Get the Tata Capital App to apply for Loans & manage your account. Download Now


Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required

Tata Capital > Blog > Wealth Services > How to Choose a Consistent PMS Scheme?

Wealth Services

How to Choose a Consistent PMS Scheme?

How to Choose a Consistent PMS Scheme?

Eager to invest in equities and outpace the ever-rising inflation rate? What options do you have at your disposal? This is where Portfolio Management Services (PMS) come into play. PMS has experienced a surge in interest, particularly in the post-Covid era, as more investors explore this avenue. 

However, choosing between PMS and other investment vehicles, such as mutual funds, can be a crucial decision. In this article, we will delve into the world of PMS investment schemes, helping you understand their nuances and how they stack up against alternatives like mutual funds.

What is a PMS Scheme?

PMS are customised investment solutions offered by professional portfolio managers. The primary aim of a PMS scheme is to manage your investments in the stock market, aiming to deliver optimal returns while aligning with your financial goals and risk tolerance.

Unlike mutual funds, PMS mandates the necessity of a demat account. This is because in a PMS, you directly own individual stocks or other financial instruments, and the portfolio manager makes investment decisions on your behalf. It is a tailored approach to wealth management, where your portfolio manager exercises discretion to create and manage a diversified investment portfolio for you.

PMS investment schemes are especially appealing to individuals with a substantial portfolio and a keen interest in actively managing their investments. They offer the advantage of more personalised attention and the flexibility to align your investments with your unique financial objectives. 

This means your investments can be fine-tuned to address your specific needs, such as tax considerations or income generation.

Who Should Consider PMS?

Determining if PMS investment schemes are the right fit for your financial journey depends on various factors. Let us explore who should consider wealth management services schemes.

Minimum Investment: PMS schemes typically require a substantial minimum investment. As mentioned in the reference article, a minimum of Rs. 50 lakh is often necessary. This makes PMS more suitable for individuals with significant portfolios.

Risk Tolerance: PMS allows for a more tailored approach to investments, which can involve higher risk strategies. Therefore, it is important to assess your risk tolerance. If you are comfortable with a higher level of risk in pursuit of potentially higher returns, PMS might be an option to consider.

Active Involvement: PMS demands an active involvement in investment decisions. If you prefer a hands-off approach and want professionals to manage your investments, mutual funds might be a more suitable choice.

Specific Financial Goals: Consider your financial objectives. PMS schemes can be structured to meet specific goals, such as tax-efficient investing or income generation. If you have unique financial requirements, a PMS can be tailored to address them.

Mutual Funds vs. PMS – A Cost Comparison

One of the critical aspects of choosing between a PMS scheme and mutual funds is understanding the cost structure.

Mutual Funds Costs

In mutual funds, the fund manager charges investors through the expense ratio, which can range from 0.50% to around 2.50% of the invested amount. This expense ratio covers the fund's operating expenses, including the manager's fee, and is deducted from the fund's returns. 

Mutual funds are generally more cost-effective due to the economies of scale and the shared expenses among investors.

Wealth Management Services Costs

In the case of PMS, the cost structure is a bit different. The fund manager providing the PMS scheme charges around 2–2.5% of the transaction value, applicable to both buying and selling of stocks. 

This fee remains constant, regardless of whether the investor makes a gain or incurs a loss. Additionally, PMS investors must cover brokerage and taxes for each transaction.

Returns Comparison

When choosing between a PMS scheme and mutual funds, investors often wonder about the potential returns from these investment options.

Mutual Funds

Mutual funds are known for their cost-efficiency. They offer diversified portfolios managed by professional fund managers. 

While returns can vary based on the type of fund and market conditions, mutual funds generally aim to provide competitive returns, typically in line with the broader market indices. 

It's important to remember that mutual funds can be an excellent choice for those looking for a relatively stable and well-diversified investment approach.

Wealth Management Services

Wealth Management Services, on the other hand, can potentially offer higher returns in the long term. This is because PMS investment schemes are tailored to the individual investor's goals and can include more aggressive strategies, which might lead to outperformance. 

However, this potential for higher returns comes at a higher cost, as discussed in the previous section. Investors must weigh the cost-return trade-off carefully.

Making an Informed Choice

Now that we've explored the intricacies of PMS investment schemes and compared them to mutual funds, how can you make an informed decision?

Assess Your Portfolio: Consider the size of your investment portfolio. PMS typically suits individuals with substantial assets.

Risk Tolerance: Evaluate your comfort level with risk. PMS can involve more aggressive strategies, while mutual funds often offer a more diversified, lower-risk approach.

Investment Goals: Define your specific financial objectives. PMS can be customised for unique goals, while mutual funds offer broader market exposure.

Cost-Return Trade-Off: Weigh the cost of PMS against the potential for higher returns and personalised management.

Seek Professional Guidance: Consider consulting with a financial advisor who can help you align your investment choices with your financial aspirations.


In your quest to navigate the world of investment, the decision between PMS and mutual funds is a pivotal one. Whether you're leaning towards a professionally managed, personalised portfolio in PMS, or the cost-effective diversification of mutual funds, remember that your decision should align with your financial goals, risk tolerance, and portfolio size.

Investing in equities is a critical financial decision, and making the right choice can significantly impact your wealth journey. Take your time, seek expert advice, and explore the options that align best with your aspirations. TATA Capital's wealth management services can be your trusted partner on this journey. Your financial future begins with an informed decision.

Leave a Reply

Your email address will not be published. Required fields are marked *