PMS vs MF: Longer-term Performance Comparison

One of the core premises of investor’s preferring PMS’s over MF’s, is the ability for PMS’s to manage more concentrated, higher risk-reward portfolios as compared to mutual funds. This leads to the potential for longer-term outperformance. 

A recurring question we often get from investors, is that does the data actually support this potential longer-term outperformance of PMS’s vs MF’s. In order to answer this query, at IME Capital we have undertaken a detailed analysis of all PMS & MF schemes with a 10+ year track record (CY12-21) at a category level, and compared their relative performance. 

The analysis period (Jan-12 to Dec-21) is a strong representation of typical market periods, which includes periods of weak market performance (taper tantrum, IL&FS default, COVID crisis) and strong market performance (post-NDA rally, post-COVID recovery). This period also included times when large-caps outperformed mid & small-caps, and when mid & small-caps outperformed large-caps. 

The results of this analysis is given below, and provide a clear pointer towards the fact that the more-differentiated, higher risk-reward PMS strategies do indeed deliver longer-term outperformance to MF schemes. 


All MF’s & PMS’s with the multi-cap (including multicap, flexicap and large & mid-cap), mid-cap & small-cap categories with a published 10+ year track record have been included in this analysis. Data sources for CY data include direct AMCs, ValueResearch, PMS Bazaar and NSE website. 

For each of the funds, we have calculated the CAGR return for the period CY12 to CY21, and used this to calculate an average 10-year CAGR for the MF & PMS for the multi, mid & small-cap categories. This data is represented in the table above. 

We have also studied the annual outperformance of funds to the benchmark (Nifty 500 TRI for multicap, Nifty Midcap 100 TRI for midcap & Nifty Smallcap 100 TRI  for smallcaps), and calculated in what % of years these funds have outperformed the benchmark. This has then been used to get an average for all PMS & MF’s analysed over this period, to study the consistency of outperformance. 

Note: Since we have only included funds with a 10-year + track record, and that not all PMS’s disclose CY performance, the universe of PMS funds in mid & small-cap are relatively small (3 each). The multi-cap category has a much wider universe of PMS funds with a 10+ year disclosed CY returns (18), and hence the analysis on the multi-cap category is the most relevant. 

PMS-AIF World Study

PMS AIF World also undertook a study comparing the performance of top-performing PMS funds vs top-performing MF funds, across different time periods. Unlike our study which focused on average performance across all funds with data available, the PMS AIF World study seeked to compare the performance of the top-performing funds across PMS’s & MF’s.