Mutual Fund vs Portfolio Management Schemes

Difference between Mutual Fund and Portfolio Management Schemes

Basis of DifferenceMutual Fund (MF) Portfolio Management Schemes (PMS)
ObjectiveTo earn relatively higher returns than
To provide a completely tailor made
portfolio for each investor to suit his
MeaningA trust which pools the savings of
several investors together and invest
this collected fund in diversified
basket of securities at low cost
A personalised service and customised
portfolio solution is offered depending
on risk appetite and returns expectation
of the investor
Investment patternInvests under risk controlled asset
classes and work under rules and
guidelines set up by the regulator
Invests in riskier securities to
maximise returns
ManagementLess aggressively managed as compared to
the hedge fund
Very aggressively managed
Who can investSmall investors who want to create long
term wealth and achieve their short term
or long term objectives
High net worth individuals (HNIs)
Fee structureBased on the percentage of assets
managed - a fixed fee structure
Offers more than one option for the fee
structure, popular structure is a low
fixed fees plus performance incentive
StrategyWill invest in diversified portfolio
having 40-50 stocks from many sectors
10-20 stocks strategies or other
financial instruments at a given time
TransparencyPortfolio and performance are disclosed
in monthly fact-sheet of final holdings
by the fund house, available to all
Investor knows every purchase and sale
of shares done for him including their
prices, brokerage, other charges, etc.,
available to investor only
RiskLess risky due to diversification
More risky due to concentration
Minimum investmentCan be as low as Rs. 500
Rs. 25 lakh
DocumentationApplication form
PMS investor and the portfolio manager
enter into a separate agreement
Investment in derivatesCan invest in derivatives (F&O) markets
for the purpose of hedging positions
Can invest in derivates (F&O) markets to
make trading gains other than hedging
PerformancePast performance of fund is available
Can not guage the performance of a PMS
product before one invests in it
Participation of investor
in selection of
Can not participate
PMS fund manager explains logic behind
stock selection, shares research report
and properly answers all the queries
raised by the investor
RegulatorSecurities and Exchange Board of India
(SEBI) is the regulator
Tax efficiencyTax efficient - Long term capital gains
(LTCG), tax exemption, etc. options
Tax inefficient as whenever PMS fund
manager buys and sells, the client has
to pay short-term or long-term capital
gains as the stocks are transacted in
investor's account directly

Upcoming Bank Holidays

2017 February 24 is a bank holiday in Chandigarh due to Mahashivratri.
2017 February 27 is a bank holiday in Sikkim due to Losar.
2017 March 03 is a bank holiday in Mizoram due to Chapchar Kut.
2017 March 12 is a bank holiday in Jammu And Kashmir due to Holi (Jammu Province Only).

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