
1 decade ago
The numbers in your Survey have only gone to endorse my belief that PMS is not everyone's cup of tea, not every portfolio managers or financial planners are any Gods.
Every reasonably sane, alert and knowledgeable investor could take initial expert guidance on building up his/her own portfolio and later possibly churn it quarterly taking into account the company and sector performance. He takes his own call and can't blame anyone!
Suiketu Shah
Replied to nagesh kini comment 1 decade ago
Absolutely right Mr Kini.PMS is best to be totally avoided in every which way.
Replied to nagesh kini comment 1 decade ago
Do you follow the above stated investment policy yourself or is it just for the sake of making one more comment?
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