Liked this topic very much as i have been in same dilemma too. Found a PMS that offers 1% flat fee and 15% commission fee on profit. They also say profit calculation for commission is with high watermark principle – probably this means that if you had 20% profit at one part of year of but end of year declined to 10% profit, may be they will charge you 15% on 20% profit, i am not so sure about this though. It also appears that returns you make may not be same as what PMS advertises. There can be impact cost since a many stocks in portfolio can be small caps or less liquid stocks and members of PMS buying and selling before you can impact your price. There will be capital gains tax as well and if you are investing for really long term , this impact can be calibrated at the end in MF. So overall it feels like unless PMS is providing a return that beats index by at least 10 – 15% consistently it wont even given same returns as index with all these additional costs. I would probably consider Nifty next 50 or Nifty midcap universe for benchmark since the one i am looking at doesnt invest in Nifty 50 though they are flexi cap philosophy. And the one i was looking at did beat it by 20% over one year My conclusion for now is that this option doesnt look worthy of risk. But will watch it over time to see how it performs and if it does beat index by 15%+ consistently over few years.
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