Portfolio Management Services (PMS) managers in India have demonstrated that concentrated portfolios can deliver alpha, but sustained benchmark outperformance is uneven across categories. According to a bl.portfolio analysis of 554 active PMS strategies using PMSBazaar data, category-average returns beat the relevant benchmarks in three of the six equity categories examined over the five years ended June 30, 2026. The findings underscore that PMS investing is primarily a manager-selection decision, not merely a choice between large-cap, mid-cap or small-cap strategies.
Key Performance Findings
Multi- & Flexi-cap emerged as the standout category, with both the category average and about two out of three strategies in the sample surpassing the respective benchmark. In contrast, mid-cap proved the most challenging segment: no strategy in the sample managed to beat the Nifty Midcap 150 TRI. The wide gap between category averages and the best-performing managers carries a second message: a concentrated portfolio can produce exceptional alpha when the manager is right, but it can magnify stock-specific losses, drawdowns and tax costs when calls go wrong.
The analysis assessed equity strategies on five-year returns using the Time-Weighted Rate of Return (TWRR), which separates the manager's investment performance from client cash-flow timing. Category averages are simple averages of active strategies in the database. Published performance is net of management fees; investor-level capital-gains tax is not captured.
| Equity Category | Category Avg Beat Benchmark? | % of Strategies Beating Benchmark |
|---|---|---|
| Multi- & Flexi-cap | Yes | ~67% |
| Mid-cap | No | 0% |
| Other four categories | Yes (in aggregate) | Varies |
Source: bl.portfolio analysis of 554 active PMS strategies using PMSBazaar data.
Industry Context
As of June 2026, India had 530 SEBI-registered portfolio managers, according to the Association of Portfolio Managers in India (APMI). The industry served approximately 2.2 lakh investors and managed ₹8.9 lakh crore (excluding EPFO assets) across discretionary, non-discretionary and advisory portfolios. For individual investors, the entry threshold remains substantial: the minimum investment in a PMS is ₹50 lakh.
Cost and Tax Hurdles
The analysis highlights three critical considerations for investors. First, the total cost of investing may exceed the headline management fee. PMS providers commonly use one of three fee structures:
- Fixed annual fees: typically 0.25% to 2.5% of portfolio value.
- Performance-linked fees: a share of gains above a pre-defined hurdle rate.
- Hybrid structures: a fixed charge plus an incentive fee.
Additional charges—brokerage, custody, audit, demat, fund-accounting, and GST on applicable fees—may apply. Under a performance-fee arrangement, investors should examine the hurdle rate, high-water-mark provisions, catch-up clauses, and reset conditions.
Second, portfolio churn can create tax liabilities even without a withdrawal. In an equity mutual fund, purchases and sales generate taxable events. The analysis notes that investor-level capital-gains tax is not captured by TWRR, so tax efficiency is a separate concern.
Third, the findings should be read as a snapshot of active strategies represented in the database, not as a census of the entire PMS market. Inactive or discontinued strategies are outside the sample.
Top PMS Managers
The analysis identified several PMS managers delivering alpha. Among the top performers are Tulsian, Asit C Mehta, ICICI Prudential, Green Lantern, and Sundaram—names that appear in the headline of the bl.portfolio report. These managers have demonstrated the ability to generate returns above benchmarks in their respective categories. Investors evaluating PMS options should conduct thorough manager due diligence, given the wide dispersion of returns and the impact of fees and taxes on net outcomes.
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